The Building of a Vibrant Youth-Oriented Belizean Economy

By Richard S. Harrison, BSc Pharm, MBA

The population of Belize in July 2013 was estimated at 334,297 persons.

Of this, 56.9% or 190,215 persons were under the age of 24, and 35.8% at the age of 14 or under.

A youthful and vibrant economy should be seen, felt, heard, smell and tasted…with the vast majority of the young people positively engaged among their peers and with the rest of society….and a wide range of avenues for participation in education, socio-cultural activities, sports, business, employment, charity, arts and talent development, entertainment, spiritual development, leisure, travel and exposure, rest and recreation…and where necessary, rehabilitation.

If Belize viewed itself as one organization….then the youth would be like the new and future workers who will grow up within and eventually manage the organization in the future. Like any other organization, it would invest as much as it can in building this resource so that it can have the greatest fighting chance to grow within the organization….developing a range of skill sets that allow everyone who wants to, to participate in helping the organization to achieve its ambitious PLANS and objectives….and allowing those who demonstrate the best leadership potential to rise in the organization…and eventually take up the mantle.

Youth unemployment is 19.5%, with 13.8% for males and 28.8% for females. 76.9% of persons over 15 are literate, as in able to read and write….which means that 23.1% are illiterate, and likely unskilled…or almost 1 out of every four persons of working age.

There is a plethora of organizations oriented to youth….from sex education, to vocational training, drug education and rehabilitation, peer and professional counseling, entrepreneurial skills development, sporting, cultural and artistic expression (as in arts, dance, music, etc), charity and volunteer opportunities, religious/spiritual development opportunities, environmental and ecological awareness and exposure opportunities, among others. These efforts need double the investment, or another 20 million annually….half from the public and half from a more robust private sector.

Below are some general observations, analysis, conclusions and recommendations that could make the economy more vibrant and youth-oriented:

I. NATIONAL VISION – PLAN

The lack of a widely accepted national economic development plan is hurting not only the youth, but every actor in the economy. Government is so big in the economy….accounting for anywhere from 30 percent to over 50 percent of the economy….that since there is no national plan to stick to…when governments change, it changes even who can buy pampers. Even with no change of government, there can be overnight change of laws, policies and practices, with far reaching consequences, including who become winners and losers, since most government decisions and actions are in response to special interest lobby or pressure…in many cases taking from Peter to give Paul. Without a national economic development plan adopted by the major political forces as their blue print…everyone is at higher risk….but especially the youth…who are at the bottom of the economic ladder. The development and adoption of such a plan would allow the entrepreneurs to better choose where to invest, to increase the scale and scope of their investments and to make better forecasts for those investments….reducing overall country risk and allowing/challenging financial institutions to be able to work with lower interest rates and longer terms…and even to work with alternative means of collateral. It would also help give direction to the youth in making more realistic choices for relevant education and skills training, for leadership preparation, investment planning and execution, and most importantly, determining what role they can and should play in the economy, other than as consumers. Placed within a legal framework, investors would have recourse if the government chooses to regulate or implement policies contrary to those national plans….which would force governments to think on a more longer-term basis, with deeper contemplation on the collateral upstream and downstream effects and costs of acting outside of this compact. It would allow any individual or group monitoring governments’ actions to do a checklist against every government law, policy and practice…to confirm or not whether government is acting within its own guidelines…and to take appropriate action.

Elsewhere, I have made recommendations for fiscal reforms that would make Belize much more competitive and productive, with a robust private sector and middle-class, which should be the horse, chariot and warrior of our blazing, vibrant, youth-oriented, long-term economic strategy.

II. THE ROLE OF HOME CONSTRUCTION AND IMPROVEMENT
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Errors’ that were made in efforts to grow the home construction and improvement sector do not preclude the important role that this sector can and should play in our economy. We already know that governments should not get directly involved in anything that can be done efficiently and effectively by private citizens….this is a basic premise of the mixed economy…which should be the driving economic philosophy that guide our thoughts and actions on the economy. Government should act as regulator and facilitator in this sector, rather than as planner and executor.

This is the avenue through which the youth can and should build collateral rapidly.

The income of the vast majority of our youth range from BZ$150-250 per week. Thus monthly mortgage payments need to fall within this range….so that housing costs are around 25% of monthly income. With this formula, the demand for new homes with land titles valued at between BZ$50 – 100,000 would increase by 20,000 overnight….financed at 6.25% p.a. over 30 years….requiring BZ$1.5 billion in new home mortgage financing over the next 10 years.

