"It turns out that advancing equal opportunity and economic empowerment is both morally right and good economics, because discrimination, poverty and ignorance restrict growth, while investments in education, infrastructure and scientific and technological research increase it, creating more good jobs and new wealth for all of us."
- William J. Clinton
Last week in part one of this series, we suggested that one of the greatest challenges facing The Bahamas in the 21st century will be the economic empowerment of our citizens.
We discussed methods by which we can seriously encourage economic empowerment in the years ahead and proposed several definitive actions that can be taken to accomplish this objective. Those methods included demonstrating greater confidence in ourselves as we transition from political to economic empowerment.
We also suggested that a concentrated effort should include Government's effective and efficient use of Crown Land as a viable tool of economic empowerment. Finally we suggested that we should look beyond the previous paradigms of expatriate "plantation plutocracy", eradicating the archaic models that have shackled us for too long, and become owners of those industries that will transport us to a more secure future.
This week, we would like continue this discussion and invite our readers to Consider this... what are the key success factors for economic empowerment?
A culture of entrepreneurship
For many years, the political directorate has placed great emphasis on job creation. While this is an important component of upward mobility and wealth enhancement, it is only one track on which we should focus our efforts. Jobs are important, but equally important is business ownership, another term for economic empowerment.
If Bahamians are going to participate in a greater share of the economic pie, a more determined, deliberate focus must be placed on developing a culture of entrepreneurship from the very early days of our education system in order to foster an appreciation for the role that this activity can play as our young people plan their futures.
It is important to place as high a priority on business ownership or entrepreneurship as we do on obtaining a job.
Revisiting and expanding the Bahamianization policy
In the early days of the Pindling administration, tremendous emphasis was placed on the importance of Bahamianization -- a policy which accentuated the need for businesses to hire Bahamians in jobs where they were qualified to work in lieu of foreigners who previously held those positions.
The Bahamianization policy also required businesses to provide the Department of Immigration with manpower projections or a detailed plan of action to ensure that those businesses trained Bahamians to assume positions that were then held by foreigners within reasonably specified time periods.
The Immigration Department closely monitored the progress of those businesses and how well their projections were realized. Businesses understood that if their manpower projections were not achieved within reasonable time frames, work permits would not be renewed for their foreign employees.
The policy worked and successfully contributed to advancement of Bahamians in the accounting, architectural, engineering, legal, banking, medical and other professions.
Today, the Pindling-instituted Bahamianization policy has become obscured by "excuses" of globalization, resulting in Bahamians being frequently displaced by foreigners where the former are qualified to hold such positions.
We submit that the time has come for the Government to revisit and even expand the Bahamianization policy relative to ownership of our economy. While we fully appreciate the importance of foreign direct investment as a tool for economic development, there is an equally pressing need to apply that policy to entrepreneurial activity.
We maintain that, like other developed countries, the Government should become more proactive in encouraging foreign investors to include greater participation of Bahamians in their investments in The Bahamas. This can be accomplished in several ways.
First, foreign investors should be encouraged to offer shares in their enterprises to the public, by way of public share offerings in our local capital markets.
Secondly, Government should encourage foreign investors to set aside a percentage of their intended investment to include Bahamians who have the expertise, interest and financial capacity. Without compelling such investors to include Bahamians in their Bahamian investments, investors should be advised that their investment proposals will be more favorably considered if they have found qualified Bahamians to participate in their investments.
Third, in the case of businesses that are presently here, the Government can use its moral suasion to encourage such businesses to offer Bahamians a way to participate in a private offering of their shares.
We believe that many foreign investors would see the wisdom of this and would embrace such a policy if it were properly presented to them.
Business planning
In the case of Bahamian entrepreneurs, the importance of business planning cannot be overstated. Too many start a business without the benefit of a business plan, which is a vital tool that will significantly increase the enterprises chances of success. The absence of such a business plan represents a built-in blueprint for that enterprises failure.
The role of mentorships and directorships
Bahamian businessmen must recognize the importance of mentorship as a critical success factor in their enterprises. Many entrepreneurs with excellent business ideas often fail because they do not investigate or obtain assistance from mentors who could help them to avoid some of the basic pitfalls that many start-ups experience.
In this regard, some Bahamians believe that the only important ingredients for business success include a well-considered business plan and adequate capital. Too often they neglect to appoint a board of directors to guide the business through the challenges that most start-ups invariably face. An astute board can enhance their success rate if adequate consideration is given to such important variables as market share, human resources, marketing, budgeting, cost controls, and financial accounting and reporting. Just some of the concerns that are often overlooked in starting and running a business.
Wisely chosen mentors and board members can also assist the entrepreneur in establishing best business and corporate governance practices which will enhance the enterprises chances of success.
Overcoming bureaucratic red tape
Many entrepreneurs complain about the excessive amount of bureaucratic red tape that they encounter in starting a business. It is vitally important to successfully reduce or minimize the level of frustration encountered in this area. Many feasible enterprises are still-born because this impediment cannot be adequately overcome. The role of the appropriate business advisor, mentor, or consultant can be very helpful in successfully navigating the treacherous waters of Government bureaucracy and red tape.
Business incubators
As the College of the Bahamas continues its march to University status, this institution can play the vital role of a business incubator which will offer assistance to start-up businesses that seek their help by creating a "one-stop shop" for entrepreneurial support.
Although most incubators offer their clients office space and shared administrative services, the heart of a true business incubation program is the services it provides to startup companies.
Business incubation is a means of meeting a variety of economic and socio-economic policy needs, including new business creation, fostering an entrepreneurial climate, technology commercialization, economic diversification, and business creation and retention.
The amount of time a company spends in an incubation program can vary widely depending on a number of factors, including the type of business and the entrepreneur's level of business expertise. Business incubation is a powerful tool for economic empowerment.
Access to capital
Unquestionably the greatest and most timeless challenge which entrepreneurs encounter is accessing capital to take their business ideas to fruition. God willing, this will be addressed in detail in a future column in the New Year.
Conclusion
The benefits of economic empowerment, especially through entrepreneurship, will be felt throughout our society. Besides the obvious financial advantages, widespread Bahamian entrepreneurship will uplift our fellow countrymen and fill them with a pride of accomplishment in their own endeavors, as well as those of others.
It will inspire not only this generation of entrepreneurs but also those who will come after, to strike out in ways not yet imagined which will make The Bahamas a shining example of what can happen when a nation is motivated by the hard work and creativity of others. And that kind of Bahamian economic empowerment will always be, as Bill Clinton says, "morally right and good economics".
o Philip C. Galanis is the managing partner of HLB Galanis and Co., Chartered Accountants, Forensic & Litigation Support Services. He served 15 years in parliament. Please send your comments to pgalanis@gmail.com.
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