|The Bahamas Investor Magazine
February 16, 2019
February 16, 2019
The most successful economies are those that facilitate business at every level, from fledgling start-ups navigating the business licensing process to foreign investors negotiating permits for large-scale projects. Hoping to enhance the business climate in The Bahamas, the government is putting renewed focus on making it easier to do business–streamlining services, addressing inefficiencies and maximizing technology to close efficiency gaps.
Prime Minister Dr Hubert Minnis recently said: “Having been a businessman for many years, I know the frustration that business owners feel in complying with certain government processes. There is considerable and urgent room for improvement across the board, especially if we seek to be world-class.”
Considered the global benchmark, the World Bank’s Ease of Doing Business rankings are an important indicator of a country’s overall economic performance and carry a lot of weight with the international community. In 2008, The Bahamas had reached 59 out of 190 economies assessed by the bank. Since then, it has slid down the rankings considerably.
“This didn’t happen overnight,” says Christel Sands-Feaste, partner at law firm Higgs & Johnson and chairman of the Bahamas Chamber of Commerce and Employers’ Confederation (BCCEC)’s Ease of Doing Business division. “Recently there has been a focus on ease of doing business, but we didn’t focus on it as early as we should have. A lot needs to be done, but with the right resources and processes, we can move the needle.”
Climbing the rankings is very much a team effort and a number of groups are being engaged to move things forward. Government has enlisted the help of the BCCEC to identify the issues and hone in on the solutions that will resonate most with the business community. Work began in earnest in June 2017 when chamber representatives were invited to join a national committee, tasked by the prime minister with examining how to improve business and make relevant recommendations to government.
Thanks to its own extensive work on this issue, including a wide-ranging survey of its members, the BCCEC could confidently advocate for the private sector, highlighting its concerns and priorities. One of the chief complaints, according to Sands-Feaste, is the lack of consistency. “At the end of the day, for the average Bahamian or the average investor doing business it is about how they feel. One person’s experience can be very positive and another’s can be negative. There is a lack of consistency. The business community does not feel that any progress has been made. Businesses are concerned about their ability to renew their licenses and pay their taxes in a timely fashion. It is about their ability to do business on an ongoing basis, not just starting a business.”
The national committee made its first set of recommendations in late 2017, and various initiatives have since been announced. These include plans for a single, online portal through which businesses can carry out a number of functions such as renewing licences, permit applications and NIB payments. Rather than dealing with several different government departments and agencies, businesses will be able to work with just one point of contact as coordination increases at government level.
Streamlining these public services will require greater adoption of technology, something Sands-Feaste says has been a long time coming. “One of the reasons we have lagged behind in the region is that we have not utilized technology as much as other jurisdictions,” she says. “The government is now focusing on digitizing certain services.”
In the 2018 Budget, the government earmarked $8 million towards its “digital Bahamas” project to bring numerous services online and promote greater transparency, data collection, customer communication and efficiency. Implemented through this year and next, the initiative includes an e-procurement hub, supplier registry and online payment gateways that businesspeople and citizens can use to interact with government bodies, pay their bills and update their accounts.
Designed to be extremely user-friendly, the system will be accessible from a range of personal mobile devices so businesspeople will no longer have to leave the office to do simple administrative tasks. “The net result will be a reduction in processes and paperwork, and the means to conduct government business more efficiently,” says Deputy Prime Minister and Minister of Finance Peter Turnquest. “Simply put, we will make use of technology to deliver public services cheaper, faster, better.“
The human touch
Technology may be transforming public services, but the human touch is still necessary. Improving staff skills at every departmental level is also key to assisting business development. Recognizing this, the government enlisted the support of the Caribbean Development Bank (CDB) in March 2018, beginning a CDB-funded training programme for around 170 public sector workers. The in-depth, face-to-face training from CDB’s Public Policy Analysis and Management and Project Cycle Management programme is expected to strengthen efficiency, reliability and accountability among the public sector and result in better communication between citizens and government. In its 2018 Ease of Doing Business report, the World Bank identified trading across borders as one of The Bahamas’ weakest areas. Addressing this, and ensuring the country is well- placed for its upcoming bid for membership of the World Trade Organization, the government focused heavily on revamping the customs infrastructure in 2018.
