Joel Allen | Caribbean private sector associations and external value creation
I read with great interest an article written by Mr David Jessop in The Sunday Gleaner dated February 17, 2019, entitled ‘Private sector needs unified, external voice’.
Mr Jessop suggested that the external influence of anglophone Caribbean private-sector associations (CPSAs) such as the Caribbean Association of Industry and Commerce (CAIC) and the Caribbean Bankers Association (CAB) has generally diminished since the early 2000s.
Mr Jessop attributed this unfortunate situation to four internal and external considerations and bemoaned the inability of CPSAs to influence complex and consequential regulatory and other issues in North America and Europe.
An example of a major unresolved external issue that threaten the social and economic prosperity of Caribbean firms, citizens, and economies is that of de-risking. De-risking generally denotes the scaling down and closure of foreign correspondent banking relationships that connect local banks and economies with the international financial system.
The observations made by Mr Jessop are timely and persuasive and should be of great concern to not only CPSAs, but also to Caribbean governments, firms, academics, and public-policy analysts. I concur with Mr Jessop that CPSAs have become less effective in their ability to influence favourable and stable external regulations and other non-market affairs on behalf of their members.
SUGGESTIONS TO IMPROVE
Considering this, I offer suggestions that can hopefully stimulate new thinking on how CPSAs can improve their external influence and value to members and society.
Broadly speaking, CPSAs must first embark on internal reform as a basis to increase their external influence and lobbying efficacy. At a minimum, the reform of CPSAs should include the broadening of their membership structures and integration of firm and non-firm interests.The membership structure of CPSAs can be broadened by introducing new classes of membership comprising key non-firm cross-sector actors, for example, academic institutions, research institutes, and non-governmental organisations.
Admittedly, structural changes of this nature demand the creation of new business models and could increase member tension.Furthermore, those tasked with leading CPSAs would need to develop more advanced public- policy analysis, negotiation, and member-management skills.
Despite the possibility of internal disruption, a cross-sector membership approach is warranted because it can broaden the voice of CPSAs, strengthen their efficacy and impact, and enable them to better integrate the interests of firms with those of other societal actors.
BOLSTER INTERNAL INFLUENCE
In sum, a cross-sector approach can bolster the internal influence of CPSAs, demystify their interests and activities, and better enable them to pursue the shared integrated interests of their members through multi-level advocacy abroad.
Another fundamental consideration is that CPSAs need to focus more on using political advocacy, social interaction, and member coordination to unlock new market opportunities and expand the market pie for members.
Such an approach is not fixated on market protection, per se, but on converting de-risking and other external threats into new market opportunities that enable foreign market penetration and shared member value creation.
For example, the de-risking threat presents an opportunity for the CAB to not only lobby foreign governments to soften regulation and subtly influence the commercial decisions of correspondent banks, but to encourage member resource pooling to purchase small banks in the United Kingdom, the United States and Canada.
These small banks can provide more stable foreign-market access for CAB members, new sources of revenue for them, and better correspondent banking access for well-managed domestic banks in, for example, Africa and the Asia-Pacific that also face de-risking.Overall, CPSAs can substantially increase their external influence and member value creation, but they first need to change their internal business models.
Strategic change of this nature is not without risk but is necessary in a complex and changing foreign-market context in which governments and commercial actors are likely to devote more attention to internally powerful CPSAs with diverse memberships and integrated voices. Reformed CPSAs can, therefore, command increased public-policy influence abroad and enable new and better access to foreign markets for members. Furthermore, reformed CPSAs potentially provide members with foreign-market knowledge and research, which may encourage them to fortify their own innovation and other capabilities, business models, and market positioning.
Joel L. Allen is a PhD candidate of strategic management and institutional entrepreneurship at The University of Auckland, New Zealand. His research considers how trade associations, chambers of commerce and other non-market collaborations shape market emergence and create new value for their members. Email feedback to firstname.lastname@example.org and email@example.com.