December
18, 2012
By Mark A. Turnquest
TOP DOWN ECONOMIC STRATEGIES ARE THE PAST
National
policies makers have focused on top down economic strategies to improve Tourism, Financial Services and
Construction Industries for almost 40 years. However, after all is said and
done, The Bahamas as of December 2012 is in economic distress because of the
following:
·
Sovereign
rating was down-graded from BBB1 to BBB (Standard
and Poor’s) and from A3 to Baa1
(Moody’s)
·
Almost
5 Billion national debt, grown from 31.7% of GDP in 2007 to 53% of GDP in 2012
·
550
million plus deficit (expected to grow to 671 million (2013/14)
·
15%
Unemployment rate (could elevate up to 20% in 2013)
·
Low
GDP (8 Billion) and low projected economic growth (2.5%)
·
A
social welfare society (an enormous increase in social
safety net transfers)
·
A
stagnated Tourism, Financial Services and Construction Industries
·
An
unmotivated and demoralized small business sector
The former government had mismanaged the economy with a double edged sword
in 2007-2012 and made the recent recession worse. The former
Minister of State of Finance and his colleagues formulated failed top down economic
strategies in recent years, namely: the costly dredging of the Nassau Harbour,
unsuccessful air travel rebates, unwarranted tax increase in the vulnerable automobile
industry and terminating concessions in the manufacturing industry. In
addition, the former Minister of Works spearheaded the catastrophic road works
project. As a result, the small and medium sized enterprises (SMEs) were
neglected and hundreds closed. The ultimate destruction was that SMEs contribution to GDP declined from 5 % (2007)
to 2% (2012).
Top down strategies, which focus on improving the
tourism, financial services and construction industries, did not significantly
increase GDP (8 Billion) to cover national expenses and reduce the national
debt / deficit. To cover recurrent expenses, reduce national deficit and debt
our annually GDP needs to be in the vicinity of 12 Billion.
Along with tax
(property, income, value added) reform and economic diversification, the
only way our country is going to obtain an annual GDP of 12 Billion is to focus on bottom up economic strategies to improve the SME sector.
BOTTOM UP ECONOMIC STRATEGIES ARE THE FUTURE
THERE MUST BE A RISE OF THE SMALL BUSINESSMAN! National policies
makers over the years casually indicated that small businesses are the pillars
of our economy and that there must be a focus on economic diversification. However, as of May, 2012 there were not
significant evidences that they were serious about trying to improve the small
business sector and diversify the economy. However, the new government
understands that bottom up economic
strategies to improve the SME sector is the way to go in the future. This
is evident because of the following:
·
The legislation of the Small Business Act in 2013
·
The creation of the Small Business Development Agency in
2013
·
Conducting a market research in order to improve the SME
sector
·
Formulating a long overdue strategic plan for SME
development
·
The fair road works compensation program
·
The renewal of concessions for manufacturers
·
Formulating new innovative agriculture strategies
·
A new strategic approach to develop SMEs in the Family Islands
·
Focus on reviving dormant industries and enhancing
existing ones
·
Formulating clustering strategies for productive and
creative markets
·
Formulating a creative national financial lending
mechanism for SMEs
Only the serous attention to develop the SME sector can save our nation
from financial collapse. Moody’s and Standard and Poor’s will improve our
Sovereign rating in 2013 because the PLP government is conducting the necessary bottom up economic strategies
to correct the failed top down economic strategies by the former FNM
government.
To help develop our SME sector you
can contact me at 326-6748 / 427-3640, email: markaturnquest@gmail.com,
website: http://www.markturnquestconsulting.com
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