Following consultation with the BCCEC, Arawak Port Development and the Customs Department, government launched the Bahamian Electronic Single Window (BESW) in spring 2018. This allows businesses to submit all their documentation electronically, reducing the number of steps involved in the import/export process and saving companies time and money. Announcing the BESW and inviting companies to sign up, superintendent of customs, Jasmine Hudson estimated that it would cut traditional processing times by more than 50 per cent.
Sands-Feaste is optimistic about the changes so far, and says even slight improvements will dramatically encourage the sector. “That all trickles down to the bottom line and those resources [time and money] can be utilized elsewhere–in hiring people and investing in technology. It is critical to driving the engine of this economy.”
Improving the ease of doing business plays a pivotal role in supporting both foreign direct investment (FDI) and small and medium-sized enterprise development, both of which are key drivers of the Bahamian economy. In his 2018 Budget address, Turnquest told government: “Improving the ease of doing business in this country is a core component of our strategy to bolster Bahamian entrepreneurship, investment and economic growth.”
According to the World Investment Report, FDI inflows to The Bahamas have faltered in recent years, reaching $522 million in 2016, but failing to recover from a high of $1.6 billion in 2014. The International Monetary Fund estimates that the country needs a minimum of $1 billion FDI annually to reduce unemployment and deliver sustained GDP growth.
Favourable business conditions have a direct impact on FDI. A better regulatory environment for local firms means a better environment for foreign investors as the two groups often run into the same obstacles. And a poor score on the World Bank rankings can translate into reputational damage, given the highly competitive environment within the Caribbean region where many island nations are directly competing for FDI.
Addressing the Business Opportunities in the Caribbean conference in May 2018, Minister of Financial Services Brent Symonette said: “The government recognizes that in a highly competitive environment, where countries are seeking to attract more and better quality investment to grow their economies, The Bahamas must improve upon the things that we have traditionally done well and do them better, and change what is not working.”
Bringing services online is expected to significantly benefit the work of the Bahamas Investment Authority, which governs all FDI-related applications. Overseas investors will be able to submit documents from anywhere in the world and receive approvals or feedback in real- time. Permits and licenses can be issued quicker and investors will be able to track their application throughout the process.
Investment from outside the country is important, but it is equally crucial to support and engage homegrown business. Easing business for Bahamian SMEs can sustainably grow the economy and help protect it from future shocks. To this end, the government has created the Small Business Development Centre in partnership with the University of The Bahamas and the BCCEC. The centre will encourage and enable entrepreneurs through technical support and advisory services. In addition, the government has committed to providing $25 million over the next five years for micro loans, small business loans, grants and guarantee facilities.
These efforts are a welcome boost to Bahamian businesses that have been coping with rising oil prices, fluctuating export markets and the recent 60 per cent increase in VAT. “There is a lot of uncertainty out there,” says Sands-Feaste. “We need resources to focus on doing things right. We have the ability to compete at a global level and can increase our ranking internationally and make it easier for business.”
While the government continues to take guidance from the national committee and look at far-reaching policy changes, Sands-Feaste is keen for it to focus on the “low-hanging” fruit, making simple changes now that would have a big impact.
“We have to prioritize. There are things that do not require a huge amount of resources. There is no reason why we can’t do those easy fixes. We have to identify the immediate priorities. The approach must be solution-driven, drawing on the private sector experience.”
And the BCCEC is determined to stay engaged throughout the journey to better business, with Sands-Feaste saying: “We will continue to advocate tirelessly for the business community and ensure the issues are raised in such a way that keeps them at the forefront of government. We have to give feedback and engage in a way that is constructive. Every day we waste makes it more expensive for business owners. It puts more pressure on their bottom line and the Bahamian economy.”