Grenada’s Banking and Financial Services Sector: Changing the Game in Grenville

May 8,2014 / By kimron / No Comment

The recent announcement of RBTT bank to close its branch in Grenville St Andrew Grenada and consolidate some other branches has taken the nation by surprise; this will definitely change the game in Grenville.

First of all it is very important to note that money is created by banks through debt. Anytime a bank grant a loan, it is creating money, and not necessarily paper or coins that one can feel. It is creating electronic money that persons can see right in front of them when checking their balances in an ATM Machine or on a bank statement. This type of money makes up over 90% of the money in the economy.

With the closure of the Grenville Branch of RBTT, the bank has ceased to create new money from its Grenville operation. This doesn’t mean that there will no longer be money being created in Grenville because there are a number of other Banks and Credit Unions in the game still. However this will create a void, a void that will have to be filled by the other banks and credit unions.

Important to note is that local branches is and will remain a crucial part of a nation’s financial infrastructure, even as more customers manage their accounts via the Internet and mobile phones. Many banks close their branches mainly to cut cost and increase profits for shareholders. There is however a social cost to this, when banks close their branches in low income areas such as Grenville and Surrounding areas, the needs of the people do not disappear. I do hope that other institutions do not follow because this can leave one to fall prey to financial predators such as pay day loans institutions and others who can exploit persons with very high rate of interest.

With the closure of the Grenville Branch of RBTT, some of the new accounts that were opened will be lost to the remaining Credit Unions and Banks, and some of the potential accounts that would have been opened will now be opened in other banks. I expect many clients to transfer their loans and savings to some of the closer institution, it will be an inconvenience and a hassle for someone to leave Sauteurs to go all the way to Grand Anse to get information about their account as oppose to going to Grenville.

Another angle to this is the amount of Jobs that will be lost in an already ailing economy by the bank closing its doors. In many cases some persons may be the sole breadwinner in a family and with no job, an entire family is affected. Persons are now without an income yet the bills will have to be paid, their kids need to attend school, and taxes are to be paid, especially VAT since it is a consumption tax and individuals consume whether employed or not.

Branch closure however is not something new to Grenada. Republic bank closed its branch in Petite Martinique some time aback, putting a strain on the people of Petite Martinique. I believe that the remaining institutions in Grenville however can and will be able to continue providing banking services to the people of Grenville. And I encourage persons to be careful with the institutions they are choosing to conduct their financial transaction; I am a promoter of Local banks and Local Credit Unions. The profit from these institutions remains locally in Grenada to help build the economy especially with the Credit Unions.

Financial Management IMPORTANT

The Beauty of “Keeping up with the Jones” in Grenada

Mar 30,2014 / By kimron / No Comment

I know the Jones. I see them on a daily basis. They live in the richer side of town in a huge house. They own a luxurious car and wear really nice clothes. Their children go to the best private schools, and both the husband and wife have really good jobs that earn them good salaries and life seems perfect. Is it?

The Joneses also have a huge housing mortgage, a motor vehicle loan, and they are also paying an educational loan. On a monthly basis, between 40 and 50% of their salaries are dedicated toward servicing their debt. They also pay cable, electricity, water, internet and phone, and private school bills for their children. Many nights, the Joneses cannot sleep because the weight of their mortgage is weighing on their minds. To further compound their financial burdens, they have personal problems between themselves because their lifestyle slowly deteriorates as the months goes by.

You on the other hand, your house is not very huge, but it is comfortable. Your car is not fancy, but it is in good condition and energy efficient. You do not live on the rich side of town, but your neighbourhood is relatively peaceful except for the occasional fights that occur every now and then. Your children go to the public schools, and they are doing quite well. Fortunately, you have a good job, though your salary is not very high. You are able to service your mortgage and other debt commitments and still have sufficient surplus income to live comfortably. Your lifestyle is not elaborate but comfortable. You can sleep peacefully without having to worry about your loans, and you and your spouse come together to work out any financial distress your family may be facing. So the question is, should you be trying to keep up with the Joneses or should the Joneses be trying to keep up with you?

Many times persons compromise the financial security of their families in order to try and live a lifestyle that they are not ready for. Because their neighbours have acquired something, in their mind, they do not want to be left behind, so they do the same. On many occasions, persons may be living a particular lifestyle that has become terribly difficult to maintain because of circumstances outside of their control. However, instead of cutting back on some of the things they do, they try to maintain this way of life in fear of what others may say and/or think.

Consequently, it is high time that persons attempt to attain greater financial security by taking charge of their finances, focusing on their personal situations, and stop looking to see what their neighbours and friends are doing.

As of January 2014, persons in Grenada earning between 36,000.00 and 60,000.00 XCD annually is required to pay 15% income tax as revealed by the Prime Minister in his address to the nation on Wednesday 30^thOctober 2013. What does this mean for individuals? It means that our debt obligations and utility bills will remain the same. Food prices will remain constant and occasionally increase, gas prices will be relatively constant, and school fees will continue to rise yearly. HOWEVER, our SURPLUS INCOME will now be reduced.

So one might ask, what should we do? We now need more than ever to take full charge of our personal financial situation. We need to stop buying things that we do not need, even if they are on sale. We need to stop buying things that we cannot afford and paying with future income. Every home should implement a budget because it will be critical that we keep track of our expenditure and income. Our expenditure should never under any circumstance exceed our income, and if it does, we need to cut back on our spending. On many occasions, we tend to confuse wants with needs in our budget. For instance, having all the cable channels is not a need. Also, although the internet is great to have, it too is a want.

