By Mark A Turnquest
Small and Medium Sized Enterprise (SME) owners must carefully review all political parties’ platforms for the upcoming May 7, 2012 general election in the Bahamas. SME owners must determine which political party best articulates strategies that will develop the SME sector, and grow and diversify the economy of the Bahamas.
After analyzing the Bahamas’ economic condition for the past three years and reviewing international watchdog agencies (Moody, IFC/World Bank, Standard & Poor’s) reports, it is imperative that the public and private sector focus on SME Development and economic diversification.
It is the only sensible approach to grow our economy in a sustainable manner, increase GDP and the entrepreneurial spirit; reduce unemployment, national debt and crime.
WHAT ARE THE REQUIREMENTS TO DIVERSIFY & GROW OUR ECONOMY?
The only way to improve the overall living conditions of The Bahamas is to develop a National Strategic Plan for SME Development and Economic Diversification. This plan should articulate ten (10) main methods on how to improve the economic conditions of The Bahamas:
(1) COMMIT TO A THEORY OF ECONOMIC GROWTH AND DEVELOPMENT
There are many models to choose from: The Linear-Stages Theory, Rostow’s Stages of Growth Theory, The Harod-Domer Growth Model, Structural Change Models, The Lewis Theory of Development, Neoclassical Growth Theory, The New Growth Theory, and Motivation For The New Growth Theory etc. These models should be analyzed to determine which one is best suited for the Bahamas.
(2) FORMULATE A SUSTAINABLE CLUSTERING STRATEGY FOR PRODUCTIVE AND CREATIVE MARKETS
Clusters have the potential to affect competition in three ways: by increasing the productivity of the companies in the cluster, driving innovation in the field, and stimulating new businesses in the field. Create clustering strategies for entrepreneurial ventures that develops innovative products, delivery systems, operational structures and marketing strategies in film making, agro-processing, fashion design, e-commerce, information technology, agriculture, art, e-learning, multi-media production, manufacturing, education, horticulture, software development, fly fishing, art and authentically Bahamian handicraft.
(3) PREPARE A SUSTAINABLE FAMILY ISLAND DEVELOPMENT PROGRAM
Each Family Island should be analyzed 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. Every redevelopment plans must preserve the natural, heritage and cultural resources of each island.
(4) CREATE A NATIONAL BUSINESS SUCCESS MODEL FOR SMEs
A national business success model 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, non-governmental organizations (NGOs), SMEs and other stakeholders as it relates to small business development in the Bahamas. Most importantly, a business success model will identify how local and international investors and entrepreneurs can qualify for incentive and stimulus programmes when it comes to financial and non-financial assistance for introducing and developing innovative products and services
(5) A NATIONAL FUNDING SCHEME
A $15-20 million SME fund needs to be developed by local and foreign investors. Government need to eliminate legislations that make it almost impossible for SMEs to access international funding. In addition, government, local and international lending institutions must partner to extend meaningful financial support to SMEs. Lenders need to focus on packaging loans extended to SMEs that have built-in accounting management, human resources and marketing support programs at an affordable cost for at least a year.
(6) FORMULATE A SME DEVELOPMENT ACT (SDA)
The SDA, from a domestic perspective, will provide the foundation on which to improve the economic conditions of the Bahamas. From an international perspective, it will attract foreign investors who want to partner with local entrepreneurs in fields such as e-commerce, manufacturing, agriculture, and information technology. These industries are tremendously underserved and underdeveloped. These types of investments would diversify the Bahamian economy, which relies heavily on tourism and financial services.
(7) CREATE NEW MARKET OPPORTUNITIES
Medical, health and wellness, sports tourism, e-commerce, Information and Communication Technology (ICT), apiculture (bee agriculture), green energy production, innovative manufacturing and agriculture (coconuts etc) markets must be effectively and efficiently exploited in order to successfully grow and diversify the economy.
(8) REVITALIZE EXISTING AND REVIVING DORMANT INDUSTRIES
The Government must be more proactive and find ways to reduce the high electricity cost and other constraints that are killing SMEs and hampering the revival of dormant industries. A comprehensive incentive and concession plan should be developed to stimulate economic development. The government and its partners should focus on revitalizing the cultural tourism, agriculture, fishing, fish farming and manufacturing industries and reviving the hemp, sisal, sponging and forestry industries.
(9) CREATE A SME DEVELOPMENT CENTRE (SDC).
The new SME development centre must be developed and structured to eliminate financial and non-financial decision making based on political influences when formulating national economic policies. The SDC will establish and identify the roles and responsibilities of a Regulatory and Advisory Board that would oversee the enforcement of the SME Developing ACT (SDA).
Public and private sector executives will be selected to this Board. Members of this Board will be mandated not to make decisions based on political; gender or cultural motives. This Board will have the authority to make recommendations to modify particulars of the SDA based on economic conditions or the request of stakeholders.
(10) CREATE A MINISTRY/DEPARTMENT OF COMMERCE
My advice to the 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.
After the May 7, 2012 general election, the new government must swiftly attack this economic crisis by developing a National Strategic Plan for SME Development and Economic Diversification that focuses on sustainable economic growth. In addition, there must me more public –private partnership (PPT) when developing economic policies because it would prevent unnecessary roadblocks for entrepreneurial advancement that are difficult to reverse.
Note: the opinions expressed in Caribbean Journal Op-Eds are those of the author and do not necessarily reflect the views of the Caribbean Journal.