Lessons of the Decade Dionisio D’Aguilar
Lessons of the Decade is a new Guardian Business weekly feature for the month of December that prods the minds of leading figures in the local business community. We want to get their views on some of the most valuable business lessons of the past 10 years as we approach the end of 2010. Have a suggestion?contact [email protected]
The last ten years have led to many changes in the country. Local businessman Dionisio D’Aguilar is pointing to three main lessons the last decade has taught us, arguing that a conservative approach was a good move for The Bahamas.
First, D’Aguilar–a former Chamber of Commerce president–tackles the stance of local banks in The Bahamas to be cautious in their lending.
“While we complained in the past that the banks were not lending enough money,”he toldGuardianBusiness,”in hindsight because commercial loans have topped that list of the portfolio of loans that have performed the worst, we have seen they were actually correct.
“If it had not been for conservatism, then we would have been in a far worse position than we are now…one of the things we can be proud of is our government did not have to bail out one bank here.”
That’s unlike what took place in the United States. One of the things he said the country had learned from”our Canadian brothers and sisters”(some of the commercial banks)was that cautious lending not only prevents significant upswings, but also prevents significant downturns and essentially saved local banks from completely collapsing.
Another good lesson D’Aguilar asserts that became evident during the last period of the decade, was that sometimes a protectionist attitude can in the long-term be a buffer to external happenings.
“We were creeping slowly toward the removal of exchange controls, but what it did was slowed down the ability of a certain class of Bahamians that had the money to invest overseas,”he said.”As a result, they were not completely wiped out by the meltdown in the U.S. stock market.
“With hindsight, exchange controls probably protected a certain sector of merchant class that liked to complain about nothing to invest in here, but government bonds, land and equity…those organizations would have suffered had they been allowed to invest in other things abroad.”
One of the least appreciated lessons of the decade is that the country will always run a deficit, said D’Aguilar, adding that the day has come for everyone to recognize this.
“Our government cannot spend less than what it takes in,”he said.”We will always run a deficit and I think politicians are selling Bahamians a dream that we can live beyond our means forever.
“We’ve got to see that if you give an increase to workers here, you may have to pay three percent for electricity. We can’t even balance the budget in time of boom. We are underpaying what we need to finance the government as a people, but they are too afraid to tell the people.”