Rates of borrowing top Bahamian savings rates:
By BARRY WILLIAMS, Guardian Staff Reporter -
Nassau, Bahamas:
barry@nasguard.com -

Financial statistics are revealing a grim reality - fewer and fewer Bahamians are saving for a rainy day.

The impact of this has spin-off effects on the economy as evidenced by the pressure commercial banks are feeling to attract depositors - a main strategy for building liquidity levels.

"[There is] a link between savings and financial services," said Vincent Peet, Minister of Financial Services and Investments. He gave an address at the official launch of the annual Savings Culture seminar sponsored by Bank of The Bahamas International.

"As a nation that makes a significant proportion of its living from financial services, we need not only sharpen our skills within the sector, but to begin as a people to be financially conscious of the whole ethos of earnings and savings," Peet added.

Statistics support that The Bahamas is a consumer society, with low levels of savings. The average Bahamian has less than $1,000 in his or her savings account, according to Central Bank statistics. They also reveal that the amount of credit outweighs savings by $1.5 billion.

In recent years many counter-productive strategies to saving has been used both by consumers and the financial institutions that cater to them.

Banks are realizing now, more than ever before, that innovative strategies are needed to create a paradigm shift away from haphazard spending.

Kids are a good target group to teach the importance of saving and controlled spending, said Tanya Wright, senior manager of business development and public relations for the Bank.

"The buy-in to the national initiative to promote a savings culture is as important to us [the banking community] as the individual savings goal is to the customer," she said.

Some commercial banks, including Wright's, are encouraging this effort of kiddy savings by offering higher interest rates on deposit accounts for young adults.

Money management is one of the critical problems facing families says Melanie Griffin, Minister of Social Services and Development. She said many are simply living above their means.

"Our culture places tremendous emphasis on the acquisition of material things," she said. "It is so important that we develop a savings culture in The Bahamas, instead of the overspending culture that currently exists."

Griffin said it is not uncommon for people making good salaries to show up at social services. The brow-raising salary deductions for checks leave some persons with a gross take home pay of $100 or less per month, making it necessary for them to turn to government for help.

The additional burden on the social welfare system is only compounded with a reliance on credit.