In face of COVID-19 crisis, we are ‘too big to fail’

Many in the Caribbean will go back to their roots, producing home grown food to supplement imports.

By guest columnist Thomas Christopher Famous

Thomas Christopher Famous

What’s next? Where do we go from here? Two questions, on the mind, of just about every human being, presently on earth.

If one looks at the thoughts of the leading financial minds, things are not looking too bright for the world economy. By extension, the economies of the Atlantic/Caribbean, which are overly dependent on a healthy global economy, are facing strong headwinds.

Grim realities

Here are some of the global outlooks:

“We anticipate the worst economic fallout since the Great Depression,” IMF Managing Director Kristalina Georgieva quoted on Loop Cayman.

“Caribbean nations are facing their biggest shock in at least a century as tourism slumps amid the coronavirus pandemic, according to Marla Dukharan, an independent Barbados-based economist. Even under the most optimistic scenario, the region will lose about 50% of its tourist revenue this year.” – Bloomberg.

“Business and tourism leaders are preparing for the possibility that Cayman could be closed to visitors until next year.” – Cayman Compass.

The list of bad news, both internationally and regionally goes on and on. However, today we will focus on some solution or option based dialogue.

With the slump in tourism, many, if not all workers in those sectors, will be faced with 3 choices:

Option A: Depend on government help, which will run out

Option B: Learn a new skill set

Option C: Starve

Logic will dictate that option B, is the most likely course for the majority.

So the question now becomes what skill set can they learn? Here are some  professions that are always in need of workers:

  • Medical staff
  • Auto Mechanics
  • Chefs / Bakers
  • Construction related occupations

It is now for them to seek to retool themselves in short order.

Building blocks

For those who run  AirBnb facilities, that sector is not likely to see any volume of demand anytime soon. So, many will look to convert their properties back into long term rental units.

The knock on effect of this, will see the lowering of rental rates, specifically for 1-2 bedroom units.

The upside is that all rental units will, eventually, need some form of upgrade and maintenance. This then opens the door, for those in the construction industry, to have some form of steady work.

Business, both large and small, will have to adapt in order to survive.

Restaurants, due to social distancing rules, will see less and less “sit in customers” and become more and more dependent on take out and delivery services in order to see revenue.

Salons and Barbershops, if allowed to reopen, will be required to use PPE, during what used to be routine procedures such as; waxing, shaves, and hair treatments.

Grocery stores will have to build protective plexiglass booths for their cashiers, among other measures including offering more and more home delivery services.

Individual responsibility

Individuals will, out of necessity, become more frugal in their spending and more and more innovative in their long term planning.

With many being unemployed or underemployed, there will be less and disposable income for luxury items such as; cell phones, clothes and eating out on a daily basis.

Many will begin to consistently cook at home, while others will begin to do more and more home repairs on their own. Some will take up more home gardening, in order to lower their costs and to ensure fresh healthy food options.

Repatriation of workers

In economies such as; Bermuda, Cayman Islands and the Virgin Islands, which are heavily dependent on guest workers, there will undoubtedly be some financial pain, as many of those guest workers, now unemployed, will be returning to their home countries.

This will result in less economic activity in sectors such as real estate, grocery stores and vehicle usage. The knock on effect, will put negative downward pressure on landlords looking to pay their mortgages.

Too Big to fail

Banks will be, or should be, forced to lower their mortgage rates in order to avoid mass foreclosures.

In the aftermath of the 2008 global financial crash many countries bailed out the banks from a disaster entirely of their own making. It is now time for these financial institutions to now come to the aid of the masses by lowering their rates on loans and mortgages.

Other financial institutions should be offering grants, not loans, to small and medium sized businesses.

Regional governments are working in solidarity, to ensure that we will mitigate the loss of life and simultaneously, through a variety of actions, including food security, in order to rebuild our social and economic lives.

In this time, we are united and in unity, we will not fail.

  • Thomas Christopher Famous is a government Member of Parliament in Bermuda. He is the Bermuda government representative for Caribbean Relations and Caricom and writes weekly columns for various Caribbean news sites.  Famous can be reached via WhatsApp at (441)-599-0901 or via email at [email protected]

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2 COMMENTS

  1. Grocery stores don’t need to build plexiglas booths. It took 1-3 days to instal plexiglass shields at cash registers and customer service desks in all Publix stores in Florida. It took may be 30 minutes per a register. It was done 3 weeks ago and not only in Publix.

  2. Cayman could fail. Tourism/Services account for nearly 40% of GDP. Cayman’s GDP is approx. $3.5B in 2019 which is down approx $2B since a GDP high of $5B is 2014. The Service Industry accounts for approx. 71% of all jobs on island, inclusive of financial, tourism and others. Without tourism, Cayman will cease to be, Dart or others, have no interest to continue developing High End properties, if no one can come to them. Island Construction is mostly driven by Real Estate which is either stayed in via resorts or purchased by foreigners. COVID has taught us all to work from home, causing commercial properties to lose their shine. The entire World needs to resume a pseudo type Economy driven by a certain level of normality. In fact, all Countries could fail if we fail to expedite mechanisms which we can allow humanity to drive consumption. In my past 7 years visiting Cayman, it’s growth has certainly thrived on BIG hotels, and other construction projects like Camana Bay. The infrastructure has been built to generate money and accept people, more of both, then the 66k, that reside in Cayman can support.