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Leadership and management
To achieve success a leader must build a team and weld individual efforts into a common purpose. It is therefore critical that the leader chooses people who bring different strengths that can contribute to the common purpose. Further, these strengths must be combined, the gaps closed and the friction points oiled to remove unnecessary duplication of effort or personality clashes. In addition to selecting a team, a leader must know the key tasks which must be undertaken and a clear statement of objectives that must be attained, and a sequenced action plan to get there.
T&T is at a difficult point in its history and the challenges many and varied. Revitalizing the economy on a long-term growth means deepening our industrial capacity in a way that meets the demands of the 21st Century. The economy revolves around the performance of the energy sector, which makes the country vulnerable to external shocks. The decline in energy prices, first in 2008 and then precipitously in 2014, has clearly demonstrated that the boom and bust cycle is not sustainable and the country wants a more ordered, sustainable growth path.
Critics of the Manning regime argued that sustainable development needed more than the construction of high-density buildings and make work social programmes. Critics of the United National Congress (UNC) term in office (2010-15) pointed to the dramatic increase in expenditure on social programmes with no obvious long-term benefits; people were not being taught how to fish.
The budget deficit is partly a reflection of the deep decline in energy prices and the sharp fall in gas production. Gas production is improving and the country will return to the optimum output of 4 mmcf of gas a day by 2019. This will meet the demands of installed LNG and petrochemical plant capacity and reduce, but not eliminate, the deficit. The issue to be confronted is that the revenue generated will not facilitate the expenditure profile to which the country had become accustomed.
The model has been that the energy dividend is shared in a number of ways:
1. Electricity is highly subsidised at USD 5 cents per kilowatt hour, whilst the comparable price in neighbouring Caricom countries is over USD 25 cents per kilowatt hour.
2. The price of petrol at the pump is once again subsidised; since Petrotrin imports oil to refine, when oil prices rise so too will the cost of every litre. In the mid-year review, the Finance Minister indicated that the subsidy for 2018 would approximate TT$1 billion.
3. WASA is subsidised at approximately TT$2 billion annually.
4. PTSC carries 10% of the travelling public, cannot maintain a scheduled service and requires an operating subvention of over $400 million a year.
The Ministries of National Security (including the TTPS), Education and Health carry the lion’s share of the annual budget (between 33% to 38% depending on whether you use the figures in the 2018 Appropriation Bill or the Minister’s budget statement). Yet in each area, the objectives are neither clearly stated, nor achieved and there is declining output. The murder rate and serious crime is increasing, but not the detection rate. Less than 40% or thereabouts of the CXC graduates produced by our education system receive a full certificate i.e. five or more passes. And there are long waiting times for critical treatment areas in the national health service.
On the monetary side, the issue is not availability of funds or lack of lending capacity in the banking system; quite the opposite as I expect the National Investment Fund (NIF) to be fully subscribed. The missing ingredient is confidence. A critical ingredient in the non-energy sector is access to foreign exchange, which remains in short supply despite a favourable trade balance i.e. export earnings are greater than imports. If the official estimates are correct, then the only reason why foreign reserves are declining is capital flight or a lack of confidence in the system.
The IMF projections show that nominal GDP will return to 2014 levels somewhere in 2021. In short, whilst there is some turnaround in the economic statistics, we will only reach 2014 income levels, without adjusting for inflation, in 2021.
A recovery of sorts but certainly no boom.
The 2020 election cycle has already begun with announcements of gains which have not yet been attained and significant issues still unaddressed. So how do we move forward?
The issues are challenging but not insurmountable. The inconvenient truth is that there is need for additional expenditure cuts and efficiency gains. People decisions are the only way to determine the performance capacity of an organisation. And that is decided by who is hired or fired, placed or promoted. The quality of these decisions largely determines whether the organisation is being run seriously and its objectives real and meaningful rather than PR and rhetoric.
Leadership, accountability, management and productivity are the keys to unlock this performance dilemma, all of which are in short supply.
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