January 24, 2022

Bo Miller says his infrastructure fund to be registered

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Bo-Miller-300x300Derrington “Bo” Miller said last Monday (17) he is planning to register the creation of the Cayman Investment and Infrastructure Fund within the next week in the local register of companies. He is looking at funding coming from several high-profile and much-needed capital infrastructure projects.

A case for the Cayman Islands Investment and Infrastructure Fund

Cayman’s economic survival is on the line and in order for us to provide any opportunities for the next generation, a new economic model must be crafted now.

For the past 40+ years, Cayman has been providing a variety of investment vehicles to enhance business and create wealth for offshore clients. These vehicles have taken many forms, from exempt companies, to trusts, reinsurance, to the latest hedge fund craze. There is no question that these services have brought a significant improvement in the standard of living of all who live here. It has provided hundreds of millions of dollars into government’s treasury over the years and it has made millionaires of many of the professionals who operate the financial services firms.

Despite these successes, this industry has operated as an invisible hand in the lives of many of our people, and there has been no attempt to bring these tools from the boardrooms to the living rooms to help enrich individuals who may not be direct participants in the financial services industry.

We brag to the world about our rankings in the funds business and we have some of the best expertise; so my question is, why this is so difficult for us to do for ourselves some of the things we have been doing for others for years?

Until I am proven wrong, I am convinced that the economic model that brought us the 40-year miracle, of which I was fortunate to be a part of, has expired and must be retired. The actions and results of the previous administration’s tenure clearly demonstrate this. They wasted four years and millions of dollars trying to resuscitate this dead model with zero results and the FFR.

Over this 40-year period, we have been led to believe that all investors must come from outside and the Caymanian people must simply be the workers. This was the old economic model and it worked for a time, but as we all can see, even this option is being denied many of our people. This trend is not good and will lead to more serious issues down the road.

When we consider the global economic changes since the 2008 crash, as well as some major developments in local commerce, whereby small and medium businesses are closing their doors, assets are being foreclosed and there are few, if any, areas of new commerce, we face a startling dilemma. To keep hoping and praying that the same actions that got us into this mess will take us out, is only comfort to a fool. Therefore, the only logical conclusion one can make at this time is that we must focus on the upgrades and installation of the infrastructure we should have implemented when we were rolling in the dollars, but failed to do.

The rate of development over the past 40 years far outpaced the investment in the infrastructure necessary to support it. To compound the issue, the impact fees from development were not sufficient nor were they used sensibly.

Our economy is now at a crawl, thus allowing us time to catch up and remedy the situation. However, due to a lack of prudent management, government has no funds and no options to borrow. The reality is that government agencies are so constrained they can’t meet their responsibilities to operate and maintain existing — much less build new — public infrastructure.

Investment in infrastructure now is critical to support existing and future development, to put our people back to work and to protect our fragile environment. This presents not just a challenge, but an opportunity for us to look to ourselves first to invest in our country, our people and our future. This is the goal of the Cayman Islands Investment and Infrastructure Fund, which I proposed during the recent election campaign.

Infrastructure funds are being established in many countries faced with similar challenges and are commonly referred to as PPPs (public, private partnerships). I suggest our model should add an additional “P”, representing our “People”.

At an infrastructure conference held in Nassau, Bahamas in June this year, courtesy of CIBC/FCIB, it was very clear that other Caribbean countries are adopting this model for solving their infrastructure needs and the bank is very keen to support these initiatives. In major developed countries, PPPs have been in operation for years, in many formats covering various types of projects. However, what we are proposing is a slight expansion of this model to include our people as investors/owners.

The status quo

• Cayman’s Infrastructure — wastewater, landfill, airport, seaport and roads — have not kept up with the country’s growth.

• Both garbage and wastewater have been long neglected to the detriment of our environment, which impacts our tourism product, our health and quality of life.

• There has never been a clear, consistent mechanism of funding for the provision, expansion or upkeep of Cayman’s infrastructure.

• Development and infrastructure, while they should have worked hand in hand, somehow got divorced.

• Government has no money and cannot borrow any; thus the FFR.

• Our government owns and operates some 26 companies and authorities, the great majority of which are losing money (note recent Auditor General’s reports). This is a far bigger share of the economy than is necessary, particularly when the private sector is gasping for economic air.

Public -private partnerships are the ideal solution for the fiscal problems plaguing this country. In this situation, the private sector brings the capital, expertise and efficiencies of business and takes the risk, while government grants licenses and concessions for operations and perform the regulatory functions.

So why then has it taken us so long to seriously consider this option? We are a reactionary society, only acting when forced to and no government in recent memory has displayed the vision or the creative thinking to act outside the box.

When you combine this with the knee-jerk aversion to allowing private enterprise to manage traditional public works, political grudges and fear mongering by those who are more interested in protecting their fiefdoms than protecting the public, you get the answer.

However, government is broke and cannot borrow. Thus change must come and we the people must drive and own that change. We cannot afford to give these infrastructure projects away as these are all we have left and we should not expect others to take a chance on us when we fail to take a chance on ourselves.

The Caymanian people will be the payers of these services; e.g. sewage collection and treatment and garbage collection, etc., so why shouldn’t the people own these entities (this can include government) and reap the financial rewards when they are profitable? This formula will not only create jobs; it will create wealth as every person on this island will be given the opportunity to invest directly via cash or by sweat equity.

Ownership should be the overriding goal. A sense of belonging will result and a psychological change in attitudes will transform this country and create an economic bonanza at the end of which our people can have an investment in the form of shares in the fund. It is time we believed in ourselves and not just sit around waiting on the foreign investor, many of whom we subsidise, while they reap the rewards.

These entities will never be financially viable and efficient while under direct government control and operations, so I trust no policy maker will use this excuse not to support necessary change.

Funding is available from several sources:

• Individual investors.

• Allocating a portion of our $1 billion pension fund (say 10-20 per cent) for local investments

• Bridging financing from local banks.

• Attracting a portion of the $10 billion dollars sitting in Cayman’s banks, much of which is earning little or no return at present.

• Institutional and other funding options exist.

Benefits of the Fund

• It will create hundreds of new jobs.

• It will create ownership by our people.

• It will put in place the necessary infrastructure to support future development.

• It will protect our fragile environment and bring Cayman up to the highest international standards to truly boast that we are “green”.

• It will empower our people giving them ownership and commitment to the long-term sustainability of their country.

• It will free government from having to borrow and they can concentrate on core services, thus reducing operational costs and hopefully the cost of living.

• It will provide a local economic block that can be the foundation for other business opportunities in the medium to long term.

By pooling our resources, vision, capital, talent and management, we will all have skin in the game and there is no better way to unite people. Cayman should be the shining example of environmental protection and efficiencies, instead we are still arguing over where to put a 50-year old pile of garbage. It is said that opportunity only knocks once. This is a golden opportunity to fix some things and do them correctly. We may not get another chance as other events like crime and hopelessness could overtake and control the agenda. Economist John Maynard Keynes said, “The difficulty lies not so much in developing new ideas as in escaping from the old.”

It is time to escape from the old Cayman or we are heading for national bankruptcy and our own government shutdown. The financial trajectory of this country is simply not sustainable.

I am part of a local group that is structuring the CIIF. Anyone who has an interest please contact your MLA to lobby their support. We can be contacted at: ciifund @gmail.com.

We can do this Cayman. Let’s all work together.

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