|The Bahamas Investor Magazine
January 1, 2016
January 1, 2016
Minister of Financial Services Hope Strachan learned a love of politics at her grandmother’s knee. Granddaughter of Mary Ingraham—a founding member of The Bahamas’ suffragette movement—Strachan was exposed to the value of public service from a young age and wants to continue that legacy with an ambitious plan for her ministry’s future.
The growth of the country’s second largest industry relies on diversification, according to Strachan, who is aggressively pursuing a number of initiatives to meet this end. Developing an arbitration hub, promoting the industry around the world, investing in local talent, building international relationships and encouraging investment—they’re all on the agenda for the minister who took up her post a year ago.
Long road to politics
Strachan is inspired not only by her pioneering fraternal grandmother, but also her grandmother on her mother’s side who dedicated her life to Bethel Baptist Church under H W Brown, himself a champion of majority rule. Strachan, who was born on New Providence, was one of seven children, six of whom were girls, and says her mother was careful to ensure her daughters made the most of every opportunity. “My mother was a strong, independent woman with strong opinions about culture and politics and the development of our country. She believed in protecting her girls and ensuring we were all well-educated, advanced in life and always striving to do better and be better,” Strachan says. “I am who I am because of the many people who have invested in me and sown good seeds into my life. All of them were integral in instilling in me the need for honesty and integrity in all I do.”
The minister’s journey to public office has been a long one. Although interested in politics from a young age, the mother of three decided to temporarily put aside those ambitions and focus instead on raising her family. “I wanted to take my children into adulthood and see them settled so that I could then put my all into my political life,” she says.
After a three-year stint in banking with Citibank, CIBC and Scotiatrust, Strachan decided to pursue a career in law. She was called to the Bar of England and Wales in 1989 and by the Bahamas Bar later that same year. Six years later, she felt established enough in the industry to open her own firm, Hope Strachan & Co, which specializes in civil litigation.
However, her aspirations of a career in politics remained and she credits her fellow Cabinet member, Minister of Transport & Aviation Glenys Hanna Martin with giving her the push she needed to make the leap. “What really took me to the point where I entered politics was Glenys Hanna Martin, a great friend and a legal colleague. We had always discussed how we could contribute as women. She encouraged me to pursue my dream of actually making a positive contribution to my country.”
In 2007, Strachan ran for Parliament in the Seabreeze constituency, Nassau. She lost that election but remained close to the community, gathering grassroots support and showing her commitment to the area. It paid off. In 2012, she ran again and won. Following her victory, Strachan was appointed Minister of State in the Ministry of Transport and says two decades of legal experience helped equip her for her new responsibilities. “The transition [from the private sector to public office] has not been particularly difficult. My legal background really prepared me for politics.”
Surprising new role
Despite this, Strachan was still taken by surprise when she was chosen as Ryan Pinder’s successor in the Financial Services Ministry in January 2015. “My first reaction was one of surprise and humility,” she says, remembering the moment she was appointed to head the ministry. “I know it is a huge responsibility and it is humbling to know there is the confidence that I can take that on. This is an extremely important sector of our economy. It is a dynamic, vibrant industry that requires a lot of attention. In financial services you are required to make decisions quickly and with a great degree of responsibility because there are significant reputational consequences. I see it as a huge responsibility, but I am also very confident and cognizant of the fact that if you have the right resources, you can make a success of your ministry.”
Strachan believes that success will come about through a joint effort. She is quick to acknowledge her staff and wants to build on their expertise by restructuring and expanding her department. Strachan says: “We want to expand, bringing in people who are educated, talented and motivated. I do not think politicians should ever be of the view that all knowledge rests with them. You have to know when you need advice, and take that advice.”
Although the Ministry of Financial Services has been a feature of previous governments, it has only recently been reinstated as a separate entity to the Finance Ministry. Because of this, says Strachan, it is often under-appreciated and she wants to make it a long- standing part of government. “One of the major things for me is that the Ministry of Financial Services has been treated as a ministry that is not truly stable. One of my main priorities is to increase its importance and its profile to such an extent that it will never be considered dispensable. There is no doubt in my mind that this ministry has to endure as long as any other.”
