IS IT PRUDENT TO SELL NAMCO?
By Alvette E Jeffers
The Antigua Observer newspaper of October 15th, 2022 reported that the United Progressive Party (UPP) intends to “dissolve” the National Asset Management Corporation (NAMCO). The UPP, it says, will then sell to Antiguans and Barbudans, “the shares owned by NAMCO.” This latest announcement is consistent with UPP’s past endorsement, in 2021, of the Antigua and Barbuda Labour Party (A&BLP) government’s decision to privatize some of the assets the nation state holds in the WIOC. The question, therefore, begs itself. Will it be prudent policy to sell NAMCO’s shares? There are indeed reasons to be dissatisfied with the operation of this entity. One of the major complaints is that its operation is shrouded in secrecy.
The coterie of government ministers who manage NAMCO, do not offer any account of their stewardship to the public. Therefore, not much is known about its investment portfolio or how and if it benefits the people. What is generally known is that the government has invested public funds in privately run institutions. But beyond that, everything else remains murky because of the lack of transparency and the absence of democratic accountability. But we do have an idea of the ideological premise on which NAMCO was constructed which is essential to determine, to an extent, its reason for being.
Prior to the establishment of NAMCO, Gaston Brown attempted to define something he introduced to Antiguans and Barbudans called “entrepreneurial socialism.” It seemed then and still appears to be a derivative of “market socialism.” Market socialism combines State planning thinking and free market ideas in the use and allocation of economic resources. Yugoslavia adapted this practice after the second world war.
The Chinese did the same in 1992. At the time that PM Gaston Brown adopted “entrepreneurial socialism,” Antigua and Barbuda was already an economy operating on some capitalist principles and a concept of the market existed. Economic “planning” in Antigua and Barbuda, remains restricted to the enactment of laws that govern local business relations which jibe with imperialist stipulations or to a degree, the granting of subsidies to investors as a means of influencing the rate of employment.
The State of Antigua and Barbuda is not, itself, engaged in commodity production as was the case in the 50s and 60s when the Antigua Trades and Labour Union (AT&LU) government committed itself to developing an industrial sector under the direction of the Industrial Development Board, established in 1952. As Paget Henry notes in his book, ‘Peripheral Capitalism,’ “manufacturing in Antigua came largely as a result of state initiative.” (p.109) There is now no direct State planning of commodity manufacturing occurring in Antigua or Barbuda as is the case in present day China and was the norm in Yugoslavia under Tito.
Gaston Brown’s “entrepreneurial socialism” is thus reduced to the investment of public funds in private corporations as a way to boost public wealth, and with it, the possibility to influence these companies’ investment strategies. The idea that government ownership of parts of the economy or a private/public cooperation constitutes socialism has long been debunked. To Gaston Brown, it imitates some aspect of “socialism.” For me, it is just plain state capitalism.
I am not ideologically committed to State capitalism nor do I think the counter to it is the privatization of, especially, a profitable public asset that was designed to create public wealth. From a nationalist point of view, and in the absence of local advocacy for the transformation of society and its political and economic relationships, NAMCO makes sense as a strategic instrument for wealth accumulation and a generator of funds for future capital projects.
It is saving something today so you can have something to spend tomorrow. When it occurs, those public investments in capital expansion and cultural life in general, should have an impact on the economy that should be positive and measurable. The underlying principle of NAMCO is credible as long as it, in actual fact, reproduces capital accumulation so essential for the renewing of the productive capacities of society and those other things that are its ancillary. States, all over, invest capital in bonds and other financial instruments. China owns an estimated $1.1 trillion in USA treasuries. In this regard, NAMCO is not a novel idea.
NAMCO’s investment should not be expected to pay for recurring expenditures. Revenues from taxes, license fees, customs duties etc. take care of those things. These revenue sources, if enhanced, may curb a natural inclination to depend on debt financing, which is now at the phenomenal amount of $3,334,175,407. But Gaston Brown and the A&BLP regularly undermine their own financial enhancement strategy when they deliberately lessen the intake of revenue by giving generous and unnecessary tax breaks to the business elites whose cupidity is unlimited.
At the same time, there seems to be no clear counter measure to mitigate the negative consequences such transfer of wealth can have on Antigua and Barbuda’s most vulnerable and exploited class.
What makes such transfer of wealth to investors appear so ill advised, is that there are no guarantees that the transfer will enhance economic growth, now or in the future. What the investors do with the additional capital, is beyond the government’s control or influence. A reversal of such errant policies and a NAMCO that is true to its declared objectives would help to increase the island’s wealth. Taxes and fees, of whatever type, have not been able to do that.
NAMCO must be assessed on the basis of its usefulness to economic investment and the collective wellbeing of the working class, whose existence is often affected by the ups and downs of the economy. When public wealth gets transferred to private individuals, there are no reasons to expect that these individuals will make a conscious decision to spur economic growth.
