One of our political messiahs, while debating a "Bill for an Act to Amend the International Monetary Fund (IMF) and the World Bank Act, skillfully promoted class envy by demonizing the Banks as racial profilers (The Tribune, Thursday, February 17, 2000).
"Racial profiling" is a derogatory term used to suggest that black Bahamians get less favourable treatment than white Bahamians when applying for a loan at a "foreign domestic bank." The implication being that black Bahamians cannot become entrepreneurs if the "policies and practices of those banks holding these same Bahamian deposits are for the most part, developed by non-Bahamians."
In any discussion it is important to consider all the facts and the issue of protection of depositors money is not considered with more than a passing mention. However, by their nature, the "foreign domestic banks" being referred to are not in the business of venture capital or investments that can be considered "risky." Their first priority is to protect their depositor-s money and of course make a profit. Not unlike any Bahamian business that has to protect its inventory and make a profit to continue to operate.
"Facts" were reportedly laid on the table indicating that the "prejudice of a banking institution put one of our own people on the brink of financial ruin." (The Nassau Guardian, Thursday, February 17, 2000). Not mentioned however is why the "bigger bosses" of the Bank officer withdrew the facility. It is not clear however if the "facts" included whether or not —
- The client met established criteria or,
- The bank officer had the authority to advance the funds in the first place.
The Three C-s of Credit.
Most banks- lending practices are guided by a simple formula called the Three C's of Credit. These are Character, Capacity and Collateral.
- Character is important to ensure that the borrower is legitimate and has a good credit rating. If they are a first time borrower decisions are made based on references, family relations etc.
- Capacity to repay the money is also important because if the loan is not repaid the bank has to write it off against profits.
- Collateral is a necessity in many instances if a borrower is not well known to the bank or wishes to borrow the money for a less than conservative venture. If the only collateral available far exceeds the value of the loan, this cannot be laid at the feet of the bank as being unreasonable.
Start a Venture Capital Fund.
The good thing about a vibrant economy and the competitive market place is that there are alternatives to these (so called) racist institutions…people who do not like the conservative nature of policies "developed by non-Bahamians" can start their own venture capital fund. They can take their money out of these Banks that, in their view, stifle entrepreneur-ship and lend their money to anyone for any project they like.
"Nothing is easier to find than injustices."
Dr. Thomas Sowell in an essay to Creators Syndicate Incorporated discussing his book Race and Culture: A World View (1994) wrote:
"Tragically, both poorer countries and poorer groups within our society are often distracted from the task of building up their human capital by being told that their underlying problems are due to other people-s unjust treatment of them. All sorts of political messiahs make a career out of focussing on such distractions.
"Nothing is easier to find than injustices among human beings, whether in a racially diverse or a racially homogeneous society. But if injustice is going to be your crutch, then you will always find enough to keep you hobbling all your life."
Regrettably, many of our political leaders here at home would rather keep us hobbling than see us succeed on our own ability.
The average Bahamian (be they Black or White) has to hurdle regulatory barriers when attempting to open a business. Unwritten laws require us to visit our "helpful" politician or "take care" of the bureaucratic rent-takers, who are created by the same "helpful" politicians, in order to get our business off the ground.
Free the economy of the trivial licensing requirements and the bureaucratic maze. Build the road to economic freedom and there will be a continuing economic boom from Abaco to Inagua.