“I’m sorry but the best we can do right now is a couple hundred dollars.”
“But the boy sick!”
At a bank this week I overheard a woman pleading for US currency (regrettably, I got there too late to maco comprehensively). The bank employee sent her off, explaining they just didn’t have any on that day. I was told at another bank that the days of walking in off the street and buying US like bread are over. It is not even a “first come, first served” basis. It is more like “First, come, then maybe get served. If not, just come again.” The “Forex queue” at the bank, from what I’ve heard, is no more.
Nowhere is the anxiety more acute than in the business community. Many are openly doubting whether they will be able to continue importing goods to sustain their operations. Naturally, chatter has arisen about avaricious conglomerates hoarding all the US dollars. The Central Bank and the commercial banks stand accused of funnelling the lion’s share of US into the coffers of “Big Sawaties,” pushing medium to small enterprises into the arms of insolvency and closure.
But how can this be? Just last year the private sector waged public war with the now-deposed Central Bank governor. Their solution was simple enough, release more foreign exchange into the market! Some also felt that Jawala Rambarran was a significant part of the problem. The currency was released and Rambarran, subsequently liquidated, yet the situation is worse than ever.
The root of the forex crisis has always been demand outstripping supply. Yet current debate still turns on flawed perspectives of inequitable distribution of US currency. Last year, vociferous consensus suggested reversion to the “old” system of currency distribution.
Old, new, recently refurbished; none of this matters if there is precious little US to distribute. If a bias towards corporate fat cyats could be proved, we could even upend the system to favour the thousands of medium to small businesses. When the larger entities are starved of their supply of greenbacks, as their business model buckles they will shed jobs of the very ones who normally support small business.
One option already floated is devaluation of the dollar. Given the pace with which the exchange rate is climbing, this may be a moot point. Last week it hovered at $6.57 and there is every indication that this upward trend will persist. A devaluation, though, would likely trigger precipitous declines in consumer spending, which will in turn lead to further job losses. Still, the idea of devaluation is tempting; stifle consumption of US currency by making it more expensive. Consumers will migrate their support to local products, ent it? A wonderful dream, but then again, what are we producing locally?
“Looking for a mid-size sedan that’s big on mileage, luxury and affordability? Come in today and test drive our newest model baigan!”
“Defend your business place, your family against crime. Come ask us about our latest range of high definition security baigan.” This is egregious exaggeration for comic effect, but you get the point.
Even if we reduce our imports and buy more local products, this doesn’t tackle the problem of weak foreign exchange earnings. We’ve been spending money that isn’t ours. With the vast majority of forex coming from the energy sector, the country as a whole isn’t actually earning the money it is spending.
Yet solutions requiring comparatively nominal investment have been staring us in the face. Here’s one: the world has changed, rapid evolution of the Internet means ordinary citizens can become earners of foreign exchange instead of mere consumers. Twenty years ago, the only “Amazon” was in South America. Today, numerous small entrepreneurs are churning out authentic, Caribbean niche products which can be readied for global e-commerce with some minor tweaking.
The Ministry of Trade should quickly establish a department dedicated to supporting locals who want to market their goods on sites like Amazon, eBay, Etsy, Barnes and Noble and whatnot...and whatnot. Such a division should be staffed with competent advisers who can help aspirant exporters navigate the tricky shoals of online sales.
The ministry should handle everything, from registration to research, from marketing to payment methods. In time, once our exporters find their feet in this brave new world, this department can begin to apply consultancy fees, thereby, earning revenue for the state. The beauty of this concept is the relatively short gestation period. If executed properly, it could be up and running within a year, activating all the local talent that already has product in hand, and equipping that talent with marketing savvy.
Next week, the second part of this column will examine how small tour operators can be harnessed to earn more foreign exchange through the creation of a product that is networked throughout the country, one which combines all of our attributes into competition-ready experience tourism.
Tackling the forex crisis in a meaningful way means making foreign exchange earners of every citizen with the potential to do so.