Here are a few more useful tips that can be used during this belt tightening period. Firstly, we should pay off our debt with the highest interest rates first, and then focus on the rest. Secondly, we can lessen on the amount of times we eat out and carry our lunches to work. Thirdly, pay bills that will require high reconnection fees and arrears if they are not paid on time. Fourthly, avoid making your lifestyle more elaborate when you get a 3% increase in salary; save it or invest for higher returns. Additionally, we need to avoid excessive use of credit cards. Also, pay yourself first; no matter your income, you need to save a percentage from it. 10% is normally the recommended amount. Furthermore, negotiate everything. You would be surprised by the number of people who will be willing to lower their prices for you when you are shopping. Finally, to maintain healthy financial standards, STOP TRYING TO KEEP UP WITH THE JONESES.

Entrepreneurship IMPORTANT

5 Business ideas Grenadians can start with very little start-up money

Mar 23,2014 / By kimron / No Comment

I have been thinking and this is what i came up with, these are five businesses that can start with very little money

1- Consultant– Do you have expertise in something that you can use to help others. Then you could consider becoming a consultant. However, you will definitely need to have expertise in something. This doesn’t mean having a degree. If you have been working in the marketing field for a number of years, then you can become a marketing consultant, helping businesses develop and launch their marketing campaigns.

2- Bookkeeper– many small businesses in Grenada do not keep proper records, especially financial records. Many of these small businesses later go on to financial institutions to seek loans and other financial services. The financial institutions will then ask for their records which most of them normally don’t have. There is a great opportunity for someone involve in accounting, to approach these small businesses and offer to keep their books for them, and convert this into a legitimate business.

3- Day Care– If you love children and love taking care of children as you would take care of your own, then this is a great opportunity for you. Lately many parents are becoming busier and need somewhere to put their babies and younger kids. Becoming a baby sitter or having a day care can be an opportunity to be exploited.

4- Gift Basket Service– I believe this is a great opportunity. I am always looking for a gift for family, friends and loved ones and it always seems so difficult to find it. If someone can develop a business putting together gift baskets, then this will make a lot of person’s lives much easier.

5- Social Media Consultant– Social Media has no doubt presented businesses with a unique marketing opportunity. However some of the generation x business owners may not be as savvy as generation Y. So if social media comes naturally to you, you may just have an opportunity to become a social media consultant. If you can help existing businesses integrate social media into their other marketing campaigns, you should have no trouble making a go of it.

IMPORTANT

Grenada and IMF reaches 21.9 Million Dollars deal- My Opinion

Mar 17,2014 / By kimron / 2 Comments

Some of you have been asking for my opinion on the IMF 21.9 Million dollar deal with the Government of Grenada.

First of all the deal is subject to the approval of the IMF board. There is no surety whether the deal will come through. However the truth is I can’t give any opinion on the deal because I don’t the details of the agreement. I know the programme is aimed at restoring fiscal and debt sustainability, boosting long-term growth through structural reforms, and safeguarding the financial sector.

That’s some good stuff, but I don’t know how these things will be done. I don’t know specifically what programmes are in place. I believe that as a people we need to get the facts first before we support or criticize. Since I don’t have any information on the arrangement, haven’t seen the document, I am unable to have an opinion of it. I can’t know whether it’s good, bad or ugly.

Entrepreneurship IMPORTANT

CEBO- A Move in the Right Direction for Grenada

Mar 16,2014 / By kimron / 8 Comments

“The CARICOM Secretariat in collaboration with the Ministry of Youth, Sports, and Religious Affairs, has organized a partnership for the programme which is receiving support of the U.S. Agency for International Development (USAID) and the Government of Spain. The programme seeks to give technical support to Member States to strengthen youth entrepreneurship by introducing the CEBO Programme” (Now Grenada, 2014).

CEBO- Creativity for Employment and Business Opportunities

This is something I could definitely support. For too long I have been advocating for entrepreneurship as an avenue for Employment and Wealth Creation. The participants of this meeting which included,

1. Non-government organisations with an interest in youth entrepreneurship including National Youth Business Trusts

2. Small and medium enterprise development organisations

3. Small business associations

4. Chambers of Commerce

5. Banks and other financial institutions

are the players needed to help develop an entrepreneurial policy in Grenada thus leading to a culture of entrepreneurship. Far too long we have relied on traditional measures to help generate employment only to find that these measures are temporary fixes to what seems like permanent flaws.

There have been many programmes in the past that included training of young people to try to get them involved in business and entrepreneurship. However, it is high time we realize that teaching young people skills for starting and running a business is not enough to get them interested in entrepreneurship. There must be a burning desire to do something, to make a difference. They need to be resilient, focused, goal oriented, determined, in addition must have good interpersonal and persuasive skills, and be willing to think outside the box, or maybe think inside a new box if needs be.

Entrepreneurship is not for everybody, and like Jeff Bezos said, “One of the huge mistakes people make is that they try to force an interest on themselves. You don’t choose your passions; your passions choose you” (Bezos, 2014).

I believe that this can be the flagship programme to help create that culture of entrepreneurship in Grenada and the rest of the Caribbean region, but please don’t only focus on creating business plans and developing business ideas and learning about ROI and other skills for starting and operating a business. One must also focus on passion and determination and some of the other soft skills that are important for entrepreneurial success, some of these can’t really be taught, however, with the right guidance once it’s within an individual it will come out…Hats off for this programme and Cheers to its success.