THE
BAHAMAS SMALL & MEDIUM SIZE ENTERPRISE DEVELOPMENT ACT 2015
Prepared
by Mark A. Turnquest (August 26, 2014)
1.0
INTRODUCTION
Small and Medium Sized Enterprises
(SMEs) in The Bahamas will soon be able to compete globally because public and private executives have already crafted the Bahamas Small & Medium Size Development Act (SME Act). The SME
Act is forecasted to be legislated during the first quarter of 2015. It will stimulate
economic growth and mitigate the negative impact of future recessions on the Bahamian
economy.
2.0
SMEDA - SME ACT’s EXECUTION AGENCY
The SME Act will be enforced and supervised
by a non-political organization called the Small
& Medium Size Enterprise Development Agency (SMEDA). A market research has already been completed
in early 2014 to obtain information on how SME’s owners would like for business
development activities to improve and progress in The Bahamas. In addition, SME
owners made recommendations on how SMEDA should be structured to cater to the
successful development of the SME sector in The Bahamas.
Public and private sector executives
will be selected to SMEDA’s Board. Members of this Board will be mandated not
to make decisions based on negative political, gender or cultural motives. SMEDA’s
Board will have the authority to make recommendations to modify particulars of
the SME Act based on economic conditions or the request of stakeholders.
Presently, a strategic plan is being
developed on how SMEDA would be properly structured so that it can operate in
an effective and efficient manner.
3.0
THE MISSION OF THE SME ACT
The SME Act, from a domestic perspective,
should provide the foundation on how to
improve the economic conditions of the Bahamas. The SME Act, from an
international perspective, should
attract foreign investors who want to partner with local entrepreneurs in
fields like E-commerce, manufacturing, agriculture and information technology.
These industries are tremendously underserved and underdeveloped. These types
of investments would diversify the
Bahamian economy, which, to its peril, relies too heavily on Tourism and
Financial Services sectors.
The SME Act will revitalize the entrepreneurial spirit in all islands
of The Bahamas. The SME Act, in its core will outline policies and initiatives that would assist in the development
of S SMEs- a major driving force of our nation.
The SME Act will increase the national economic value of SMEs in The Bahamas. In
addition, its purpose is to synchronize and
unify the efforts of the Government, financial
lending institutions, NGOs, SMEs and other stakeholders as it relates to small
business development in The Bahamas. Most importantly, the SME Act will identify
how local and international investors and entrepreneurs can qualify for incentive
and stimulus programs when it comes to financing and developing innovative
products and services.
4.0
THE IMPORTANCE OF THE SME ACT
The major reason why there is not an
explicit master plan for SME development in The Bahamas is because of the
absence of a SME Act to drive national strategies.
Six
(6) important reasons why a SME Act was crafted:
I.
The SME Act will encourage Bahamians
to become entrepreneurs because
it will outline excellent incentives /concessions that will be rewarded for:
§
The
development of new innovative products /services
§
The
hiring of a specific amount of Bahamians
§
increasing
government revenues due to a significant amount of payments made for National
Insurance, custom duties, property taxes, license fees etc
II.
The
SME Act will increase foreign direct investments (FDI) because international investors, who are
entrepreneurial, will partner with local Bahamians to develop innovative
products and services in underserved and undeveloped industries;
III.
The SME Act will keep many existing
businesses open during a recession because
it will provide incentives / concessions to businesses that employ a moderate amount
of staff, are up to date with NIB and
custom duties, Value Added Tax (VAT), business License fees and contributing to
making The Bahamas more competitive globally;
IV.
The SME Act will encourage Family
Island Development by
providing incentives / concessions to Bahamians who want to open small complimentary
businesses (tour operators, movie theaters, agriculture, Laundromats etc.) on a
family island that will increase the employment rate, improve the
infrastructure of the island, encourage Bahamians to reside there permanently
and entice more domestic and foreign tourists to visit the island;
V.
The SME Act will increase The Bahamas
Gross Domestic Product (GDP)
because it will eventually reduce the importation of foreign products and
services, increase compensation to employees, increase business profits,
increase government income and increase interest payments to Bahamians; and
VI.
The SME Act will reduce the national
debt and deficit because
it will decrease Government spending, particularly on hiring civil servants,
and increase Government licenses, fees and taxes because more businesses will
be operating in The Bahamas.
5.0
THE IMPACT OF THE SME ACT ON STAKEHOLDERS
The SME Act will impact the decision
making process of the following organizations: Government, SMEs (new entrepreneurs, existing business owners) financial
lending institutions, NGOs, professional / trade associations in the
following manner:
5.1
GOVERNMENT:
·
Incentive
programs will be developed to encourage the creation of innovative products or
services that will tremendously improve economic development;
·
Business
recovery programs will not focus on unemployment hand-outs, but will assist businesses
owners in maintaining current employment levels;
·
The
Bahamas Development Bank, The Bahamas Agriculture and Industrial Corporation
and The Bahamas Entrepreneurial Venture Fund would harmonize policies and
procedures; and align operational structures to become more effective and
efficient when catering to SMEs. All government agencies and department that
cater to businesses will work in synergy with SMEDA; and
·
Acquiring
a business license will be less tedious because all of the relevant regulatory
bodies would be under one roof.
