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Laying Out The Roadmap For Economic Resilience

The UK-based Centre for Local Economic Strategies (CLES) outlines ten indicators that can be used to determine whether an area, or country, is resilient. The first three of these are the strength of the commercial sector; strength of the public sector; and strength of the social sector.

For a resilient economy, each of these sectors must be operating at or near optimal levels, or at least a high level. The commercial (or private) sector must therefore be prepared to innovate and invest in the economy's growth. Private sector efforts should become the main driver behind all major expansion.

On the other hand, as alluded to previously, the social sector must be aligned and operating with significant effectiveness and efficiency. Resilience also demands a strong public sector that is responsive and nimble, inclusive of an administrative machinery that is well-structured with a high level of certainty, discipline and is facilitative to the other two sectors. Without such characteristics, the public sector becomes a significant limiting factor in any advancement and development.

The way forward therefore involves public sector reforms in a substantial way. Consistent performance with transparency and public education will contribute to an improvement in public confidence, which holds implications for investor participation - especially local investors.

The next four indicators of resilience identified by CLES are the commercial sector's relationship with the public sector; public sector relationship with the social sector; social sector's relationship with the commercial sector and health and wellbeing; and their relationship with the local economy.

This is the point made earlier in relation to the Government-appointed Economic Recovery Committee's (ERC) work - the need to ensure that the interdependencies are actively at play. Faced with a health pandemic that has triggered an economic crisis, the importance of this clearly stands out.

The private sector and public sector must have a robust, healthy and vibrant working relationship.

While many on both sides tend to default to adversarial roles, and the presence of a healthy tension is extremely worthwhile, more value is always going to be created when these sectors work as partners towards a common vision.

The private sector supports, and needs, the social sector as it undergirds the quality and availability of its workforce. How people live, the level of support when things go wrong, peace of mind and the "natural" environment are all socially important elements which play to the level of resilience an economy can derive. After all, their output directly affects commercial and economic inputs. All remedial efforts going forward should take this into account.

The Government's response to COVID-19's economic fall-out, with significant emphasis on supporting social programmes, fully explains the third of these four indicators. Safety nets, and the provision of social support, demands active engagement and participation by the public sector.

Engagement without the ability to fund what is necessary will render this interaction ineffective. Balance is therefore critical.

Finally, The Bahamas' response - and the extent to which it could insulate itself against the shocks caused by the COVID-19 crisis - was highly influenced by the state of health and well-being, the state of underlying health infrastructure, and the extent to which the country's economic affairs could provide new and urgent resources for these areas.

Part of the Bahamian reality, for example, is the high level of non-communicable diseases present in the population. This placed many persons at high-risk if they contracted COVID-19, and consequently led to stringent decisions aimed at curtailing movement.

Reflect on how the state of the health care system would have factored into the early decisions made, and those that continue to be made. Reflect also on how the economic state of The Bahamas influences the reopening decisions despite the surge of COVID-19 cases in our main tourism market of the US.

The final three indicators are the relationship between the local economy and working within environmental limits; relationship between the local economy and local identity, history and context; and relationship between the local economy and both local and national governance.

I view these as identifying the factors that exert limiting influence on economic expansion. Environmental limits play a role in resiliency. Consider, for example, the recently discussed and refuted proposal involving 500,000 acres of land in Andros. The thinking is that this would have a significant negative impact on delicate ecosystems and be detrimental to the way of life for persons on that island. Environment, identity, history. All these factors affect, or contextualise, the potential economic value that such a proposal could bring. Consider further the unequivocal pronouncement of the Prime Minister that there will be no such project. Local and national governance can dictate the economic fortunes of an island. This is why effective governance is critical to economic resilience. The remedial work, adaptation and transformation required today must therefore see governance reforms implemented. As an example, effective local government with the ability to create real economic centres across the archipelago is part of the recipe for deeper national economic resilience. Vulnerabilities can be mitigated if there is greater "economic diversity" throughout the country. Again, whatever is done will have to give due respect to the Bahamian identity, its historical norms and environmental well-being. Resilience takes all these elements into consideration. This is why the focus has to be broad-based and deep if we are to achieve this objective. A simple return of tourism, and the normal level of commerce and export earnings, will not be sufficient.

Having established that resilience is a function of relationships, it becomes clearer what we must anticipate from the Economic Recovery Committee and/or policy makers, the private sector, society and the public sector going forward. Every solution should be practical and properly designed to move the country forward with more effective and efficient ways of thinking, performing and achieving. Every solution applied should happen against a clearly-defined viewpoint of the future, and the treatments should advance efforts to get there. That future for The Bahamas is one with an economy where there is consistent growth of at least 2 percent annually. It is a future underlined by consistent, robust and effective debt management and fiscal consolidation programnes. A new era of systematic treatments of structural and fiscal reforms. A future economy where there are greater sources of exports, and therefore more diverse means of earning foreign exchange. The stakes are consistently high and demand no less. Business as usual will defeat the effort to secure the resilience we desire and need.

• To be continued

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