CFAL President Anthony Ferguson yesterday stated that the Bahamas Entrepreneurial Venture Fund (BEVF) has been an "abysmal failure" in stimulating healthy small and medium-sized enterprise (SME) growth in the country, stressing that fundamental policy directives, rather than the BEVF's staff, were largely responsible for the challenges facing the fund.
Speaking on "Let's Talk Live" with host Carlton Smith on Guardian Talk Radio 96.9 FM, Ferguson charged that the fund's success rate had been undermined both by questionable accountability and vetting processes.
"The venture capital fund has existed for many years and is just an abysmal failure. I haven't seen any public report or financial [statement] where we can see what the returns are on the monies that we the Bahamian people have invested in that," he stated.
Senator Jerome Gomez, another guest on the show, acknowledged that the BEVF had struggled over the years but believed that the fund was correcting itself despite assertions from BEVF officials that the fund's loan portfolio had a roughly 80 percent failure rate.
"This one is correcting itself. It's found the right formula, it's gotten more ruthless in what it requires... The board may make some mistakes in trying to get some employment out. Over time you pull back and correct your business model," said Gomez.
Gomez, who was charged with the responsibility for the administration of the BEVF in 2005, believes that greater consistency is needed regarding the fund's annual government subvention. Gomez argued that the BEVF's sporadic access to government capital is the main culprit for the fund's woes over the last decade.
The BEVF offers up to $200,000 in equity and $100,000 in debt financing to successful applicants seeking to launch their SMEs.
In September, BEVF Chairman Michael Cunningham revealed that the government was 18 months behind on its allocations to the fund and was currently operating on "repayments, loans, and dividends" from successful BEVF-funded projects. Ferguson's assessment of the fund's future was blunt.
"The venture capital fund was a great idea. The problem with it was that it was not consistently getting the annual subvention. One million dollars really can't do much, and I think perhaps what they could have done was have an external advisory committee of investment professionals to vet some of the projects so that we could have probably had a higher success ratio.
"But I think it has to be restarted to assist some of the smaller businesses or else it's going to be challenging to grow the economy," he stated.
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