EDITORIAL: Risk management and diversification

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Former prime minister and living national hero Sir Lester Bird is said to be urging the government and the people of Antigua and Barbuda to go all in on tourism. While making his presentation during the debate on the $1.22 billion budget, Sir Lester dismissed the calls for the economy to move away from tourism. According to his assessment, tourism is an invaluable contributor to the economy, and there is no other sector that can match it.
In support of his argument, Sir Lester declared, “The economic survival and prosperity of Antigua and Barbuda is inextricably intertwined with the use of the tourism sector as the dominant engine of growth. Attaining the heights of an economic powerhouse cannot be achieved if the tourism sector is not a powerhouse in and of itself.”
We get the point, however we do not necessarily agree with it. Sir Lester is correct when he says that Antigua and Barbuda’s economy is “inextricably intertwined” with the tourism sector but that is because we have made it so. We took a conscious decision to utilize the tourism sector as our economic foundation (many years ago) and it has, for the most part, worked. The reasons for the initial and subsequent decisions surrounding tourism as our main driver are well known and in hindsight, while some decisions can be criticized, overall, few can say that we have not benefited greatly.  
Tourism allows us to leverage and exploit some of the few natural resources that we have: sun, sea, sand, weather, etc.; basically, a lot of the things that God has given us. We have for decades ‘rented’ our bit of paradise to people from around the world, and we have done reasonably well out of the arrangement.  So, we are not going to get into a discussion of the past. Times are changing though!
As we look to the future, placing all of our eggs in the tourism basket seems foolish and to be honest, we are not entirely sure that is what Sir Lester is advocating. Our interpretation of his remarks is that we should be doing more in the sector and that any future that envisages an economic powerhouse must include growth in the sector so that it too is a powerhouse. If our interpretation is correct, then we will not be arguing that point.
That said, focusing all of our energies on tourism and sticking to a mindset that it must be our economic foundation, would be akin to putting on blinders. Developing countries, such as ours, need to diversify our economic base. That is not an option. Relying solely upon a tourism track and putting all our eggs in one basket is courting disaster.
And speaking of disaster, natural disasters are just one of the things that are completely outside of our control when we consider using tourism as our economic foundation. In fact, the Achilles heel of tourism as a base is that so much is outside of our control. For example, we rely on our key partners to maintain robust economies so that people have that extra bit of money to travel. If their economies suffer for any reason, we will feel the effects and deal with the consequences. Getting back to the impacts of weather, we need only look at Barbuda or Dominica to get an inclination of what would happen to our tourism product if we were flattened by a hurricane. We would see tourism dry up, we would see a mass exodus from the island, and we would experience the devastating after-effects of the storm, long after it has passed. We have not even touched on other issues like public health and crime.
Just those basic considerations amplify the need for a diversified economy. Like any good portfolio, we need to spread the risk. The portfolio should be sufficiently diverse that whatever affects one industry would have limited effect on another. There will certainly be overlap but that is the function of risk management.
That brings us to our greatest natural resource – our human resources. When we look to diversify, we need to leverage the human capital that we have on island. We continue to sound like a broken record, but we believe that the next ‘big thing’ can certainly come from a bright Antiguan or Barbudan mind.  
When all else is gone, the people will still be here to carry on the struggle. If they are equipped with globally saleable skills then we shall weather any type of storm. Sure, some will leave but many will stay, and we need to make sure that the economy is based upon them. That is why education is the key to any future economic diversification. We have talked ad nauseum on this subject and will again, but for now, the point is made.
While it may all sound simplistic, nothing discussed here is. Tourism is what we know and the old argument ‘don’t fix what is not broken’ is easy to apply. At the same time, tourism is very easy to break, so we should always have a back-up plan. That back-up is a diversified economic base that should be based on the minds and intelligence of our people.
We invite you to visit www.antiguaobserver.com and give us your feedback on our opinions.

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