MINISTER LAING: I imagine a day when any Bahamian with a dream to further his or her hopes, dreams and aspirations by building a successful business will be able to:
(i) Take his business idea and have it translated into a professional business plan capable of withstanding the most robust of scrutiny by finaciers/investors and financial institutions no matter where in the world that scrutiny occurs,
(ii) Access capital on favourable and appropriate terms from a variety of funding sources (Venture Capitalist, Commercial Banks, Angel Investors, etc.) no matter where in the world they may exist,
(iii) Receive, where appropriate, administrative, human resource, technological and professional technical assistance for a period of time here at home,
(iv) Graduate to a level of independent operation that enables him or her to be competitive both at home and abroad, and (v) Lend their developed expertise and experience to the mentoring of other business aspirants as they achieve success.
This is a day toward which we, as a Government, our working.
Promoting our citizens’ increased ownership of the Bahamian economy is a fundamental objective of the Free National Movement/Ingraham administration. We pursued this in our first two terms in office, which saw some fourteen enterprises come into broad public ownership. We also created new facilities to support small and medium size business growth, including:
The Item 8 provision of the Tariff Act which allows exclusively Bahamian owned cottage businesses to import any number of items duty free for up to five years; there are now about 750 businesses receiving benefits under that provision, more than 500 of which were given a year’s extension beyond the five years as a result of the global economic crisis;
The Government Loan Guarantee Programmes, which provide guarantees of up to 80% of the cost of projects not exceeding $250,000 for small businesses and up to $500,000 for a touristic development project in the Family Islands; and
$30 M in extraordinary injection of Capital into the Bahamas Development Bank for onward lending to qualified small and medium sized businesses; and
A micro-lending facility at the Bahamas Agriculture and Industrial Corporation (BAIC).
These facilities added to the Industries Encouragement Act, the work of the Bahamas Agriculture and Industrial Corporation, the Agriculture Credit Guarantee and the Hotels Encouragement Act to provide assistance to the development of Bahamian businesses.
The Venture Capital Fund, providing some $1 million annually to businesses was introduced in 2003/2004. In 2003, we introduced the Self-Starter programme, designed to empower young persons, 18 – 30 years, seeking to establish or expand small businesses and provide funding of up to $5,000 to acquire tools and supplies for their businesses.
By these efforts, hundreds of Bahamians have come to own a piece of the economy, increase their personal wealth and generate employment for thousands. It was also a period in which, the lowest income bracket of Bahamian households shrank by 20% while at the same time the middle income bracket expanded by almost the same 20%.
Notwithstanding the efforts we have made in the past and the results achieved, having returned to office this time around, it is clear to us that the present state-sponsored regime for supporting small and medium size business growth in our country must be changed in order to better meet the needs of this segment of our economy and reflect the means and role of the Government. In other words, we realize that it cannot be “business as usual”. The facilities put in place in too many instances are now failed or failing, are unsustainable and/or fail to provide the particular support most needed by entrepeneurs.
Change must come, so that we can better position our economy for growth. This is especially so in a new normal where capital resources, namely cash, will be more discerning and discriminating in a global economy heavily strained and chastened by financial systems failure and unbridled systemic risks. In this new environment, governments must deploy scarce resources to achieve the best ends, which means making, in many instances, very tough choices. To be sure, however, a sound choice to make, is finding the appropriate way to encourage and support small and medium size business development in our country.
Toward this end, we have developed and expect in due course to unveil a new government-sponsored initiative to encourage and promote the development of small and medium size businesses in our nation. This is in keeping with our view that these businesses are important to the sustained growth and development of our economy. They can meaningfully support job creation, wealth accumulation, technology development, foreign reserve earnings and retention and overall community wellbeing.
I will not get into the specifics of our new initiative this morning, given that important consultations with stakeholders continue and the details still require final approval. I will at this time, however, speak to certain fundamental philosophic elements that are likely to underpin the new initiative.
It will for the first time provide an official definition for Small and Medium Size Businesses that can qualify for state aid;
It will refine and redefine government assistance to small and medium size businesses and consolidate that assistance under the auspices of a single piece of legislation, the Bahamas Small and Medium Size Business Development Act, administered by a single agency;
It will fundamentally shift government support from a dominance on limited, inefficiently and ineffectively lent public funds to reducing the risk profile of small and medium size businesses and business proposals to improve access to the more abundantly available capital in the private financial sector;
It will provide targeted, critically important non-financial support that ensures that Bahamian small and medium size business persons can have internationally credible business proposals, ongoing cash management and administrative support and support for advancement to the next level of business operation; and
It will have a clearly defined budget framework to ensure affordability and sustainability over time.
This new framework will enhance a number of other initiatives we are undertaking in the interest of improving the way we do business in this country. These initiatives include:
The passage of a new business license Act to make it easier to license a business in this country;
The establishment of online facilities for applying for business license and renewal and paying for fees related to doing business in the country, for which a consultancy with the Government of Singapore will be signed within a matter of weeks;
Expanding opportunities for Bahamian businesses to access international capital, particularly capital available through the private sector funding arms of scores of multilateral institutions;
Improving our business facilitation processes, as reflected through the work we are doing at the Customs Department which is increasingly being acknowledged by the public or at the Registrar General’s Department; and
Efforts to ensure that our international trade agreements result in increased opportunities for Bahamian businesses to access global markets for both sourcing inputs and exporting goods and services.
I am confident that in so far as improving the climate for doing business in our nation, including in respect of small and medium size busineses, we are headed in the right direction. I am excited about what we are doing and what we will do and I invite all of you to come along.