A local business consultant has hit back at suggestions from the managing director of The Bahamas Development Bank (BDB) that the government should consider allowing it to lead the way as a key small business advisory agency, rather than requiring the wind-up of the bank under forthcoming small and medium-sized enterprise (SME) legislation.
Mark Turnquest, of Mark A. Turnquest and Associate Companies, said that preliminary evidence from a needs assessment done on the SME sector in The Bahamas shows that no current institution is serving their needs, and the small and medium-sized enterprise development agency (SMEDA), which would be created by the SMEDA Bill, is necessary to plug the gaps in the current institutional support network.
"The SMEDA is a must in their minds," he told Guardian Business.
His comments come after Arinthia Komolafe, managing director of the BDB, called on the government to allow the BDB to serve the same purpose as a SMEDA in a "more cost effective way".
She said the current SMEDA Bill represents a "threat to the BDB", as it requires the winding up of the bank; she called for the government to, instead, invest the $25 million start-up costs for the SMEDA into the BDB, which could "serve the same purpose."
Komolafe, who was appointed to head the BDB in September 2013, has committed to leading a turn around at the BDB, not only strengthening the BDB's balance sheet and ability to lend, by improving its level of delinquency, but also adding more business advisory services into its portfolio of offerings, appreciating that a lack of understanding of business management is a major source of SME failure.
At present, just over one third of its loans are performing, with around 500 businesses in arrears to the tune of $41 million.
Turnquest, who played a role in the development of the SMEDA Bill, said there is no way that the BDB can do what SMEDA is intended to do.
He pointed out that a needs assessment conducted after a survey of SMEs in The Bahamas, which has yet to be officially released, shows that there are major gaps in the support network for SMEs, whether on the level of technical assistance or financing.
One of the critical elements of the SMEDA will be its lack of political interference, said Turnquest, suggesting this has hampered the effectiveness of The Bahamas Development Bank.
"The BDB cannot assist them. Just the name, the history, the culture, what Bahamian people understand about the BDB...Politics destroyed any type of transformation of the BDB," he said.
"SMEDA is going to correct all of the wrongs of the financial and non-financial institutions in the past. It will bring together all of the agencies so we can operate in an effective and efficient manner.
"It will be focused on SME development in a comprehensive and holistic manner. It will be everything in one, with no political influence, because in its structure and legislation it will say the Minister of Finance would have no leverage over the organization."
Turnquest said that rather than increasing bureaucracy, as Komolafe said the establishment of a SMEDA would do, Turnquest said it will reduce "red tape".
"It's not a bureaucracy; it's one entity that can enhance SME development in The Bahamas," he said.
Under the SMEDA Bill, several agencies that currently provide various services to businesses, such as the Bahamas Agricultural and Industrial Corporation and the Bahamas Venture Capital Fund, would be amalgamated under one roof, while the BDB would be wound up.
"All they're doing now is butting up against themselves and doing duplicate work, and offering no benefit to the business man," Turnquest said of these entities.
He said the critical difference between a SMEDA and the BDB would be the level of advisory assistance SMEDA would provide to SMEs, notwithstanding Komolafe's commitment to seeing the BDB grow its offerings in this area.
"The BDB only really provides the financial mechanism. SMEDA would provide management consulting, accounting, and marketing services to small and medium sized businesses who want to grow. The training mechanism and the coaching and counseling mechanism will take place via SMEDA.
"Even licensing your business SMEDA will take care of. It will be a one-stop shop, like the Small Business Administration in the U.S.," said Turnquest.
Rather than encouraging the government to look at letting a transformed BDB play the role that the SMEDA would play, Turnquest suggested the BDB looking at how it can "align" itself with the SMEDA, and even suggested that Komolafe herself might do well to seek a job at the agency.
"She is saying what she is saying because she is the director of an organization that will cease to exist in the future," he stated.
Turnquest said he expects the Bill to move forward once the government finishes with value-added tax (VAT) implementation this year.
"The only thing that is stopping SMEDA from progressing is VAT. Once that progresses, you are looking at the end of the year for that to be completed," he added.

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