Published On:Thursday, June 10, 2010
By MARK A TUNRQUEST
I HAVE observed (from a non-partisan political view) the political behaviour of both governments and commercial banks in relation to the development of small and medium-sized enterprises (SMEs) in the Bahamas for the last 10 years. In my observation, the following five main situations have occurred:
* The absence of a national plan for SMEs' development. Only recently, a SME Development Act is said to be scheduled for legislation in 2011.
* Lack of a consistent effort to provide adequate financing and business support services to SMEs. Commercial banks only provide 1 per cent of capital financing to SMEs, and the Government inadequately assists SME owners with business support services once they commence operations.
* The lack of collaboration between government and banks to develop a sophisticated approach towards SMEs. The commercial banks (local and foreign) make in excess of $300 million in profits annually, and have failed to assist the Government with implementing strategies that can help SMEs to contribute more to GDP. SMEs currently only contribute 5 per cent of GDP.
* National Budgets are prepared without prior consultation with key stakeholders in the private sector. The individuals in government who formulate the annual budget always fail to inform key stakeholders in the private sector about tax increases or major policy adjustments that could negatively impact their business operations. Only after uproar from those affected does the Government sometimes alter tax increases etc. This could be prevented if consultation begins three months before the Budget is prepared.
* The lack of foresight to diversify the economy. Over the years we have had a Ministry of Finance, Ministry of Financial Services and a Domestic Investment Board. However, SMEs have not received serious attention because the sector was - and is - overshadowed by the focus to develop the tourism and financial services sectors. All governments have failed to diversify the economy because SMEs presently only contribute 5 per cent of GDP.
MISSION OF THE
MINISTRY OF
COMMERCE
My advice to the FNM government is to create a Ministry of Commerce without incurring any costs or expenses. Simply transfer a few existing staff from the Ministry of Finance and empower the present Minister of State for Finance to head it. If additional persons are needed, I am optimistic that business persons from the private sector would volunteer their services (on an advisory board) to improve the economic conditions of the Bahamas because it would be in their best interests to do so. I would be a volunteer if asked.
The Ministry of Commerce's mission would to be to create policies and strategies that increase SMEs' contribution to GDP and to diversify the economy. Large businesses, owned by Bahamians, would continue to receive government and public support. However, a special goal will be to immediately develop the SME sector because it has been neglected for too long by stakeholders who were supposed to assist in its growth and development.
GOALS OF THE
MINISTRY OF
COMMERCE
The main goals of the Ministry of Commerce would be to:
* Spearhead the formulation and implementation of the Bahamas SME Development Act. The Ministry would work closely with both the public and private sectors to ensure the focus of the Act is to create and sustain SME development in the Bahamas.
* Establish a Family Island Development Board. This board will be responsible for formulating strategy and implementation plans on how we can shift about 1/3 of the population from Nassau to various Family Islands.
Each Family Island will be analysed 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. This Board will work closely with the Ministry of Tourism and BAIC.
* Encourage local commercial banks and international financial lending institutions to invest more in the Bahamas. The Ministry of Commerce will be an advocate for Bahamian banks to retain more of their profits for the purpose of providing adequate financial resources to viable SMEs. The Ministry will work directly with the Central Bank of The Bahamas to ensure that Bahamians SMEs can have easy access to international financing.
* Have regular meeting with professional organisations and unions. This will allow the Ministry of Commerce to be knowledgeable about industry-specific problems and opportunities.
* Oversee the management of all government agencies that cater to businesses. BAIC, the Bahamas Entrepreneurial Venture Fund, Business License and Evaluation Department and the Bahamas Development Bank etc, would be mandated to synchronise activities that provide effective and efficient services to SMEs.
* Liaise with business organisations such as the Chamber of Commerce, Bahamas Business Association and community groups in order to determine their needs and concerns, so that they can be addressed in a timely manner.
* Establish consumer and business protection agencies. These agencies would be responsible for ensuring that both the buyer and seller behave in a socially responsible manner when exchanging money for goods or services. In addition, the Ministry could partner with the Royal Bahamas Police Force and the National Crime Committee to reduce all types of crime.
* Establish an Infrastructure Development Committee. This committee will work closely with the following: BEC, Water and Sewerage Corporation, Ministry of Public Works and Transport, Bus and Taxi Unions etc. The mission of this committee would be to analyse the infrastructure requirements of the entire Bahamas for the next 10-15 years. This will prevent the outcry of business owners when infrastructural upgrading (road reversals, highway restructuring and 'road digging' projects) negatively affect their livelihood. If this occurs then business plans and models could be adjusted well in advance.
* Collaborate with international organisations such as the IDB, ILO, IICA and CEDA to prepare Bahamian businesses to compete globally. The Ministry of Commerce will provide information in a timely manner about how international trade agreements (such as the EPA) and becoming a member of international organisations (WTO) would affect local SMEs.
* Encourage learning institutions and business support organisations to provide innovative and affordable services to SMEs. The College of the Bahamas and other tertiary institutions would be required to conduct more primary research initiatives on how to improve local industries and markets. Accountants, lawyers, business, marketing, human resources and financial consultants would be given motivation (via grants) to reduce the price of basic services.
* Finally, the Ministry of Commerce will ensure that the Bahamas constantly experiences economic development. This could be accomplished by:
* Encouraging other government ministries and departments to focus on operational effectiveness and efficiency.
* Developing initiatives that reduce the nation's debt, unemployment and inflation levels.
* Developing initiatives that increase foreign direct investment, GDP and economic diversity.
* Developing initiatives to reduce crime and protect our environment.
I hope that the FNM government will create the Ministry of Commerce because it is important to the economic development and diversification of the Bahamas.