5.2
SMEs (NEW ENTREPRENEURS):
·
New
entrepreneurs that create innovative products or services will have easy access
to financial funding, technical training and business support services.
·
Favorable technical and business management support will be
given to entrepreneurial ventures
that develop innovative products, delivery systems, operational structures and
marketing strategies in film making, agro-processing, fashion design,
e-commerce, information technology, Junkanoo, agriculture, art, e-learning,
multi-media production, manufacturing, education, horticulture, software
development, fly fishing, art and authentically Bahamian handicraft.
5.3
SMEs (EXISTING BUSINESSES):
·
SMEs that operate in a socially
responsible manner (e.g.
up-to date in NIB, custom duty payments, VAT etc.) will have it less arduous to
access financial funding and stimulus packages during economic downturns.
·
Medical, health and wellness,
sports tourism, e-commerce, Information and Communication Technology (ICT),
apiculture (bees agriculture), green energy production, innovative
manufacturing and agriculture (coconuts etc.) markets will be effectively and efficiently exploited in order to
successfully grow and diversify the economy.
·
The government and
its partners (public–partnership relationship) will focus on revitalizing the cultural tourism,
agriculture, fishing, fish farming and manufacturing industries. I addition, the hemp, sisal, sponging and
forestry industries will be successfully revitalized.
5.4
FINANCIAL LENDING INSTITUTIONS:
·
Commercial Banks, Credit Unions, and Government financial funding programs will focus on providing adequate
capital to variable SMEs in introductory,
growth and maturity stages of the business life cycle; and
·
All
financial lending institutions will engage in collaborate activities to develop
various funding packages that address all financial requirements of viable SMEs.
5.5
NGOs (TRADE ASSOCIATIONS / OTHER):
·
The
Bahamas Chamber of Commerce and Employers’ Confederation (BCCEC) , The
Inter-American Development Bank, The College of The Bahamas (and other
colleges), The International Labour Organization, The Inter-American Institute
For Cooperation on Agriculture, The Bahamas Business Association etc. will collaborate
efforts with SMEDA to oversee the enforcement of the SME Act;
5.
6 PROFESSIONAL ASSOCIATIONS:
·
Business,
Accounting, Medical, Technical, Merchandising, Manufacturing, Construction,
Real Estate, Fishing, Agriculture, etc. Associations will lobby for industries
specific programs / concessions / incentives that would increase competitive capabilities to offset negative
impacts of the Economic Partnership
Agreement (EPA) and joining the World
Trade Organization (WTO).
6.0
THE BASIC STRUCTURE OF THE SME ACT
The basic structure of the SME Act
should have five major components:
6.1 A CLEAR DEFINITION OF A SME
·
The
national definition of a SME will be based on the combination of the following:
Industry, Annual Sales, Employment Level
and Ownership (Capital Structure);
·
This
definition will clearly indicate the difference between “small businesses” and
“medium sized businesses”; and
·
Stakeholders
that cater to SMEs will be requested to honor this definition.
6.2 INCENTIVES, CONCESSIONS &
STIMULUS PROGRAMS
·
The
present Incentive / Concession Legislation will be encompassed in the SME Act;
·
The
SME Act will outline new incentives and concessions that would be received by
SMEs for developing innovative products and services that contribute to the country’s
economic development;
·
The
SME Act will introduce stimulus programs that will be available to selective
SMEs to mitigate the negative impact of future recessions. SMEs must be
“socially responsible”, maintain a specific employment level and show signs of
vitality;
·
The
SME Act will explicitly indicate which SMEs are eligible for incentives,
concessions and stimulus packages.
6.3 NATIONAL SME FINANCIAL FUNDING
SCHEME
·
Government
lending agencies, commercial banks, credit unions and other financial lending institutions
will collaborate and pool together resources to develop a National SME Financial Lending Scheme (NFS). This NFS will make it easy to access capital for various
stages of SMEs’ life cycle (Introductory, Growth, Restructuring, Recovery etc.);
·
The
NFS will have clear policies, and loan packages will be categorized into
specific programs based on financial requirements (needs); and
·
The
NFS will be properly overseen by SMEDA
6.4 TECHNICAL TRAINING & BUSINESS
SUPPORT PROGRAMS
·
Management,
marketing, human resources, computer, finance, accounting and entrepreneurship
training will be provided at affordable prices;
·
Business
Support Programs (BSPs) will be available to all SMEs. SMEs will have access to
accountants, lawyers, business, marketing, human resources, information
technology and financial consultants who
sign up and are approved by SMEDA to
offer their services at affordable rates;
·
Business coaches and consultants will be
assigned to SMEs on a need-by-need or contractual bases; and
·
Technical
training, BSPs and financial funding will be strategically linked so that SMEs
will have a greater chance to operate viable businesses.
7.0
CONCLUSION
The major benefit of the SME Act will
be that, through its aggressive financial and overall SME support policies, the
Bahamian economy would become diversified and hence, be more protected against
future recessions.
For more information, please feel free to
contact Mark A. Turnquest at:
Telephone:
(242) 326-6748 / 427-3640
Website: markturnquestconsulting.com
