Dear Editor,
After my organization hosted the first Small Business Summit in 2009, it was evident that The Bahamas needed a national strategic plan for the development of small and medium sized enterprises (SMEs). However, our country for 38 years, has had a flaw for not developing a practical strategic national plan for anything (crime, economic development, immigration, etc.).
Industry leaders from the professional and medical services; manufacturing, agriculture, fisheries, wholesale merchandising and retail; construction, tourism, hospitality, commercial banks and government indicated during the 2009 Small Business Summit that an Act to developed the SME sector was far overdue.
As a result, a report was developed to identify how this SME could be formulated and implemented in an effective and efficient manner. This report, Act As One: The Importance of Stakeholders' Collaborative Efforts When Developing the Small Business Act of The Bahamas, can be viewed at http://www.markturnquestconsulting.com/Entrepreneurship.html. After consulting with the government, I applaud the Ministry of Finance team for creating the political will to develop the Bahamas SME Development Act and to create a new strategic framework to enhance the productivity level of the sector.
However, there were too many questionable decisions in 2010 on how to perform infrastructural development (mainly the road improvement works) and what formula of tax increases to apply on import duties. I hope that these two decisions will not reduce the effectiveness of the SME Development Act in the future. In 2010, the main focus to stimulate the SME sector should have been to provide incentives and concessions to mitigate the impact of the recession. There was a small window of opportunity to 'stop the bleeding' and it was not taken advantage of; hence, I witnessed hundreds of SME failures and the death of many entrepreneurial dreams. Governments must realize that sometimes negative effects of policy decisions without proper consultations are sometimes irreversible.
My main concern with the formulation process so far is that there has been limited participation by the Act's main stakeholders - SMEs. If this had occurred, then the $7,500 Jump Start Program (grant funding) would not have been given a green light. The grant is not enough and other sources of funding are required by local and international financial institutions to be pooled together to benefit new and existing SMEs.
Other concerns are as follows:
o There should be town meetings with the wider SME community in order to gather information about the major problems and opportunities facing the sector;
o In addition, there needs to be more industry-specific (construction, agriculture, merchandising, hospitality, manufacturing, technical services, tourism, hospitality, fashion design, etc.) discussions, so that local and international issues that affect individual industries could be addressed in the Act.
The formulation process of the SME Development Act needs to be evaluated and corrective measures should take place. I am aware that there were consultations with the Inter-American Development Bank, The Bahamas Chamber of Commerce and Employers Confederation and a few others, but this is not an effective way to develop such an important Act. There needs to be 'inter-stakeholder synergy'; this means that more trade organizations, banks, industry leaders and especially SME owners should be involved in the formulation process before the Act is debated in Parliament.
This inter-stakeholder synergy between the government, NGOs, trade associations, financial institutions, industry leaders and SME owners would align resources and capabilities to craft a SME Act that is meaningful to the sector. Although this Act should not precede a strategic national plan for SME development, it is a good start because our SME sector is lagging behind in competitiveness, globally.
The main policies that must be adapted by key stakeholders when diligently transforming the Act from formulation to implementation are as follows:
Government
I. Ensure that possible amalgamation of Bahamas Agricultural Industrial Corporation (BAIC), Bahamas Development Bank and Bahamas Entrepreneurial Venture Fund focuses on leveraging the strengths and correcting the weaknesses of the organizations;
II. The new SME development framework that is being developed must be structured to eliminate financial and non-financial decision making based on political influences. This is the main reason why the Bahamas Development Bank is near bankruptcy;
III. Focus on Family Island development but keep the natural heritage and cultural resources of each island;
IV. Reduce the barriers that make it almost impossible for SMEs to access international funding;
V. Promote and encourage e-commerce activities and remove policies that make opening on-line merchant accounts very difficult;
VI. Adapt public policy tools to SME needs - especially facilitating SME participation in the public procurement process;
VII. Consider creating a Ministry or Department of Commerce to protect the SME sector from the Economic Partnership Agreement (EPA) and to develop strategies to improve on its five percent contribution to gross domestic product.
Commercial banks
I. Partner with government and international leading institutions to develop comprehensive SME funding scheme (SFS) so that more financial support can be extended to SMEs;
II. The $7,500 grant that is currently being offered to a few SMEs by the government could be used as a down payment so that local and international banks, and private investors could give more meaningful funding in order to prevent business failure due to undercapitalization;
III. Focus on packaging loans extended to SMEs that have built-in accounting management, human resources and marketing support programs at an affordable cost for at least a year.
The Bahamas Chamber Of Commerce and Employers Confederation
I. Focus on providing new SMEs with more market information about various industries. The organization should partner with the College of The Bahamas and the Inter-American Development Bank to perform more market research on the economy of The Bahamas;
II. Become more visible in the SME market (over-the-hill) and remove the perception that the organization only focuses on big businesses;
III. Encourage professional and trade associations and SMEs to become more knowledgeable about the pros and cons of the Economic Partnership Agreement (EPA).
SMEs
I. SMEs must be committed to acting in a socially responsible manner (paying business licenses, NIB, correct custom duties, etc.);
II. SMEs must become knowledgeable about all aspects of their business model (operations, marketing, accounting/finance, human resources, etc.);
III. All SMEs must have sound marketing, management, human resource and accounting systems. SMEs must invest in the Quickbooks Accounting Software; it is an invaluable tool for businesses.
The Bahamian consumer
At the heart of the new Act, there should be the conviction that achieving the best possible framework conditions for SMEs depends first and foremost on society's recognition of entrepreneurs.
Bahamian consumers must support the implementation of the new Act and SME framework to buy authentic Bahamian made products and discourage criminal activities that would negatively affect local SMEs. The Bahamian consumers should understand that vibrant SMEs will make The Bahamas more robust to stand against the uncertainty of business cycles (especially recessions and depressions).
Finally, framers of the initial draft of the Act must consider the following important matters:
I. Ensure that presidents of trade and professionals associations clearly identify problems that their members are experiencing from local regulations and international competitors;
II. Build in major incentives in the Act for entrepreneurial ventures that create innovative products, delivery systems, operational structures and marketing strategies in filmmaking, fashion design, e-commerce, information technology, agriculture, manufacturing, education, software development, art and handicraft;
III. Create added concessions to protect 'socially responsible' SMEs that employ over 25 Bahamians during future recessions;
IV. Provide special assistance to local SMEs that focuses highly on exporting authentic Bahamian products and creative services;
V. Provide regulatory policies to protect the management consultancy sector from unfair and unethical practices that are performed by international service providers.
I hope that the initial draft of SME Development Act is brought to the business community. The government must host a series of town meetings and workshops so that all aspects of this Act could be diligently crafted. My advice to the government is not to dilute the process, but have adequate consultation with SME owners and not to force this Act down the throats of SME owners. The government must understand that this is an important Act and not to delay communicating the contents of it to SMEs throughout The Bahamas.
In addition, members of Parliament must become more involved in the formulation of the Act. They should immediately host meetings and obtain information about the challenges and other issues that SMEs are experiencing in their constituencies. This is important so that they (MPs) can have intellectual debates when discussing this Act in the House of Assembly.
I would like for SMEs to contact me so that we can ensure that this Act is diligently formulated and implemented. To contact me call 326-6748/427-3640 or log on to www.markturnquestconsulting.com.
- Mark A. Turnquest
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