The Proposed Structure

of

 

THE BAHAMAS MICRO,

SMALL & MEDIUM SIZE ENTERPRISE (MSME) DEVELOPMENT ACT 2022/23

 

 

 

First Written in 2009 (13^th  Version)

 

 

Prepared by

 

 Mark A. Turnquest, MBA

 

www.markturnquestconsulting.com

 

 

 January 10, 2022

 

 

TABLE OF CONTENTS

 

 

 

	Page
1.0 Introduction	3
2.0 242 Small Business Association & Resource Centre (SBARC 242) Ltd. and Small Business Development Centre (SBDC)	3
3.0 The Mission of The MSME Act	4
4.0 The Importance of The MSME Act	4
5.0 The Impact of The MSME Act on Stakeholders	5
6.0 The Basic Structure of The MSME Act	8
7.0 Conclusion	9

 

1.0 INTRODUCTION

 

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:

MSME CATEGORY	ANNUAL SALES  PARAMETERS
Micro	$1.00 - $99,999.00
Small	$100,000.00 - $249,999.00
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