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Untapped potential

Can Freeport recreate the magic?

Since its creation in 1955, Freeport has gone through numerous economic peaks and valleys.

Dubbed the Magic City in the 1960s, during an unprecedented period of growth, Freeport went through a slump in the early 1970s, followed by a short-lived economic revival by the end of the decade.

Despite a second boom in the mid-1990s, Freeport’s economy sputtered and stalled the following decade after the September 11 attacks in the United States (US) in 2001 and subsequent hurricanes that eviscerated Grand Bahama’s infrastructure.

Then, came the double shock of monster Hurricane Dorian in 2019 and the COVID-19 pandemic months later.

While some islands enjoyed growth recently, Grand Bahama has continued to decline, with its economy contracting by nine percent this fiscal year compared to the previous period.

Once seen as the City of Dreams, many of Freeport’s landmarks have fallen into disrepair. Its residents are hopeful, however, that a comeback is on the way.

A city is born

In 1955, 18 years before The Bahamas gained independence from Britain, an American investor had the ingenious idea to transform thousands of acres of barren pine bush on Grand Bahama into an industrial city.

Wallace Groves, a Wall Street financier, who had been convicted in the US for mail fraud, had come to Grand Bahama in the 1940s after buying the Abaco Lumber Company and its pine forest in Pine Ridge. However, he soon realized that his business model was not sustainable, as once the lumber had been cut, he had no more product to sell.

As the story goes, Groves looked at all the land that had been cleared and saw its untapped potential.

On August 4, 1955, he and the colonial government of the day entered into the Hawksbill Creek Agreement, which gave Groves the exclusive right to develop thousands of acres of land in the center of the island.

The deal (which was altered over the years and expires in 2054) mandated that Groves’ Grand Bahama Port Authority (GBPA) dredge a deep water harbor and attract industries to the new city – a free port with significant tax concessions afforded to those who would operate within its borders.

By 1967, Groves had transformed the “scrubland” of Grand Bahama into a “$400 million resort center with six hotels, two casinos, and a commercial and industrial complex of 800 licensed businesses,” Time magazine reported.

Luxury apartments, housing developments, churches, schools and amenities also began springing up by the end of the 1960s. Freeport was a properly planned city, more modern than Nassau, the nation’s capital. And Grand Bahama, once known as the “poverty pocket” of The Bahamas, had become the envy of the region.

Groves himself questioned if he envisioned the level of success Freeport would achieve.

“I had high hopes for Freeport even before that day in 1955 when the enabling act which was to be Freeport’s birth was signed, but I look back and wonder if I even imagined the success that we would have,” he wrote in 1980.

But the 1960s gold rush would be short-lived.

Bend or break

The Hawksbill Creek Agreement was signed between Groves and the United Bahamian Party.

The black-led Progressive Liberal Party (PLP) took umbrage with many elements of the deal, notably the power the Port Authority wielded in Freeport, the number of foreign workers brought in and the disenfranchisement of ordinary Bahamians while wealthy expatriates prospered.

In 1969, two years after the PLP assumed office, Pindling delivered his memorable “bend or break” speech on Grand Bahama, laying down the law of how it would be going forward.

“Far too many here adopt the attitude that they have certain guaranteed rights to make money and that is all that matters,” said Pindling at the official 

opening ceremony for the BORCO refinery on July 26, 1969.

“Freeport has indeed been a miracle of economic development; it has indeed been a shining example of financial wizardry. What it lacks is humanity; what it needs is a social conscience; what it must have before long is a soul.

“In this city, where, regrettably, almost anything goes, where promisingly some economic activities have come to Bahamians, Bahamians are nevertheless still the victims of an unbending social order which, if it refuses to bend, must be broken,” Pindling said.

The searing speech—and the resulting immigration and customs clampdowns by the PLP—sent shockwaves through Freeport.

A 1980 Bahamian Review magazine editorial, from an issue celebrating Freeport’s 25th anniversary, recalled how dismal things in the once-vibrant city quickly became.

“This frightened the people living in Freeport and those which had already invested in Freeport,” the magazine reported.

“They fled, only leaving a handful behind. Amongst the handful were the good and the bad, the rich and the survivors.

“Many belts had to be tightened after the government tightened up on Freeport. Business just didn’t get bad, it disappeared.”

By the time the country marched toward independence from Britain in 1973, Freeport had seen a sad reversal of fortunes. In his biography of Pindling, author Michael Craton wrote that in the early 1970s, Freeport’s progress had “come to a standstill, or even gone into reverse”.

This was attributed to the Pindling administration’s alterations to the Hawksbill Creek Agreement – becoming a shareholder in the GBPA – as well as its immigration policies, which investors on the island saw as forced Bahamianization. A global recession and dips in tourism had also dampened Grand Bahama’s prospects.

A change at the top

In the early 1970s, Groves retired from the Port Authority.

In 1976, Edward St. George and Jack Hayward, son of Groves’ original partner Charles Hayward, took over.