In fact, they would be just another group, added to those already in existence, who will feast on the profits that the working class creates, in the form of dividends. On the contrary, if and when the State uses such dividends to fix the roads, repair or reinvent the water system, invest in education, and perfect the operation of the hospital, more lives, individually and collectively, are positively impacted and those investments, will at the same time, increase levels of employment that will have a direct impact on the economy.
When we sacrifice the good of the many for that of the few, we are deliberately destroying what remains of a communal idea and in its place, we are promoting naked individualism, an egocentrism that has no empathy with working class aspirations, but sees itself in relation to foreign capital, its taste, its market driven ideology and its end product, self-aggrandizement. The attempt to destroy both the idea and practice of communal land ownership in Barbuda, by the Brown administration, has the same objective.
Finally. No one has asserted that NAMCO is not gaining returns on its investment. It is not known if it is a bane to the society. They simply do not know. Apparently, that is not germane. Its financial status will not determine its existence. MAMCO’s fate has already been predetermined. The bell has begun to toll. A UPP government will dissolve NAMCO because the party, I presume, believes, as a matter of ideology, that the State should not hold such valuable shares. By the way, if they are not valuable, no one will purchase them. I sincerely agree with those who say that NAMCO exist in secrecy. I concur that a public enterprise should be under the direct gaze of the public. I even go further to say, Cabinet should not be managing NAMCO.
All Cabinet is required to do is to establish the legal norms under which it operates and then turn it over to the appropriate authority to administer in the interest of the community. Correspondingly, similar indictments are made against the general way is which politics is conducted but no one calls for the end of parliamentary democracy or the overthrow of the system. The comrades who once advocated for the revolutionary transformation of Antigua and Barbuda in the 70s and 80s, are now the pretorian guards of either of the conventional parties. So why the call to end NAMCO?
My feelings are implicit in my reasoning. NAMCO as a concept is important. The way it functions, however, should be reevaluated and reinvigorated to achieve the same strategic objectives it was implemented to achieve. All the criticism against NAMCO should be noted and corrected in order to restore public confidence in its mission.
Antigua is in dire straits, financially. NAMCO cannot cure the problems that economic dependency and the principal reliance on foreign capital to stimulate growth produce. Even if those things are tackled, we will still have to find ways to save something today, so we can have something to spend tomorrow. That is common sense economics. So, the obvious? It is imprudent to suggest the dissolution of NAMCO.
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#HFWL will say anything to try and get into power because there is an audience for it. The vast majority of the electorate will keep him and the other #UPPNEARGA at bay!
@ Just Saying
Yes, he will also say the WATER PROBLEM WILL BE SOLVED IN 14 DAYS IN 2014 (note the year 2014) AND HE WILL ALSO PROMISE 500 HOUSES IN 500 DAYS (as he did in 2014)……..YES HAROLD PROMISED ALL THAT IN 2014 JUST TO GET ELECTED.
SMH, some people really will say anything to get elected. I hope you get the irony!
@Poverty..tap find excuse fuh no wash you kin.
@ Just Saying
I CANNOT WASH MY SKIN WITHOUT WATER
LOL LOL LOL LOL LOL LOL
MAYBE YOU AND ALL THE MINISTERS THAT SELL WATER TO THE PUBLIC IN YOUR TRUCKS AND RAKING IN ALL THE MONIES THROUGH THAT ENRICHMENT SCHEME CAN SPARE ME SOME.
I WUD WELCOME SOME, IF YOU GUYS HAVE ANY LOL
@Just Saying… did you actually read the article or are you too stupid to comprehend? Did you see the parts of the article where the writer posits that the way NAMCO is managed without accountability is not sustainable. DO YOU UNDERSTAND THAT. Basically as it is governed now, it is just an entity susceptible to corruption. It has to be changed; if it cannot be changed then dissolve it.
I wonder where you went to school. Please let me know so that I don’t send my children there.
Chups. You ALP shills just hate transparency.
After the ABLP Government has refused to reveal the internal dealings and financial status of NAMCO by refusing to table Audited Reports, the UPP has decided if will be audited, findings revealed, then assets sold off to empower the people, as the UPP Government pursues a private-sector lead development strategy.
Had the failed ABLP did what it was supposed to, we would not be here today. NAMCO is a black hole, filled with tax payer money and never ending dredging expenses, benefitting who?
Further:
NAMCO is a basic holding company that at best should not employ more than one or two clerks, so where would the job losses Gaston claims take place?
The primary companies that form part of NAMCO’s investment portfolio (present and future) are WIOC, State Insurance, Caribbean Union Bank and APUA PCS, ALL of which have been in operation years before NAMCO was conceived, and will continue to operate long after NAMCO is wound up.
The truth is NAMCO IS NOT necessary, and under the ABLP, it is used to create another layer of bureaucracy that makes it more difficult for anyone to trace what is happening to state revenue.
Prior to NAMCO all surplus after tax income generated by these companies were paid into the consolidated fund. These funds were readily available to finance the kind of social programmes the PM alluded to.
