In recent times, much has been made about the perceived need to educate the rest of the world about the beneficial and vital role that offshore financial centers – and, by extension, the Cayman Islands – play in the global economy.
This somewhat fashionable mantra (“If they only knew!”) has been repeated more often and more forcefully in the wake of negative attention prompted by data breaches (such as the “Panama Papers,” “Paradise Papers,” etc.) and ever-increasing scrutiny of offshore jurisdictions by entities such as the European Union.
But as today’s Page One story makes clear, if we are to look inward at our own territory, we will see an astonishingly similar lack of knowledge about the importance of the financial sector, which is the key piston in Cayman’s economic engine.
In his story, veteran business journalist Michael Klein shines a bright and steady spotlight upon Cayman’s financial services sector, illuminating the positive effects this “invisible” giant has delivered to the country for the past half-century.
Although, from time to time, the offshore industry generates high-profile headlines, on a daily basis the local players in Cayman’s financial services sector tend to maintain relatively low profiles – particularly compared to our country’s second economic pillar of tourism.
Put it this way: Tourists are easy to spot. They sport garish raiment, tend to look the wrong way before jaywalking across West Bay Road, and are sometimes tipsy in public during the day.
Lawyers and accountants, on the other hand, “blend in.” They wear sensible business attire, participate in morning and evening commutes, and cloister themselves in their offices until quitting time. (At which point, many of them, like the rest of us, join the tourists at Cayman’s beaches and bars.)
Let’s face it: In terms of drawing attention, bikinis beat briefcases every time.
The financial services sector is anything but a monolith. It has many diverse components, including (but not limited to) commercial, investment and private banking and trusts; insurance; securities brokerage; trading or analysis; financial planning and advisory services; investment management; insurance services; shipping registry; company registration; and legal and accounting services.
Maintaining those lines of business requires professionals, such as accountants and lawyers – but also legions of office staff, support personnel and managers, collectively known as Cayman’s “intellectual capital.” In other words, the financial services sector is home to the best, brightest, most well-educated and most accomplished individuals in the country.
All of those financial services employees (some 7,669 of them in Cayman; more than 18 percent of the labor pool), in turn, create demand for services from other businesses, such as restaurants, retail, groceries, cleaning services, telecommunications, etc., etc.
Despite perceptions from some populist corners, the financial services workforce is overwhelmingly Caymanian (62 percent, compared to 47 percent among the entire labor force).
In terms of generating economic activity, financial services punches far above its weight, accounting for 52 percent (read: most) of Cayman’s gross domestic product. Similarly, contributions from the financial services sector amount to 42 percent of government’s revenue – which, in turn, is transformed into government spending, on things such as civil servant salaries, healthcare, public education, social services, road construction, etc.
The net result, of course, is the “Cayman Miracle” our country has joyfully experienced for the past 50 years, transforming Cayman from a forgotten Caribbean backwater into a first-world economic powerhouse.
During that time, our country’s wealth (as measured by per-person GDP) has far outdistanced former regional peers such as Jamaica and the Turks and Caicos Islands, has surpassed our mother country the United Kingdom, and is now on par with the United States.
With continued good fortune, perseverance and high-quality education, we have no doubt that Cayman – energized and enabled by our financial services sector – will not only build on our half-century of success, but will surpass even those “miraculous” accomplishments.