The president of the Bahamas Investments and Securities Business Association said today the fastest route out of the ‘COVID-choked economy’ is staring The Bahamas right in the face – private sector regulated funds that can serve a triple role.

“The fund sector of the Bahamian economy is one of the most overlooked sources of capital to drive businesses at all levels,” said Andrew Rolle, who took over the reins of the fund and securities association this year. “There are, literally, hundreds of funds regulated by the Securities Commission of The Bahamas and while foreign investors most often rely on funds for the projects they develop, Bahamians have not been as aware of the untapped potential of funds, relying instead on borrowed money from banks or other lenders or even family to start or expand a business.”

Using a well-regulated fund for investment capital, said Rolle, allows small and mid-size businesses to expand and fill needs often created by foreign direct investment (FDI).

“The Bahamas must continue to welcome FDI, but we cannot be reliant on extremely large projects for the bulk of our employment and livelihood,” he said. “The use of privately-generated and managed funds will allow us to enjoy a more balanced economy with local service providers, smaller construction projects, expanded short-term stay operators, new concepts in the fields of health and medical care, agri-business, digital assets and communications, information and technology.”

Funds in which private citizens invest, often along with institutional investors, can play a triple role, says Rolle, who founded Mundo Advisors following a decade long career in private banking.

“Funds can, firstly, provide capital for the local business, secondly, complement the needs of FDI and thirdly, can be used to satisfy the investment requirements for those seeking permanent residency,” he said.

Current policy requires a person seeking permanent residency to invest a minimum of $750,000, a requirement usually met by investment in real estate. While that has been a much-needed boon to the real estate industry, Rolle believes that expanding the pathway to residency to include funds will serve indirectly to make home ownership more realistic for more people.

“A young professional who has a good business plan but lacks initial funding which he or she is not likely to get from a bank without a good track record, especially in these challenging times, may be able to access funds through one of the government-funded agencies including the Small Business Development Centre, but where does the SBDC get its money from? I am suggesting that in addition to government funding that the SBDC or the Bahamas Agricultural and Industrial Corporation, for instance, access private sector funds raised both locally and through foreign investment for residency. Such funds funneled through the Securities Commission of The Bahamas could breathe new life into the COVID-choked economy.”

The lockdowns, restricted travel and safety protocols that have had dramatic impact on the tourism-driven economy have also provided unprecedented opportunity for the advancement of local small to mid-size businesses if – and only if – access to capital continues by government and is buoyed by even greater funding from the private sector, says Rolle.

“Bahamian citizens and residents are doing what they rarely did before – looking to ‘home’ for products, goods and services that they imported before the pandemic made travel difficult and the supply chain challenging,” he added.

Rolle acknowledged that the small size of the Bahamian market is offset by the vast amount of wealth that can be used to create a capital market that in turn will shore up or expand existing economic drivers and inspire new enterprises.

“Capital must be raised from local and international investors in order to further development of the emerging technology start up and digital entrepreneurial eco-system, invest in existing businesses to assist them transforming their business models to deliver what is required to survive in today’s economy, boost Investment in agriculture (and agrotechnology products) and food processing in order to decrease our dependence on food imports and enable development of boutique resorts throughout the family islands, lessening our reliance on the mega resorts; and modernize our infrastructure by way of public-private partnerships,” he said.

“Immigration policy can also be reformed by carving out a category for permanent resident applicants to be successfully approved by making a minimum investment into Bahamas-domiciled investment funds. This would have a broader economic impact beyond real estate and incentivize the development of a community of local alternative investment fund managers that would in turn garner a more dynamic local and cross-border capital markets system. It’s a win-win for everyone.”