Services become essential when we can’t do without them. Actually, you could do without these services referred to as “essential” if you lived like the aborigines of Australia or the Plains Indians of America. Even today, you have to do without them if you live in some villages in the rural areas. I am talking about essential services in a city such as Belize.
Electricity, water and security are the three main ones, security being the most important. Services are of no use to you if you are not alive. You need electricity, for heating, refrigeration, lighting and power. Uses of electrical power are manifold, which is why it is declared a public utility regulated by the government. The same with water, another public utility. Without a National Security Service, a state cannot exist. Let’s call water, electricity and security, the big three but, there are other services which may qualify as being essential to the existence of a modern state. Communications & Telecommunications
The post office or mail service was the only means of communication by way of transmitting letters and packages between individuals, private and public entities on private and business matters. In those days, the mail service was considered to be essential. Its importance is not so great since the invention of the telephone and the development of telecommunication services. Having a telephone, once considered a luxury, is now a necessity. Can you do without a telephone? The answer is yes but, you would feel cut off from the rest of the world. The average telephone subscriber makes at least three or four calls per day and receives as many. At least one of those calls is a matter of urgency or great importance to either the caller or the receiver.
Telephone communication is now vital to the conduct of private, commercial and government business. A breakdown in the system or a strike would paralyse the nation and leave us as an island “entire of itself.” It has become an essential service, which means that it is the duty of the government to ensure that it is provided. Banking
Does banking belong in a conversation about essential services? A lot of people would say no. They only go to banks to cash cheques when members of their families send them remittances. There are other places which can use the foreign exchange. Many people believe that bankers are engaged in taking people’s savings, on which they pay very low interest, and lending it to borrowers at high interest, making sure that the loans are secured by valuables far in excess of the amounts loaned. Let’s be fair to the bankers. They have a lot of expenses. They have to have buildings, buy equipment and supplies, employ staff, provide training, contract top management personnel whose primary function is to ensure that profits are high enough that shareholders can be paid dividends that satisfy their expectations. Shareholders expect at least 15% on their investment.
By the way, the banks have other expenses than those already listed. Plus they have to pay corporate taxes on their profits. Perhaps, that is why the banks charge such a high interest on loans and, why there is no variation in these rates, such as a lower rate for entrepreneurs who are venturing for the first time and an even lower rate for agricultural loans. If they did, it would increase production, which would accrue to our GDP. Why should they do this when our business community who import goods for sale, don’t mind paying the high rates? The amounts paid on mostly short terms loans are added to their expenses, plus 20% profit, and the consumer pays it all. So. The higher the interest on loans or overdraft services, the larger the profit on the commodity sold.
The banks provide a thing called credit, which enables workers to obtain items they could never acquire otherwise. Most people are not disciplined enough to save their money until they can afford to buy what they need or want. The bank will lend you money to buy a refrigerator or a car or a house at the usual rates using the article as security, if you agree to have your salary paid into the bank and they can deduct the repayment due monthly.
You could have all of the things you need and, many of the things you want at far less cost if you belonged to a credit union, which is another kind of bank. But, you would have to be disciplined. You would have to learn to live within your means. You would to budget your salary, saving some of it.
Let’s say you want or need a car and, can pay for it over a period of time. The bank will lend you the purchase price of $5,000 for five years at 18% interest, under the usual conditions. You would pay $1,000 towards the principal and $900 interest annually. At the end of five years, your total payments would be $5,000 principal and $4,500 interest, a total of $9,500. The interest is high but you would have a car. You would never have saved $5,000 to buy it. Has the bank done you a favor? Perhaps, perhaps.
Now, if you had learnt how to save. You might have subscribed the minimum amount of shares and joined a credit union. They would lend you $5,000 to by a car under similar conditions as the bank, except that the interest would be 1% per month on the reducing balance, which works out to 6½ % interest per annum. So, your payment for the first year would be $1,000 principal and $325 interest. The second year the interest would be charged on the $4,000 balance and so on. At the end of five years, the total repayments would be $5,000 principal, $975 interest. If only you had learnt to save. A National Bank
I know of three very well respected Belizeans, who have been saying for years, that our country will never be developed until there is a national bank. They argue that only merchandising, which is a low risk and high profit venture, can meet the repayment charges on bank loans. That what we need is a bank, which will make loans at varying rates of interest, according to a policy, which seeks development of our resources as its primary objective.
In my view, if the establishment of a national bank is the only way to ensure that credit is available in the areas and to the individuals and entities which will achieve the desired ends, then we have to have such a bank. The important thing is that the necessary credit be provided. Amandala