Above: Bay Street in Nassau (CJ Photo)
By Mark A Turnquest
After my organization hosted the country’s first Small Business Summit in 2009, it was evident that the Bahamas needed a national strategic plan for the development of small and medium sized enterprises (SMEs).
Industry leaders from the professional and medical services, manufacturing, agriculture, fisheries, wholesale merchandizing and retail, along with those from construction, tourism, hospitality, commercial banks and government indicated during the 2009 Small Business Summit that an act to develop the SME sector was far overdue.
As a result, a report was developed to identify how this SME could be formulated and implemented in an effective and efficient manner: Act As One: The Importance of Stakeholders’ Collaborative Efforts When Developing the Small Business Act of the Bahamas (view it here).
Having consulted with the government, I applaud the Bahamas Ministry of Finance team for creating the political will to develop the Bahamas SME Development Act and to create a new strategic framework to enhance the productivity level of the sector.
My main concern with the formulation process so far is that there has been limited participation by the act’s main stakeholders – SMEs.
Other concerns are as follows: there should be town meetings with the wider SME community in order to gather information about the major problems and opportunities facing the sector, and there need to be more industry-specific discussions, so that local and international issues that affect individual industries could be addressed in the act.
The formulation process of the SME Development Act needs to be evaluated and corrective measures should take place. I am aware that there were consultations with The Inter-American Development Bank, the Bahamas Chamber of Commerce and Employers Confederation — and a few others — but this not an effective way to develop such an important act.
There needs to be “inter-stakeholder synergy”; this means that more trade organizations, banks, industry leaders and, especially, SME owners, should be involved in the formulation process before the act is debated in Parliament.
The main policies that must be adapted by key stakeholders when diligently transforming the act from formulation to implementation are as follows:
I. The new SME development framework that is being developed must be structured to eliminate financial and non-financial decision making based on political influences. This is the main reason why the Bahamas Development Bank is near bankruptcy;
II. Focus on family island development but keep the natural, heritage and cultural resources of each island;
III. Reduce the barriers that make it almost impossible for SMEs to access international funding;
IV. Promote and encourage e-commerce activities and remove policies that make opening on-line merchant accounts very difficult;
V. Adapt public policy tools to SME needs: especially facilitating SMEs’ participation in the public procurement process;
VI. Consider creating a Ministry or Department of Commerce to protect the SME sector from the EPA and to develop strategies to improve on its 5% contribution to GDP.
I. Partner with government and international leading institutions to develop comprehensive SME Funding Scheme (SFS) so that more financial support can be extended to SMEs;
II. Focus on packaging loans extended to SME that have built-in accounting management, human resources and marketing support programs at an affordable cost for at least a year.
THE BAHAMAS CHAMBER OF COMMERCE AND EMPLOYERS’ CONFEDERATION
I. Focus on providing new SMEs with more market information about various industries. The organization should partner with the College of the Bahamas and the Inter-American Development Bank to perform more market research on the economy of the Bahamas;
II. Encourage professional and trade associations, and SMEs to become more knowledgeable about the pros and cons of the Economic Partnership Agreement (EPA).
SMEs (NEW & ASSISTING)
I. SMEs must be committed to acting in a socially responsible manner (paying business licenses, NIB, correct custom duties etc);
II. SMEs must become knowledge about all aspects of their business model (operations, marketing, accounting/finance, human resources, etc);
III. All SMEs must have sound marketing, management, human resource and accounting systems. SMEs must invest in the Quickbooks Accounting Software; it is an invaluable tool for businesses.
THE BAHAMIAN CONSUMER
At the heart of the new Act, there should be the conviction that achieving the best possible framework conditions for SMEs depends first and foremost on society’s recognition of entrepreneurs.
Bahamian consumers must support the implementation of the new Act and SME framework to buy authentic Bahamian-made products. The Bahamian consumers should understand that vibrant SMEs will make The Bahamas more robust to stand against the uncertainty of business cycles.
Finally, framers of the initial draft of the Act must consider the following important matters:
I. Ensure that presidents of trade and professionals associations clearly identify problems that their members are experiencing from local regulations and international competitors;
II. Build in major incentives in the Act for entrepreneurial ventures that creates innovative products, delivery systems, operational structures and marketing strategies in film making, fashion design, e-commerce, information technology, agriculture, manufacturing, education, software development, art and handicraft;
III. Create added concessions to protect “socially responsibly” SMEs that employ over 25 Bahamians during future recessions;
IV. Provide special assistance to local SMEs that focuses highly on exporting authentic Bahamian products and creative services;
The government must host a series of town meetings and workshops so that all aspects of this act could be diligently crafted. The government must understand that this is an important Act and not delay communicating its contents to SMEs throughout the Bahamas.
In addition, Members of Parliament must become more involved in the formulation of the act. They should immediately host meetings and obtain information about the challenges and other issues that SMEs are experiencing in their constituencies. This is important so that they (MPs) can have intellectual debates when discussing this act in the House of Assembly.
Mark A Turnquest is a Caribbean management and marketing consultant, author, corporate trainer and small business consultant. He is the President of Outreach Sales & Marketing Management Ltd. He is also a board member of the Board of Directors of the Bahamas Agriculture and Industrial Corporation.