The Proposed Structure
of
THE BAHAMAS MICRO,
SMALL & MEDIUM SIZE ENTERPRISE (MSME) DEVELOPMENT ACT 2022/23
First Written in 2009
(13th Version)
Prepared by
Mark A. Turnquest, MBA
www.markturnquestconsulting.com
January 10, 2022
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TABLE OF CONTENTS
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Page
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1.0 Introduction
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3 |
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2.0 242 Small Business Association & Resource Centre (SBARC
242) Ltd. and Small Business Development Centre (SBDC)
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3 |
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3.0 The Mission of The MSME Act
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4 |
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4.0 The Importance of The MSME Act
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4 |
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5.0 The Impact of The MSME Act on Stakeholders
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5 |
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6.0 The Basic Structure of The MSME Act
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8 |
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7.0 Conclusion
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9 |
Micro, Small and Medium Sized Enterprises (MSMEs) in The Bahamas will soon be able to compete globally because public and private executives will craft the Bahamas Micro, Small & Medium Size Development Act (MSME Act). The MSME Act is forecasted to be legislated during 2022/23. It will stimulate economic growth and mitigate the negative impact of future recessions on the Bahamian economy. All government economic development strategies that focus on micro, small and medium size enterprises (MSMEs) must be outlined and clearly defined in the MSME Act.
I consider small businesses
(MSMEs) with different sales categories
up to $500,000 in a Bahamian context in the following manner:
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MSME
CATEGORY |
ANNUAL
SALES PARAMETERS
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Micro |
$1.00 - $99,999.00 |
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Small |
$100,000.00 - $249,999.00 |
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Medium Sized |
$250,000.00 - $500,000.00 |
2.0 242 SMALL BUSINESS ASSOCIATION
& RESOURCE CENTRE (SBARC
242) LTD. AND SMALL BUSINESS DEVELOPMENT CENTRE(SBDC)
The MSME Act should be
enforced and supervised by two non-political organizations called the 242
SMALL BUSINESS ASSOCIATION & RESOURCE CENTRE (SBARC 242) LTD. AND SMALL BUSINESS
DEVELOPMENT CENTRE(SBDC)
A market research has
already been completed in early 2014 to obtain information on how MSME’s owners
would like for business development activities to improve and progress in The
Bahamas. In addition, MSME owners made recommendations on how “SBARC 242 and SBDC”
types of organizations should be structured to cater to the successful
development of the MSME sector in The Bahamas.
Public and private
sector executives were selected to SBARC 242’s
and SBDC’s Boards. Members of these Boards are mandated not to make
decisions based on negative political, gender or cultural motives.
Government, SBARC 242’s and SBDC’s Board along with the BUSINESS
COMMUNITY will have the authority to make recommendations on how to
modify particulars of the MSME Act based on economic conditions or the request
of stakeholders.
3.0 THE MISSION OF THE MSME ACT
The MSME Act, from a domestic perspective, should provide the foundation on how to improve the economic conditions of the Bahamas. The MSME 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 MSME Act will
revitalize the entrepreneurial spirit in all islands of The
Bahamas. The MSME Act, in its core will outline policies and
initiatives that would assist in the development of MSMEs- a major driving
force of our nation.
The MSME Act will
increase the national economic value of MSMEs in The Bahamas. In
addition, its purpose is to synchronize and unify the efforts
of the Government, financial lending institutions, NGOs, MSMEs and
other stakeholders as it relates to small business development in The
Bahamas. Most importantly, the MSME 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 MSME ACT
The major reason why
there is not an explicit master plan for MSME development in The Bahamas is
because of the absence of a MSME Act to drive national strategies.
Six (6) important reasons
why a MSME Act was crafted:
I. The MSME 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 NationalInsurance, custom duties,
property taxes, license fees etc.
II. The MSME 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 MSME 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;
ItThe MSME Act will encourage Family Island
Development by providing incentives/concessions to Bahamians who want to open small complementary 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 MSME 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
VThe MSME 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 MSME ACT ON
STAKEHOLDERS
The MSME Act will impact the decision making process of the following organizations: Government, MSMEs (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 MSMEs. All government agencies and department that cater to businesses will work in synergy with SBDC; and
· Acquiring a business license will be less
tedious because all of the relevant regulatory bodies would be under one roof.
5.2 MSMEs (NEW ENTREPRENEURS):
· New entrepreneurs that create innovative products or services will have easy access to financial funding 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 MSMEs (EXISTING BUSINESSES):
· MSMEs 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. In 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 MSMEs in introductory, growth and maturity stages of the business life cycle; and
· All financial lending institutions will engage
in collaborative activities to develop various funding packages that address all
financial requirements of viable MSMEs.
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 etc. will collaborate efforts
with SBDC to oversee the enforcement of the MSME 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 MSME ACT
The basic structure of the MSME Act should have five major components:
6.1 A CLEAR DEFINITION OF A MSME
· The national definition of a MSME 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 “micro-businesses”, “small businesses” and “medium-sized businesses”; and
· Stakeholders that cater to MSMEs will be requested to honor this definition.
6.2 INCENTIVES, CONCESSIONS & STIMULUS PROGRAMS
· The present Incentive / Concession Legislation will be encompassed in the MSME Act;
· The MSME Act will outline new incentives and concessions that would be received by MSMEs for developing innovative products and services that contribute to the country’s economic development;
· The MSME Act will introduce stimulus programs that will be available to selective MSMEs to mitigate the negative impact of future recessions. MSMEs must be “socially responsible”, maintain a specific employment level, and show signs of vitality;
· The MSME Act will explicitly indicate whi ch MSMEs
are eligible for incentives, concessions and stimulus packages.
6.3 NATIONAL MSME FINANCIAL FUNDING SCHEME
· The Government has Allocated $250 Million ( $50 Million Annually) allocated for Grants and Loans to MSME development. Government lending agencies, commercial banks, credit unions and other financial lending institutions should collaborate and pool together resources to develop a National MSME Financial Lending Scheme (NFS). This NFS will make it easy to access capital for various stages of MSMEs’ 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 should be properly overseen by SBDC
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 MSMEs. MSMEs will have access to accountants, lawyers, business, marketing, human resources, information technology and financial consultants who sign up and are approved by SBDC to offer their services at affordable rates;
· Business coaches and consultants will be assigned to MSMEs on a need-by-need or contractual bases; and
· Technical training, BSPs, and financial funding
will be linked together so that MSMEs will have a greater chance to operate
viable businesses.
7.0 CONCLUSION
The major benefit of the MSME Act will be that, through its aggressive financial and overall MSME 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, MBA at:
Telephone: (242) 427-3640
Email
markaturnquest@gmail.com
Website: www.markturnquestconsulting.com