With the two at the helm, Freeport began to rebound. While the old guard at the Port Authority had a foreigners first mentality for the city, Hayward and St. George embraced rather than recoiled from the PLP’s Bahamianization policy.

Hayward in particular believed that Freeport should be a Bahamian city, and not a foreign outpost, and ensured more Bahamians became involved in running the area.

By the end of the decade, Freeport’s industrial sector was solid again, Craton wrote, while “property sales were booming after years of stagnation, residential, commercial and industrial construction was up and tourism had risen by 30 percent in the previous year to reach half a million—a third of the Bahamian total” at the time.

The island’s population had also mushroomed from 8,000 in 1963 to close to 50,000 by 1980, about half of that figure living in the Freeport/Lucaya area.

The Port Authority injected $63 million in capital investments into Freeport between 1976 and 1982. By 1980, the island’s international airport had gone through multiple upgrades, including the addition of a US Customs and Immigration preclearance facility.

But the revival that began in the late 1970s would be short-lived.

The 1980s brought high unemployment and inflation to many parts of the world, including Grand Bahama. Though money flowed through the economy, much of it was from the illicit drug trade.

“Grand Bahama in 1980 was visibly more vibrant; the appearance of the city was better than it is today,” said James Carey, Grand Bahama Chamber of Commerce president.

“It was better kept, there wasn’t as much dilapidation in terms of structures and things were happening. Mind you, back then, we had a vibrant drug trade going on and there was that artificial economy from things happening.

“We all knew that could not be sustained, as the authorities, both The Bahamas government and the US government, cracked down on that type of activity. That level of business dried up and disappeared.”

A second boom

In the early 1990s, change swept through the country. The Free National Movement, led by Hubert Ingraham, won the 1992 election, ending Pindling’s 25-year rule.

According to Ingraham, Grand Bahama’s economy was in the doldrums when his party first assumed office. His administration quickly got to work partnering with the Port Authority to attract much-needed investment to Freeport.

The Ingraham administration enacted legislation which extended the Hawksbill Creek Agreement’s expired real property and business license exemptions for an additional 22 years.

The government also partnered with the Port Authority to woo investors in Europe, Asia and North and South America.

“The result of those legislative amendments followed by targeted promotional tours and the good working arms-length relationship we established with the GBPA was the inflow of hundreds of millions of dollars of Foreign Direct Investment (FDI) into the Freeport economy,” Ingraham wrote in a 2018 letter to the editor.

In 1995, Hong Kong conglomerate Hutchison-Whampoa entered the Freeport economy, developing the Freeport Container Port and becoming 50 percent owners with the St. George and Hayward families in the Grand Bahama Harbour Company, the Grand Bahama Development Company and the Grand Bahama Airport Company.

Ingraham wrote that between 1992 and 2002, “Freeport experienced greater economic expansion than it had seen in a generation,” resulting in Grand Bahama’s unemployment rate falling under seven percent.

Some of the other notable developments that emerged in Freeport during this time, he said, included a world-class energy company buying an ownership stake in Freeport’s electricity company, the development of the Grand Bahama Container Transshipment Port, the creation of the Grand Bahama Shipyard, the redevelopment of the island’s airport, the construction of the Grand Lucayan resort, and the development of the Pelican Bay Marina Village.

During this time, the island’s oil transshipment and storage capacity expanded, new and additional pharmaceutical companies entered Freeport, as well as new manufacturing companies including Polymers International. Upscale residential developments expanded as well.

Freeport was on pace to continue its growth when, in 2004, Hurricanes Frances and Jeanne wrecked the island’s economy, leading to mass layoffs and hotel closures.

That same year, Edward St. George died, and court action ensued over the reins of the Port Authority.

In 2015, Sir Jack died, and with the two leaders gone, the Port Authority struggled in the following years to recapture the level of investment and interest in Freeport it once had.

“The old guard of the GBPA – St. George, Hayward – they had a way of making things happen,” Carey said.

“They were well connected, both locally and internationally, and they were able to seemingly make things happen. With their demise, there was a certain decline – there were peaks and valleys during their time – but it appears that with them moving off the scene and their successors taking charge, we don’t see the level of activity with those guys.”

In 2019, Hurricane Dorian and the COVID-19 pandemic added to the erosion of Grand Bahama’s economy.

It appears unlikely that Freeport will ever recapture the lightning in a bottle it had in the 1960s, but those interested in the city’s success – which is vital to The Bahamas’ success as a whole – say there is still untapped potential there.

“I’m always looking forward as opposed to looking backward,” said Kwasi Thompson, a former minister of state for Grand Bahama, when asked about Freeport’s future.

“There are some lessons to learn in terms of where we came from. It is a useful process for us to learn from where we came and to continue moving forward.

“At one point, they called us the Magic City. I do not believe we are ever going back to the Magic City. I think we need to create a new dynamic that is going to push us forward and cause us to have a new future to look forward to.

“The island is still filled with potential. The island is still one of the best places to do business; it is still one of the best places to live.

“It has huge potential for investment and I believe with the government paying sufficient attention and with change at the Port Authority, I think it can be done.”

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