St Helena Government is considering selling off its substantial share of Solomon’s, the largest business on the island.
The company’s near-stranglehold on the island’s commerce is viewed by some as a barrier to other people setting up their own businesses – seen as vital to the island’s economic transformation.
Government ownership of Solomon’s was identified as a major problem by a consultant who was brought in to advise on how to encourage private sector growth. That was in 1997 – and the issue has remained unresolved.
The consultant, from the London Business School, was able to offer few suggestions for dismantling it, according to one unofficial source. But now, St Helena Government’s website says ‘a concerted effort is being made… to develop a vibrant and sustainable economy.’
A statement of just two sentences was issued today (1 March 2012) by the island’s Financial Secretary, Paul Blessington. It said:
St Helena Government wish to inform all shareholders of Solomon & Company (St Helena) Plc that discussions are being held within SHG, to consider SHG’s options of raising cash from its shareholding in Solomon & Company (St Helena) Plc, whether through disposal of all or part of its shareholding or otherwise. SHG has informed the Board of Solomon & Company (St Helena) Plc of these discussions.
A complete sell-off of this ‘ripe plum’ would alter the very foundations of the economy on St Helena.
The 220-year-old company operates stores throughout the island, the bulk fuel operation, the petrol stations in Jamestown, Longwood and Half Tree Hollow, and a wholesale business.
It is also the island’s shipping and insurance agency, and runs transport, farming, construction, electrical, IT, vehicle inspection and wharfage services. In 2001 it took over two stores on Ascension Island.
The government owns nearly two-thirds of the company, which posted an annual turnover of £7.6 million last year (to March 2011).
Roughly half of its income comes from its retail operations.
It is not clear why officials at The Castle would need to raise cash. A team from the Department for International Agreement has only just promised an aid package worth around £75 million over the next three years.
The announcement of the potential shares sell-off comes only a day after the government economist, Owen James, issued a very positive Economy Watch statement.
It said: ‘As a result of increased economic activity on the island – which we have all noticed recently – it is expected that Saint Helena will be able to raise more revenue locally to spend as it pleases.’
Solomon’s was established in 1795 by Saul Solomon and remained a family-owned firm for 150 years.
As the largest enterprise on St Helena it was simply known as ‘the Company’. It owned a third of the island and nearly all the shops, and managed the shipping and wharf handling.
In 1948 the company was sold to its London fibre agent, John I Jacobs, but the collapse of the flax industry on the island in 1963 meant Jacobs no longer had a use for Solomon’s.
In 1968, St Helena Government acquired 32,000 shares in the business for £34,000 through an agreement with the South Atlantic Trading & Investment Company Ltd (SATIC), which had bought 62% of Solomons share capital for £80,000.
SATIC became sole buying agents for the company, but within three years, it was owed nearly £100,000 by Solomon’s.
Growing debts – of more than £300,000 – prompted the government to buy out SATIC’s shares in 1974 and keep the company trading. It has been kept intact ever since.
By the early 1980s a change in policy moved the Company towards part privatisation, with 20,000 shares sold to the public – leaving the government holding the remaining 62.3% of the paid-up capital.