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Monday Jul 08, 2024
Friday, 10 January 2014 00:00 - - {{hitsCtrl.values.hits}}
Two of America’s renowned business cycle forecasters Lakshman Achuthan and Anirvan Banerji in their book ‘Beating the Business Cycle’ have outlined how to predict and profit from turning points in the economy. But unlike in the ’80s and ’90s, the decades in the new millennium have witnessed more economic recessions, uncertainties and meltdowns that have made it difficult for the best of the world’s economists to fathom and to give any clear forecast.
This cyclic effect of things happens around on a daily, weekly and monthly basis is a fundamental realty. As we see from history, it gets repeated over and over again globally on political and economic dimensions. Understanding the turning points of each cycle too is not rocket science but greed has many times blinded political and business leaders across the world from seeing and discerning the signs of each turning point and recognising the impending economic booms and downturns. This is one of the key reasons many times the private sector is wittingly or unwittingly contributing to create more economic imbalances and inequalities in the Sri Lankan society.
Inconsistency is very costly
Whilst recognising economic business cycles and the turning points of each cycle, one clear way of facing the impending economic and business uncertainties is the commitment of all stakeholders , whether public or private sector, to have consistent policies and actions. The Sri Lankan public has over the years paid a heavy price for inconsistency, with the majority of the country having to face the brunt of the impact on any emerging economic uncertainties.
We have seen the Government led by President Mahinda Rajapakse putting in place a road map and numerous programs to work on more consistent initiatives. But we have also seen, in many areas that are very vital for sustainable economic development, the left hand is not aware of what the right hand is doing.
While there is a praiseworthy Road Map that works on 5+1 hub strategy for more inclusive and sustainable growth in the country, there are many wheels not turning in the direction for inclusive and sustainable economic development. This is mainly due to inconsistency of policies and actions of those who are responsible for turning these wheels. Particularly in areas of education, agriculture, trading and importation of goods, the policies, procedures and actions need significant improvement in consistency to ensure trickledown benefits for the majority of the population of the country.
Consistent collaboration for greater inclusivity
The corporate sector of the country needs to drive their organisations with long-term visioning, taking into consideration the impact their organisations can create for more inclusive and sustainable development that can trigger benefits to more people across the country in partnership with public institutions. Their strategic plans and implementations should be consistent with the greater inclusivity envisaged by the leadership of the Government of the country.
What we have seen in the private sector is a very fragmented approach to consistency with a very narrow thinking focused on the survival of their respective industry, trade or business. This is where a greater role has to be played by various business chambers of the country by aligning their members to be more in line with consistency, thus articulating their business decisions that support sustainability. The attitude of making hay while the sun shines and adopting a ‘me and my business need to survive and thrive at any cost’ approach will not take them very far in the world of economic uncertainties.
Commitment to consistent relationships and partnerships
It is apparent in the more globalised and market-driven world economy, what counts most is the relationships and partnerships that can add value. As Sri Lanka is linked to the global economy through its import/export economic partnerships and relationships with respective governments and multinational corporates, maintaining consistency of those relationships are vital.
Historically and traditionally Sri Lanka has maintained very consistent relationships and partnerships with friendly countries and multinational corporate business entities that have greatly enhanced the business continuity and ensured more favourable terms in the past. The Sri Lankan public sector and private sector should work hard with tact and diplomacy on building more consistent business relationships and partnerships internationally to cushion the impact of uncertain economic setbacks that will undermine the plans and road maps for sustainable economic development.
Banking and finance sector consolidation in line with people’s aspirations
It is very encouraging to see the introduction of the Road Map of the monetary and financial sector for 2014 and beyond and articulation by Governor Nivard Cabraal highlighting what has been achieved since the Road Map was introduced first in 2007. The Governor of the Central Bank of Sri Lanka has shown consistency in presenting the Road Map for the banking and financial sector regularly. It is a timely and most appropriate introduction of the banking and financial sector consolidation to take place in the next two years.
What the Central Bank proposes for the banking sector is the right thing, at the right time and one would always feel this was a long overdue matter, but whatever was proposed for implementation on the short, mid and long term should be consistent with the needs and aspirations of the majority of the population – in particular bringing financial inclusion to the majority people who are living in rural Sri Lanka, by making banking and financial sector products and services more accessible and affordable.
There is a need to have one big development bank to drive the major development programs of the country with greater regional collaboration and further consolidation of the commercial banking sector of the country. However, if this consolidation is not consistent with the creation of a more economically inclusive society in Sri Lanka, the slightest external or internal economic set back can be more detrimental to sustainable and inclusive development.
Consistent collaborative actions
Wishes, plans and good intentions are always to be taken positively, but to make visions of political and business leaders a reality along with the fulfilment of the dreams of the people, there needs to be greater commitment of all stakeholders of the country’s public and private sector leadership towards consistency in their policies and collaborative actions.
[The writer is the Chairman of Asia’s largest microfinance network, BWTP. He is also the Chairman of Lanka Financial Services for Underserved Settlements (LFSUS) and serves on the number of national and international financial institutions that advocate and practice financial inclusion. The thoughts and comments expressed here are his own and in no way connected to the organisations he represents. He can be reached via [email protected] or [email protected].]