If the ministry is to endure, so must the industry it serves and Strachan is looking to new products and new markets to help build a sustainable sector, saying that innovation must be at the forefront of the government’s approach.
“Innovation is as necessary in financial services as it is in technology. People want more, and they want better, and they want it now,” she says. “They want products that respond to the changing financial environment. They are also looking for trusted jurisdictions and entities. New markets provide a new pool of individuals that can add to the strength of the industry and encourage innovation in product formation to satisfy those markets.”
Over the past few years, the Ministry of Financial Services has extended its reach into Latin America. Products such as the Investment Condominium Fund (ICON), SMART funds and the Bahamas Executive Entity have helped The Bahamas establish a foothold in markets such as Brazil and now Strachan wants to replicate that in other jurisdictions such as Mexico.
“The Bahamas’ financial services industry has been innovative. We have products that have stood the test of time. We must work hard to develop products that cause investors to want a greater connection to our country,” says the Minister. “Our largest focus is on Latin America. The focus this year has been on Brazil and trying to ensure we make [the ICON] known to that market. We have seen some success in that. But we are not going to rest on our laurels. These so-called new and emerging markets of Latin America provide a pool of millions of high-net- worth and ultra-high-net-worth individuals that can be tapped into.”
The ministry has enlisted the services of a local consultant in Mexico with the aim of creating tailor-made solutions for the high-net-worth Mexican client. The minister is a firm believer in knowing your market and says it pays to have boots on the ground— giving her an insight that she can then pass onto the industry at home. Also in the ministry’s crosshairs is Asia. After a series of successful events there in 2014 under the Bahamas Financial Services Board (BFSB)’s Landfall banner, Strachan wants to continue making inroads into that continent and participated in a multi-city tour with stops in Shanghai, Beijing and Singapore towards the end of last year. She says being visible is a key part of her position, and that it gives potential investors great confidence to see the government so engaged.
“International industry persons regard the presence of a government minister very highly. It demonstrates to them the seriousness with which the government is treating financial services and the importance of it to the economy,” she says. “It is a wonderful way to enhance the profile of the country. Our industry partners [in The Bahamas] say they garner a lot of comfort from the fact that their minister is with them at these events.”
Strachan does not take her role as ambassador lightly. She is well aware that she represents not only the financial services industry, but also the country saying: “You make the most of it; you try to be prepared when you go out and sell The Bahamas. You need to show your country’s wonderful attributes. I like to say we have the best of both worlds with this beautiful environment. We have a playground in which you can work. My ministry’s responsibility is to bring people looking for financial services to our shores. I’m certainly going to do my best to ensure that it is a success while I’m here.”
Establishing a reputation globally is no easy task for an offshore jurisdiction such as The Bahamas and it became even more difficult in June 2015 when the country, along with 13 other Caribbean financial centres, was included on an EU blacklist of the world’s tax havens.
Almost immediately, the Organization for Economic Co- operation and Development (OECD) released a statement denouncing the blacklist, emphasizing that the named countries were either “fully or largely compliant” according to the Global Forum. In August, OECD director Paschal Saint Amans met with Strachan in Nassau and she says the meeting was encouraging with Saint Amans reiterating his support for the jurisdiction. With the OECD in its corner, The Bahamas is in a strong position according to Strachan. “I would not dismiss [the blacklisting] offhand, but there is a degree of comfort in the OECD’s statement. The list has been condemned by the OECD as inconsequential. The Bahamas must and will continue to work to meet all international regulatory requirements to preserve our global reputation as a premier financial centre.”
When Standard & Poor’s downgraded its outlook for the Bahamian economy last August, Strachan saw it as a learning experience. She says the country is working even harder to secure foreign investment against this backdrop.
“It is an issue we have to be concerned about,” she says. “We have to ensure we improve. It does have an impact and it is a cause for concern and an issue we are going to grapple with. We need to generate foreign investment. We need that new money to come into our economy to show vibrancy and that the economy can withstand some shocks. We must encourage more investment in our Family Islands, investment that will create new opportunities and sustainable industries.”
