Prepared By Mark A. Turnquest
After analyzing The Bahamas’ economic conditions for the past three years and reviewing international watchdog agencies (Moody, IFC/World Bank, Standard & Poors) reports, it is imperative that the public and private sectors focus on small and medium size development (SME) Development and economic diversification. It is the only sensible approach to grow our economy in a sustainable manner, increase GDP and the entrepreneurial spirit; reduce unemployment, national debt and crime. In order to correct these problems there must be public and private sector partnership which will conduct a strategic analysis on how to make this little country, GREAT!
WHAT ARE AFFECTING THE GROWTH OF THE SME SECTOR?
(1) NATIONAL DEBT The reality is that the national debt is almost 5 billion (50% of GDP). We spend almost 20% (298 million) of our budget on servicing our national debt.
(2) UNEMPLOYMENT 40,000 Bahamians are either unemployed, underemployed or are discouraged workers. The unemployment rate in New Providence is 15.1% and Grand Bahama is 21.2% (The Bahamas overall is 15.9%). There have been 26,000 job losses over the last 5 years.
(3) CRIME Our crime challenges are tremendously affecting the business community (via break-ins and armed robberies) and we have four years of consecutive murder rate records.
(4) DECLINE IN COMPETITIVENESS Several International credit rating agencies have downgraded The Bahamas’ sovereign credit rating and competitiveness in 2011 and suggested that our government raise taxes, formulate some type of value added tax system, slow down government spending, and mostly importantly, diversify our economy. Unfortunately, The Bahamas has lost its economic competitiveness and creativity in comparison to our Caribbean neighbors in recent years. Our country has regress in the important categories of:
(A) Ease of Doing Business,
(B) Starting a Business,
(C) Sovereign Credit Rating and (D) Human Resource Index.
(5) INDUSTRIES CHALLENGES
Our Tourism product is uninteresting and not exciting; our financial services offering lack new innovation and our construction boost is benefiting foreigners. These three industries: Tourism, Financial Services and Construction and related industries contribute over 90% of GDP (6.5 Billion) and 80% of our employment level (152,000). We are still importing over 500 million dollars in agricultural products and our manufacturing sector is stagnated.
(6) ROAD WORKS PROJECT & PROLONGED RECESSION The SME sector is stagnant and contribution to GDP has deteriorated from 5% (2007)-3% (2011) because of the great recession, failed economic policies, the road improvement project, money borrowing crunch, lack of opportunities and a contracted economy.
(7) FAILED ECONOMIC POLICIES Stakeholders who are responsible for SME Development have failed to improve our economy beyond mediocrity by not developing a Strategic Plan for SME Development. Although over the past seven years (2005- 2011) the public and private sectors collaborated with the intent to provide some form of a SME framework development e.g. Domestic Investment Plan, SME Development Act which both have failed to become formulated and now the SME sector is in a hopeless position in mid 2012.
(8) NO FAMILY ISLAND DEVELOPMENT VISION Each Family Island should be analyzed to determine its economic, social and cultural potential, so that financial and other incentives can be offered to Bahamians who want to open complementary businesses and reside permanently on a Family Island.
• This initiative will increase
• the employment rate,
• improve the infrastructure of the Family Islands,
• encourage Bahamians to reside there permanently
• and entice more domestic
• and foreign tourists to the various islands.
Every redevelopment plans must preserve the natural, heritage and cultural resources of each island. (9) NO SME DEVELOPMENT ACT (SDA) The SDA, from a domestic perspective, will provide the foundation on which to improve the economic conditions of The Bahamas. From an international perspective, it will attract foreign investors who want to partner with local entrepreneurs in fields such as e-commerce, manufacturing, agriculture, and information technology. These industries are tremendously underserved and underdeveloped. These types of investments would diversify the Bahamian economy, which relies heavily on tourism and financial services.
The SDA will revitalize the entrepreneurial spirit in all islands of The Bahamas and will outline policies and initiatives that would assist in the development of SMEs–a major driving force of the economy. All current incentives, concession and legislation that are afforded to small businesses should be modified and encompass in the SDA. (10) NO SME DEVELOPMENT CENTRE (SDC).
The new SME development centre must be developed and structured to eliminate financial and non-financial decision making based on political influences when formulating national economic policies. The SDC will establish and identify the roles and responsibilities of a Regulatory and Advisory Board that would oversee the enforcement of the SME Developing ACT (SDA).
Public and private sector executives will be selected to this Board. Members of this Board will be mandated not to make decisions based on political; gender or cultural motives. This Board will have the authority to make recommendations to modify particulars of the SDA based on economic conditions or the request of stakeholders.
(11) NO NATIONAL FUNDING SCHEME A 15-20 million SME fund needs to be developed by local and foreign investors. Government need to eliminate legislations that make it almost impossible for SMEs to access international funding. In addition, government, local and international lending institutions must partner to extend meaningful financial support to SMEs. Lenders need to focus on packaging loans extended to SME that have built-in accounting management, human resources and marketing support programs at an affordable cost for at least a year. In conclusion, the PLP government must
1. Swiftly attack this economic crisis by developing a National Strategic Plan for SME Development that focuses on sustainable economic growth and economic diversification.
2. In addition, there must me more public –private partnership (PPT) when developing economic policies because it would prevent unnecessary roadblocks for entrepreneurial advancement that are difficult to reverse.
I would like for SME owners to contact me so that we can collaborate to improve the economic conditions in The Bahamas To contact me call 326-6748 / 427-3640 or log on to www.markturnquestconsulting.com
The Bahamas Small Business Sector Is In Ruins
Prepared By Mark A. Turnquest
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