WEDNESDAY, DECEMBER 28, 2016
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Union’s threat to Water Corp deal By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
Says $8.9m contract breaches industrial terms
A trade union is threatening legal action over the Water & Sewerage Corporation’s $8.9 million water plant deal with a BISX-listed company, amid an outcry that Bahamian groups were not given a proper chance to bid. Ednol Rolle, the Water and Sewerage Management Union’s (WSMU) president, told Tribune Business that the agreement to give Consolidated Water a new 15-year contract to operate the Windsor reverse osmosis plant breached its own
BISX-listed firm’s rivals query why no public tender Say 15-year award ‘flies in face’ of ‘Bahamians first’ industrial agreement with the Corporation. Promising that the union will
challenge the deal, Mr Rolle confirmed that it would “most likely” result in legal action, as this was the only method to overturn the contract award. The Corporation’s decision to renew its relationship with Consolidated Water also angered a rival Bahamian investor group, which questioned why the Windsor plant contract had not been the subject of a proper public tendering process that was open to rival bidders. Don Demeritte, principal of the EPS Consultants’ consortium, told Tribune Business that the Corporation’s decision “flies in the face of everything that speaks to empowerment of
Bahamians and entrepreneurial development for Bahamians”. Tribune Business revealed last month that Consolidated Water, which has local ownership via Bahamian Depository Receipts (BDRs) that are traded on BISX, had agreed a new 15-year deal to supply the Corporation and its thousands of New Providence customers with water from the Windsor plant. Leslie Miller, the Corporation’s chairman, suggested then that the deal would produce annual savings of up to $4 million per year, and was “in the best interests of the See pg b7
Sir Franklyn: ‘No positive Govt warned: Don’t spin’ for junk downgrade take all credit for jobs By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A well-known businessman says “no positive spin” can be placed on the Bahamas’ junk downgrade, adding that it showed this country is failing to tackle long-standing structural weaknesses in its economy. Sir Franklyn Wilson bluntly told Tribune Business that Standard & Poor’s (S&P) decision to strip the Bahamas’ of its ‘investment grade’ status five days before Christmas was “not good news”, with reactions from the different political parties all-too predictable. The Arawak Homes and Sunshine Holdings chairman, while criticising the Opposition parties for failing to offer solutions to the problems highlighted by S&P, also warned against placing too much reliance on Baha Mar’s promised April 2017 opening. While acknowledging that Baha Mar’s arrival and several thousand hirings will help the stagnant economy, Sir Franklyn said those who See pg b6
Arawak boss: Nation failing on ‘systemic problems’ ‘Short-sighted’ to see Baha Mar as ‘full answer’ Bahamians not adjusting, Opposition gives no solutions
Sir Franklyn Wilson
Entrepreneurs challenged to exploit Bank’s rate cut By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net Sir Franklyn Wilson has questioned whether the Bahamas has sufficient entrepreneurial risk-takers capable of exploiting the Central Bank’s interest rate to create new businesses and jobs. The Arawak Homes and Sunshine Holdings chairman said that despite interest rates having already been at near-record lows for the previous five-and-a-half years, there was little evidence that this had helped to stimulate the moribund Bahamian economy. Pointing to the commercial banking system’s $1.472 billion in surplus liquid assets available for lending at end-November 2016, Sir Franklyn challenged budding entrepreneurs to “find the answers” through greater innovation and creativity. He acknowledged, though, that the 50 basis point (0.5 percentage point) cut to the Central Bank’s discount rate, dropping this to 4 per cent, would only produce positives for Bahamians and local companies. Apart from reducing monthly repayments for hard-pressed mortgage and commercial borrowers, Sir Franklyn said the move would also reduce costs for companies whose debt securities were tied to the Bahamian Prime rate. He added that BISXlisted FOCOL Holdings, which he chairs, would enjoy a $250,000 reduction in annual interest payments to
Sir Franklyn: ‘Who’s going to create the ideas, jobs?’ Says of drop: ‘It ain’t the good old days, but it helps’ Urges Bahamians: ‘Take control of your lives’ holders of its $50 million in perpetual preference shares - money that can now be reinvested in the company, or drop straight to the bottom line. “In terms of that contributing to economic growth, there’s no way to put spin on that,” Sir Franklyn told Tribune Business of the Central Bank’s interest rate cut. “While there’s no way to put a good spin on S&P, there’s no way to put a bad spin on this.” He then, though, challenged Bahamian entrepreneurs and the private sector to step up and exploit the reduced cost of capital and borrowing, implying that they had failed to respond to the last Central Bank rate cut in June 2011. “Where are the entrepreneurs? Where are those who are going to do something?” Sir Franklyn asked. “Interest rates were already new record lows, yet we have all See pg b5
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net The Government cannot take sole credit for the 31,735 jobs added to the labour force since its May 2012 election, the Chamber’s chief executive warning that businesses “cannot feel they are working just to pay taxes”. Edison Sumner told Tribune Business that the private sector needed to be given “due recognition” as the Bahamas’ primary job creator, given that it employed the majority of the 217,750-strong workforce. He spoke out after learning that “some circular is going around that the Government has created 31,735 jobs” during its four-and-a-half years, a claim that was repeated by Bahamas Information Services (BIS) director, Elcott Coleby, in his weekly blog. “Let’s look at that in perspective,” Mr Sumner told Tribune Business. “The pri-
Chamber chief: Private sector chief growth creator Businesses ‘cannot feel working just to pay taxes’ Govt sector largest industry at 30% of workforce vate sector generates the jobs in the marketplace, and it’s the private sector that carries the burden of meeting payroll every week or month.” He added that as the Bahamas’ largest generator and creator of jobs, it was “incumbent upon the Government to pay close attention to private sector employers to ensure they get the help they need”, especially when See pg b4
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Capital markets await $70-$100m in fund raisings ‘Much higher level of activity’ predicted for 2017 Banker predicts full-year equity returns of 10-15% Economy, markets boosted by Baha Mar and rate cut By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net The Bahamian capital markets could see between $70-$100 million in fundraising activity during the 2017 first quarter, an investment banker is predicting, with equity securities set to generate fullyear returns of 10-15 per cent. Michael Anderson, RoyalFidelity Merchant Bank & Trust’s president, told Tribune Business that the Central Bank’s interest rate cut would likely make investments in BISX-listed stocks more attractive in 2017. With returns on bank deposits and debt securities, such as preference shares, set to drop because they are linked to the now-lower Bahamian Prime, Mr Anderson predicted that investors would be attracted to equities as they sought higher Michael Anderson yields. “If you take into account that fixed income securities will drop off by 0.5 percentage points, it should make equities slightly more attractive,” he told Tribune Business. “The dividend yields are somewhere between 3.5-6 per cent on equities, based on the average prices on the [BISX] market, and that should become more attractive. “We should see stock prices increase between 5-10 per cent next year, and dividend yields of between 3.5-6 per cent, so the overall returns on equities should be north of 10 per cent. It should be in the See pg b8