The
Proposed Structure of
THE
BAHAMAS
SMALL
& MEDIUM SIZE ENTERPRISE DEVELOPMENT ACT 2019
Prepared by
Mark A. Turnquest, MBA
www.markturnquestconsulting.com
November
24, 2018
This position paper will
concentrate on the following areas:
1.0 Introduction
2.0 Small Business Development Centre (SBDC)
3.0 The Mission of The SME Act
4.0 The Importance of The SME Act
5.0 The Impact of The SME Act on Stakeholders
6.0 The Basic Structure of The SME Act
7.0 Conclusion
1.0 INTRODUCTION
Small and Medium Sized Enterprises
(SMEs) in The Bahamas will soon be able to compete globally because public and private executives will craft the Bahamas Small & Medium Size Development
Act (SME Act). The SME Act is forecasted to be legislated during 2019. 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 SME
Act.
2.0 SMALL
BUSINESS DEVELOPMENT CENTRE(SBDC)
The SME Act should be enforced
and supervised by a non-political organization called the SMALL BUSINESS DEVELOPMENT CENTRE (SBDC). 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 a “SBDC type of organization” should be
structured to cater to the successful development of the SME sector in The
Bahamas.
Public and private sector
executives was selected to SBDC’s Board. Members of this Board is mandated not
to make decisions based on negative political, gender or cultural motives. Government, SBDC’S Board along with the
BUSINESS COMMUNITY will have the authority to make recommendations on how to
modify particulars of the SME Act based on economic conditions or the request
of stakeholders.
It is recommended that a STRATEGIC PLAN should be developed on
how SBDC would be properly structured (IN A BAHAMIAN CONTEXT) 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 SBDC;
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 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 etc. will collaborate
efforts with SBDC 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
·
The
Government has Allocated $25 Million (
$5 Million Annually) allocated for
Grants and Loans to SME development. Government lending agencies, commercial
banks, credit unions and other financial lending institutions should 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 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 SMEs. SMEs 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 SMEs on a need-by-need or
contractual bases; and
·
Technical training, BSPs and financial funding will
be linked together 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, MBA at:
Telephone: (242) 427-3640
Email markaturnquest@gmail.com
Website: www.markturnquestconsulting.com