To help boost The Bahamas on the world stage, the Ministry of Financial Services is moving ahead with its planned accession to the World Trade Organization (WTO). The Bahamas currently holds “observer” status and first applied for full membership in 2001. In the years since, the idea has been abandoned and revived many times, but it is now a priority for Strachan. “Over the years there has been a hesitancy, but when you look at it in a holistic way you have to ask, can we continue to be an island? We are the only country in the Caribbean region that has not acceded [to the WTO]. We have to do the work required for us to accomplish what is expected from us on a global level.”
While endeavours such as the WTO accession and reaching out to new markets are important, the Minister is particularly passionate about several new initiatives.
Given her legal background, it is no surprise that she is very keen to establish The Bahamas as a successful arbitration centre during her term in office. Arbitration has been on the financial services agenda for some time, but Strachan says her plans are “time sensitive and aggressive” and the ministry has enlisted two consultants to help her develop them—local attorney Bertha Cooper-Rousseau and Professor Jan Paulsson from the University of Miami School of Law. The ministry recently launched research looking at the industry end users to determine what they want from an arbitration service, and how the government can meet that need.
“We are very hopeful that we can [become an arbitration hub]. We have been talking about it for a long time and we have made some headway, but we have not closed the gap. I am excited and focused. I see this as a golden opportunity to diversify the services offered in this jurisdiction for certain specialized areas such as maritime and financial services. The opportunities are endless.”
That may be so, but the opportunities will be wasted without financial services professionals to exploit them. That is why Strachan believes that the younger generation is a vital part of safeguarding the sector’s future and must be given the skills to meet the challenges ahead. The minister has lent her support to the BFSB’s Millennial Society, which was established in November 2014 and aims to foster greater interest in the sector among young people, as well as providing support to those who are qualified and in need of mentorship and guidance.
In September 2015, the ministry partnered with the BFSB, the Ministry of Education and Rosetta Stone to launch a language programme in public junior and senior high schools throughout The Bahamas. Learning a second language is crucial in an increasingly globalized world, says the minister and if the Rosetta Stone initiative proves successful, there are plans to branch out from the current Spanish courses into Mandarin. There will also be opportunities for students to enroll in immersion courses.
“It is heartwarming to see that we have young people who see the big picture and what they can accomplish in financial services,” Strachan says. “They are serious; they are motivated; they welcome opportunities to further their education. This shows there is hope for the industry and the country as a whole. Creativity must be nurtured through education and training of persons in the sector, particularly young people.”
Strachan also wants to establish a Centre of Excellence in The Bahamas and be at the forefront of the region in training, research and advocating for financial services. It may be early days for the centre, but Strachan says planning is underway and she is optimistic about its impact. “We are developing a plan for how it will be established. It is going to take a lot of work, but we feel good about it. We are working with the BFSB and they have a wonderful platform. We are working diligently to get it done. That is something that will benefit this country for many years to come.”
A positive contribution
With so many projects in the pipeline and international engagements taking her out of the country for weeks at a time, Strachan says one of the most challenging aspects of being Minister of Financial Services is timekeeping. As well as running the ministry, Strachan is still a very active part of the community in her constituency of Seabreeze. She enjoys attending and organizing fun days, fundraisers and holiday events and adds that they “have a wonderful time together.”
While Strachan is short on time during the week, she ensures that every Sunday when she is not travelling is dedicated to family. On that day she joins her sisters at her mother’s house and they cook, talk and enjoy their time together. As she prepares to celebrate her first year in office, Strachan is not only looking to the future with an ambitious roadmap for her ministry, but also keeping one eye on the past, striving to follow her suffragette grandmother’s example. “I believe that I am contributing to the well being of my country. I try to exemplify a life that demonstrates a positive contribution to nation building,” she says. “I’m sure both my grandmothers would be proud. I want to make sure I continue to make them proud.”