This amount of money can and should come from the private banks and credit unions….and from workers participation in the ownership of a Workers Bank of Belize (WBB)…a natural evolution of the National Bank of Belize Ltd. (NBB), buttressed with government residential land transfers through grants. Pooling of local resources is a much more stable, long-term means of financing home mortgages than debts and supplier credits, as is currently the positive experiment at the NBB. The Belize diaspora should be allowed and encouraged to participate in the ownership of the WBB. Public sector debts alone will never be able to realize this scale and scope of new home construction and improvement…without causing us other problems with the fundamentals of the economy….and most of all, does not allow for the kind of empowerment that the people need to build things other than homes that the country requires to transform itself into a vibrant youth-oriented economy.

Even if the roll-out is only 3000 new mortgages per year, it offers the potential to add 6,000 new permanent jobs to the economy….especially relieving pressure on the illiterate, unskilled and semi-skilled….with around 78 million dollars per year going into their hands….mostly accruing to the youth population….which would ripple across the economy to grow all other sectors….especially more local construction materials that should be given preference by law, policy and practice.

As an alternative to BIL, set up to build expensive, unnecessary buildings in all major towns with no return-on-investment criteria….consideration should be given to forming a group of south-side Belize City business leaders…who would be encouraged and facilitated with forming an Urban Development Corporation, which should focus on rebuilding their neighborhoods using the lessons learned from such efforts as Rebuild South-Central Los Angeles…including creative provisions for local ownership. We should think about the investment as a sort of compensation for the many years of neglect that has created this depressed corner of our economy.

Thus, the youth will gain from cash for their labor….and the capital gains converted in growing collateral as they make monthly payments to their mortgages…..but more importantly, they will be building self-esteem, self-worth, self-confidence and all that comes along with those.

The political leaders owe it to the youth of Belize to come together and agree on a national economic plan….which is the only way that this proposed strategy could be realized. The youth and youth-oriented organizations should organize themselves, to demand that this plan be adopted at least one year before the 2017 general elections….and threaten to boycott the polls in mass if this demand is not met.

III. FEMALE UNEMPLOYMENT

The 28.8 percent female unemployment is a luxury the country is not able to afford. This is so important an issue that it requires a rapid assessment of the nature of this unemployment….so that realistic and practical projects and programs can be directed towards this deficiency of the economy.

While we wait for the results of such scientific in-depth study…which should not take more than three months to complete….allow me to make four assumptions based on observation…..1. that the rate of youth female unemployment is much higher than the total female unemployment , in all categories of unskilled, semi-skilled , high school, sixth form and university graduates 2. That a major contributor to this has to do with pregnancy, childbirth and early care, mostly outside formal family structures 3. That much has to do with mismatch of education/skill sets with the jobs types that the economy is creating and/or the mismatch of the location where the job is and where the suitable person reside 4. That the solution to this will involve, among other things, increasing allowance for part-time jobs and scheduling, such as would allow young single mothers to only work 4-6 hours per day, for 3-5 days per week….which would require a major push to educate and encourage employers about the need for this adjustment. The government could provide the incentive of paying the social security contributions for qualified employees employed under these conditions, as an incentive for the employer to appropriate for the administrative and cost adjustments required.

Major investments that should be encouraged and which would open up new opportunities for female employment are garment industry for uniforms, bed covers, curtains, etc, agro-industry and especially processing, biscuits and snacks manufacturing of all kinds, home-based hand-made arts and craft production pooling for local and export market with centralized e-marketing and sales, self-employment in such sector as alternative public transportation via targeted financing of Bajaj three wheelers and golf-carts taxis, much more sophisticated investment and management in the beauty and fashion industry, forging stronger linkages to the more successful agencies in the developed markets, and investments in environment protection and sustainable development projects that involve young people, especially women…such as massive reforestation of riparian and pine forests, and propagation and planting of timber and flowering forest species.

The raising of minimum wage hurts unskilled women more than anyone else…because a lot of the domestic employment that they would otherwise get is not there. What minimum wage ‘experts’ failed to take into account….is that domestic workers get at least one meal at the home where they work, and some get two meals….which makes up for more than the meager increase in minimum wage. At least another 2,000 middle class families would be willing and able to afford domestic help if the minimum wage for domestic workers were 2 BZ dollars per hour….with a lower social security contribution for this category of employee.

Our vibrant youth-oriented economy should be realistically as much about what employers are willing and able to afford…as about our ambitions and desire for what employees should earn….it should not only take salary into account, but also benefits, such as meals, pick-up from home and drop-off from work, training, exposure, insurance, uniforms, etc.

This article was written by Richard Harrison, Belizean investor in production and services businesses in Belize. He holds a Masters in Business Administration degree from Lancaster University.

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