NB: The author can be contacted at telephone: (242) 326-6748 /427-3640
By MARK A TUNRQUEST
I HAVE observed (from a non-partisan political view) the political behaviour of both governments and commercial banks in relation to the development of small and medium-sized enterprises (SMEs) in the Bahamas for the last 10 years. In my observation, the following five main situations have occurred:
* The absence of a national plan for SMEs' development. Only recently, a SME Development Act is said to be scheduled for legislation in 2011.
* Lack of a consistent effort to provide adequate financing and business support services to SMEs. Commercial banks only provide 1 per cent of capital financing to SMEs, and the Government inadequately assists SME owners with business support services once they commence operations.
* The lack of collaboration between government and banks to develop a sophisticated approach towards SMEs. The commercial banks (local and foreign) make in excess of $300 million in profits annually, and have failed to assist the Government with implementing strategies that can help SMEs to contribute more to GDP. SMEs currently only contribute 5 per cent of GDP.
* National Budgets are prepared without prior consultation with key stakeholders in the private sector. The individuals in government who formulate the annual budget always fail to inform key stakeholders in the private sector about tax increases or major policy adjustments that could negatively impact their business operations. Only after uproar from those affected does the Government sometimes alter tax increases etc. This could be prevented if consultation begins three months before the Budget is prepared.
* The lack of foresight to diversify the economy. Over the years we have had a Ministry of Finance, Ministry of Financial Services and a Domestic Investment Board. However, SMEs have not received serious attention because the sector was - and is - overshadowed by the focus to develop the tourism and financial services sectors. All governments have failed to diversify the economy because SMEs presently only contribute 5 per cent of GDP.
MISSION OF THE
MINISTRY OF
COMMERCE
My advice to the FNM government is to create a Ministry of Commerce without incurring any costs or expenses. Simply transfer a few existing staff from the Ministry of Finance and empower the present Minister of State for Finance to head it. If additional persons are needed, I am optimistic that business persons from the private sector would volunteer their services (on an advisory board) to improve the economic conditions of the Bahamas because it would be in their best interests to do so. I would be a volunteer if asked.
The Ministry of Commerce's mission would to be to create policies and strategies that increase SMEs' contribution to GDP and to diversify the economy. Large businesses, owned by Bahamians, would continue to receive government and public support. However, a special goal will be to immediately develop the SME sector because it has been neglected for too long by stakeholders who were supposed to assist in its growth and development.
GOALS OF THE
MINISTRY OF
COMMERCE
The main goals of the Ministry of Commerce would be to:
* Spearhead the formulation and implementation of the Bahamas SME Development Act. The Ministry would work closely with both the public and private sectors to ensure the focus of the Act is to create and sustain SME development in the Bahamas.
* Establish a Family Island Development Board. This board will be responsible for formulating strategy and implementation plans on how we can shift about 1/3 of the population from Nassau to various Family Islands.
Each Family Island will be analysed 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. This Board will work closely with the Ministry of Tourism and BAIC.
* Encourage local commercial banks and international financial lending institutions to invest more in the Bahamas. The Ministry of Commerce will be an advocate for Bahamian banks to retain more of their profits for the purpose of providing adequate financial resources to viable SMEs. The Ministry will work directly with the Central Bank of The Bahamas to ensure that Bahamians SMEs can have easy access to international financing.
* Have regular meeting with professional organisations and unions. This will allow the Ministry of Commerce to be knowledgeable about industry-specific problems and opportunities.
* Oversee the management of all government agencies that cater to businesses. BAIC, the Bahamas Entrepreneurial Venture Fund, Business License and Evaluation Department and the Bahamas Development Bank etc, would be mandated to synchronise activities that provide effective and efficient services to SMEs.
* Liaise with business organisations such as the Chamber of Commerce, Bahamas Business Association and community groups in order to determine their needs and concerns, so that they can be addressed in a timely manner.
* Establish consumer and business protection agencies. These agencies would be responsible for ensuring that both the buyer and seller behave in a socially responsible manner when exchanging money for goods or services. In addition, the Ministry could partner with the Royal Bahamas Police Force and the National Crime Committee to reduce all types of crime.
* Establish an Infrastructure Development Committee. This committee will work closely with the following: BEC, Water and Sewerage Corporation, Ministry of Public Works and Transport, Bus and Taxi Unions etc. The mission of this committee would be to analyse the infrastructure requirements of the entire Bahamas for the next 10-15 years. This will prevent the outcry of business owners when infrastructural upgrading (road reversals, highway restructuring and 'road digging' projects) negatively affect their livelihood. If this occurs then business plans and models could be adjusted well in advance.
* Collaborate with international organisations such as the IDB, ILO, IICA and CEDA to prepare Bahamian businesses to compete globally. The Ministry of Commerce will provide information in a timely manner about how international trade agreements (such as the EPA) and becoming a member of international organisations (WTO) would affect local SMEs.
* Encourage learning institutions and business support organisations to provide innovative and affordable services to SMEs. The College of the Bahamas and other tertiary institutions would be required to conduct more primary research initiatives on how to improve local industries and markets. Accountants, lawyers, business, marketing, human resources and financial consultants would be given motivation (via grants) to reduce the price of basic services.
* Finally, the Ministry of Commerce will ensure that the Bahamas constantly experiences economic development. This could be accomplished by:
* Encouraging other government ministries and departments to focus on operational effectiveness and efficiency.
* Developing initiatives that reduce the nation's debt, unemployment and inflation levels.
* Developing initiatives that increase foreign direct investment, GDP and economic diversity.
* Developing initiatives to reduce crime and protect our environment.
I hope that the FNM government will create the Ministry of Commerce because it is important to the economic development and diversification of the Bahamas.
NB: The author can be contacted at telephone: (242) 326-6748 /427-3640
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