When one considers the recent crime wave and other national aliments afflicting our country, it is becoming patently clear that the wheels are coming off.
As it relates to national issues, the government – who I shall collectively call the emperor – is clearly not wearing any clothes. We have glaring problems with crime, a seemingly nationwide mortgage meltdown and energy/electricity costs which are horrendously expensive for the average Bahamian and energy reform has yet to materialise. What’s more, there has been labour unrest at unprecedented levels recently and it has featured a level of vitriol that few people can recall. Meanwhile, National Health Insurance (NHI) continues to be elusive and unexplained.
As one looks around, when one asks Bahamians who believed in what was being sold by politicians in the 2012 general election cycle what they feel about such promises today, many respond and more would certainly say that going into Christmas 2014 they have received a lump of coal in their stockings.
The mortgage meltdown – even more evidenced with the release of FINCO’s recent report – is nothing short of saddening and mind boggling, particularly when one considers the outrageous and outlandish promises of mortgage relief made to the Bahamian public in 2012. FINCO’s $22m provision warning is clearly a sign that the mortgage crisis has reached earth-shattering levels. That credit facility noted that they had non-performing loans on the books that amounted to $115m at the end of July 2014, having increased as a percentage of its total loan book from 11.8 per cent to 12.5 per cent.
What’s more, the Central Bank of the Bahamas recently revealed that nearly one out of every four mortgage dollars lent by Bahamian commercial banks was past due at the end of October 2014. The Central Bank’s latest credit quality indicator report shows the depth of the debt delinquency plaguing Bahamian society and the economy, with more than $700m worth of mortgage credit past due. The report revealed that this equated to 24.04 per cent – almost one-quarter – of the bank industry’s $2.885 billion worth of outstanding mortgage credit being in default.
Of the past due mortgages, some $519.82m, or 18.01 per cent of the total, are non-performing, meaning they are over 90 days past due and banks have stopped accruing interest on them. A further $184.15m, or 6.38 per cent of the total, is between 31 and 90 days past due. There have also been high consumer and commercial loan delinquencies, leaving the banks having difficulties in finding new customers to qualify for the more than $1 billion in surplus system liquidity which they are keen to lend out.
This is nothing short of stunning. According to Franklyn Wilson, there is purportedly an estimated 4,000 homes over 90 days past due on their repayments.
Earlier this year, CIBC FirstCaribbean International Bank (Bahamas) and Bank of the Bahamas declared net losses of $174m and $69m respectively.
The governing party’s much-ballyhooed mortgage relief plan, touted during the last general election cycle, has fallen flat. The earlier incarnation of this plan was billed as one that would assist 1,000 delinquent mortgage borrowers but it failed and less than ten people have been able to qualify and benefit for this plan, particularly since many Bahamians are over leveraged due to numerous salary deduction streams, etc. The $10m that was acknowledged by the Junior Minister of Finance as having been set aside to assist delinquent mortgage holders has helped far less than 10 per cent of such people.
When nearly 25 per cent of mortgages are at risk or non-performing, we as a people must re-evaluate our spending and borrowing habits and the government should also implement stricter laws to govern bank lending. Some banks are simply rapacious and avaricious. We have too much of a lax credit system that allows people to get themselves totally over their heads in a culture of spend-spend-spend, with no knowledge of how to save.
We have created the perfect storm. No amount of rhetoric can wash away much of the issues we are facing today. Frankly, the solution would require for us to examine the root cause of all of the issues we’re facing, modifying our basic approach to life in the Bahamas and seeking to right-size expectations and our expenditure and to implement a credit agency that could hopefully limit predatory lending and, most importantly – on the revenue side – increase the number of reasonably paying jobs that Bahamians could seek/hold. This simply means that there has to be a fundamental re-think of where we are today and how we proceed. Clearly, business as usual has failed.
Beyond the need for governmental change every five years – or before – there is also a need for us to change our collective mind-set. There has to be a willingness to embrace seismic change.
Transitioning a bit, I have noticed a recent, most troubling upsurge in violent crime. I realise that some of it is seasonal (this being the Yuletide season), particularly since the opportunity for easy money increases around this time of year when people would be out shopping; as criminals themselves seemingly have a greater need for money; and the season seemingly tends to exacerbate psychological and emotional stress, with some of the criminally minded choosing to play the role of the Grinch for those whom they believe may have it better than them. Unfortunately, during this time we see a spike in violent crime towards one’s self and to others. It is distressing and is the antithesis of what one would expect during the festive season. As I reflect on some of the criminal acts reported in recent weeks, it is appalling to see Man’s inhumanity to their fellow Man.
Before I conclude, I note that the unions – particularly the Customs and Immigration Union – made a big deal about salaries and promises this week. Frankly, this union and several others allowed themselves to be used as political pawns and sought to do so for political gain. No union should feel hurt or upset if they place themselves in such a position and are callously discarded when they are no longer of use to a governing party. It speaks to a lack of principle and demonstrates that some of entities will climb into bed with whoever they perceive will give them the most benefits. We know that they were angered by the previous administration when they were put on a shift scheme as opposed to being able to collect overtime as they had become accustomed to over the years.
Unions ought to know that a promise is a comfort to a fool. I’m glad to hear that the Customs and Immigration Union have now concluded their negotiations and arrived at a new agreement with government; however this is a lesson for future reference. One should never seek to make a Faustian bargain and expect to get very far, no wonder the Customs and Immigration Union now wishes to feign offence.
There’s much to be done to set out country on the right track. Sadly, if the average Bahamian is asked about their degree of optimism for the future, I believe than less than 50 per cent would answer affirmatively.
Adrian Gibson
