The Tribune

• Sir Franklyn: Rich/poor gap ‘growing immeasurably’

• High-end real estate sales beat rest of Caribbean

• And says FTX collapse ‘not going to destroy us’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The gap between rich and poor Bahamians “continues to widen immeasurably”, a prominent businessman warned yesterday, while blaming gambling for causing increased family and social instability.

Sir Franklyn Wilson, the Arawak Homes and Sunshine Holdings chairman, told Tribune Business that gambling’s growth was outpacing the economy’s expansion and helping to fuel rising inequalities in Bahamian society that were already deepened by the COVID-19 pandemic.

Warning that Bahamians “can’t keep doing fool and hoping somehow things are going to work out”, he said too many “look for the easy way out” instead of working hard, being prudent with their finances and supporting stable families.

Identifying these as qualities that households and individuals require if they are to survive the ongoing cost of living crisis, Sir Franklyn told this newspaper: “The gap between those doing reasonably well and those doing badly continues to widen immeasurably.”

The large gulf between the wealthy in Bahamian society, which includes some of the world’s richest persons among its residents, and lower income segments has been frequently cited among the root causes of social instability and crime. Many in the latter category believe opportunities are passing them by which they are ill-equipped to exploit, and that they are being left behind, with COVID-19 worsening such divisions.

Sir Franklyn, though, argued that this was being exacerbated by rampant, unchecked gambling that was leaving too many Bahamians with insufficient income to pay their bills. “I’m telling you, Neil, gambling in this country... Man, the pace of gambling in this country is having implications that few people are talking about.

“To me, that is a big, big, big problem. It’s causing family instability and causing serious, serious problems, particularly in the Family Islands. The pace of gambling in this country, from what I see and hear, I don’t care how fast the economy grows. If the economy grows at such a pace, you make more but gamble more with it.”

The Arawak Homes chief provided no data to support his assertions, and the web shop gaming industry will likely push back against them. However, others such as Roderick Simms, the former Chamber of Commerce Family Islands director, have also warned that gambling in the islands beyond New Providence has become an increasing problem that has left families unable to pay bills, and with no disposable income, because scarce funds are being sucked up by this habit.

Meanwhile, Sir Franklyn said increased worker productivity, combined with personal responsibility and greater savings, will be vital to offset the present pressures caused by post-COVID inflation that has sparked rising business and living costs.

“My view is that the biggest challenge for us here is that people have got to work hard and stop looking for the easy way out,” he pronounced. “Work harder and save. So much is in our control. Hard work, stable families. At the end of the day, people can’t keep doing fool and somehow think it’s going to work out.”

Acknowledging that soaring Bahamas Power & Light (BPL) bills, the threat of a US and wider global recession, inflationary pressures from still-high energy and shipping costs, and supply chain bottlenecks all remain dangers that could throw the Bahamian economy off its projected 4 percent GDP growth for 2023, Sir Franklyn added: “By acting prudently we have to find ways to offset that anyway we can.

“We don’t produce the stuff, costs are going up and it’s costing the shipping companies more to bring goods in. The only thing we can do is double down, work harder, be more productive and be prudent in our expenditure. What else can we do?”

Sir Franklyn backed Tribune Business’ analysis that The Bahamas presently has a two-speed economy, with the international sector - especially tourism and foreign real estate sales - driving the post-COVID revival and poised for further growth, but its domestic counterpart still struggling to cope with the increased cost and difficulty of doing business.

However, he argued that high-end property sales to wealthy expatriates is having “a greater multiplier effect” than traditional resort-based tourism due to the construction industry stimulus they provide. And the Arawak Homes chief revealed it was “mind boggling” to be told that Bahamian real estate sales during the COVID pandemic’s peak exceeded those for the rest of the Caribbean combined.

“That is very much the case,” Sir Franklyn agreed of the two-speed economy assessment. “The only thing I would add to it is that the interest in high-end Bahamian real estate is mind boggling.

“I was involved in a transaction that was pretty significant, one of the large international banks, and what was significant to them was when they looked at the Bahamian economy during the COVID period, there was more real estate activity and sales in The Bahamas, I was told, than the rest of the Caribbean combined.

“That was huge, and made such a difference. To say there were more real estate sales in that period in The Bahamas than the rest of the Caribbean combined, that has a lot of implications. Many of us who operate in that real estate space need to appreciate that and understand what it means. I don’t think we understand that fully.”

Sir Franklyn said the business model for real estate purchases by wealthy foreigners differs vastly from the traditional resort-based tourism that The Bahamas has relied upon, and impacts the country and wider economy in a much different way.

“When we look at the international side, we have to focus on this real estate piece and not just lump it in with this tourism piece,” he argued. “Someone comes and and buys, and spends a serious amount of money in a lot in a prestigious community.

“More often than not they build something, and are thus going to be impacting a different set of people than the hotel sector and its waitresses and maids; people in the construction field. I would think that will have a larger multiplier effect, especially for the suppliers who sell materials to the construction industry. It’s a different set of economics.”

Sir Franklyn, though, said that while FTX’s implosion has yet to play out there were signs that it will “not destroy” The Bahamas’ international reputation as some had feared. “The conversation about FTX, and situation with FTX, is still not settled,” he said of the failed crypto currency exchange.

“We have to see how it plays out but, to me, there’s some commentators who a few weeks ago weeks ago were forecasting doom and gloom but have now settled down a bit. It doesn’t appear that it’s going to destroy us as some people seemed to be implying a few weeks ago.

“One has got to be encouraged by the fact that some people who have considerable respect in the financial community have turned their forecasts away from doom and gloom. The US liquidators and our liquidators are talking, so hopefully that will not be the crisis some people had feared.”