Under the new construct, some of that income is used to pay thousands of dollars of fees to the DIRECTORS on a monthly basis. No such expense was incurred previously.
More importantly, the various companies previously produced, and submitted to the relevant Ministers, annual financial statements, and in that sense the process was transparent. Now, the profits are paid over to NAMCO, rather than into the Consolidated Fund, and there is no accounting for what has transpired with those funds.
Rather than enhancing transparency NAMCO is contributing to the creation of murky/opaque processes that could potentially mask the ripping off of Government revenues. All the more reason it should be dissolved!
“No one has asserted that NAMCO is not gaining returns on its investment. It is not known if it is a bane to the society. They simply do not know.”
We don’t know what is going on except that people are getting rich. So clearly, NAMCO needs to be audited. It’s a black hole and lacks transparency.
Thank you for a healthy serving of alphabet soup. This article is all over the place and ends with contradiction. I hope the author was paid per word and walked away happy. The end!
Jeffers, Roy Jackson, NOMAD and FITZROY.
WHERE DID YOU GET YOUR ECONOMIC DEGREE?
I GOT MINE FROM THE LONDON SCHOOL OF ECONOMICS.
SO LETS HAVE A DEBATE, though what you are promulgating is a PARADOX!!
A quick fix would be to remove the Cabinet ministers, replace them with non political appointees then issue audited Namco statements…..
Appreciate the comments. Debate can help to bring greater clarity. One must not assume that there is nothing new to learn. But important also is regardless to your place in life, you reserve the right to give expression to your innermost feelings, especially when they are honest.
There are problems with the way Namco is being run. No audited financial statements for years. Lack of transparency. And all of those politicians on the board. I would not necessarily agree that Namco shares should be sold. Namco should have no politicians on its board. We know how ratta love cheese. If Namco survives, it should managed as a corporation accountable to the public with independent management and directors and certified annual audited financial statements. It is alleged that Maria Browne is on WiOC board. These Politicians try to control everything and leave nothing for Antiguans.
When UPP comes into office they will definitely have to audit Namco. I hope we don’t have a repeat of when some labour ministers were being investigated, they were running all over the place with boxes of documents.
Gaston, why did you show financial statements for Namco for 2018 stamped “Draft” on your radio show on Saturday? Where are the certified audited financial statements. You really think all Antiguans stupid?
“I even go further to say, Cabinet should not be managing NAMCO.
All Cabinet is required to do is to establish the legal norms under which it operates and then turn it over to the appropriate authority to administer in the interest of the community. ”
We always seem to want to have it both ways. When things go wrong, we blame the politicians. When things go right, we praise the public servants or those managing the company. We need to make up our minds what it is we want. When things would go bad with NAMCO run independently by a board not reporting to the CABINET, would we hold the Directors accountable and not require the Shareholder Government to find monies to bail them out? We see how this happened with LIAT and Jolly Beach. Cabinet doesn’t run WIOC. NAMCO doesn’t run WIOC either. They are shareholders and look after the interest of the government share in the company. In the unlikelihood that WIOC goes bankrupt should the Government be called upon to bail out WIOC? If in the final analysis you are asked to do so, should you therefore not have a say in the way the company is run? ABIB comes to mind. We are not only asked to pay the bill, but none of the Directors have ever been held accountable for the loss of the company. $300million of taxpayers’ money gone. This could have paid many public Servants Salaries, Repair Roads, Schools, Hospitals. The Directors still live large in their big mansions on the hills. With their Yachts and Condos in the USA and Canada. Writer you should not be narrow minded when talking about what cabinet should and should not do. Whom does the BOX stop at? Who is held ACCOUNTABLE in the end. Who are the elected members that are given the powers to run the affairs of the state? You cannot have it both ways. I would not want to be held accountable for something or someone I had no control over. Just look at the structure of NAMCO and see if the day-to-day operation is managed by the Cabinet.
If NAMCO primarily functions as an investment company, it’s employees make a decision
to invest based on the accounts of the company and its potential for growth. At a certain time, NAMCO receives dividends. Is my understanding correct? Is there something I am missing? The only question left to ask is who decides the use of the dividends NAMCO receives? Who should? NAMCO ‘s succes is based on two things. The companies it choses to invest in and the long term profitability of the companies it invests. How failure is measured for NAMCO has to do with the use to which it puts its accumulated wealth. The chances of it failing or sustaining liabilities if it’s investments do not accrue a return must concern the public, but that can be limited if it makes informed decisions about where it invest. All of these things we should know.
Clarification. NAMCO makes investment decisions on behalf of the citizens of A&B. if it makes a bad call, then it owes citizens an explanation. Can there be consequences for that and what would that look like, especially if there are mitigating circumstances? All these doubts and questions can be answered if those who make the decisions are compelled to face scrutiny and their inner operations are made public. NANCO belongs to us.
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