Small and Medium-Sized Enterprises (SMEs) in the Bahamas will soon be able to compete globally because public and private executives have crafted the Bahamas Small & Medium-Sized Development Act (SME Act). The SME Act is likely to be legislated during the 2015 first quarter, and will stimulate economic growth while also mitigating the negative impact of future recessions on the Bahamian economy.
The SME Act will be enforced and supervised by a non-political organisation called the Small and Medium-Sized Enterprise Development Agency (SMEDA). Market research was completed in early 2014 to obtain information on how SME owners would like business development activities to improve and progress in gthe Bahamas. In addition, SME owners made recommendations on how SMEDA should be structured to cater to the successful development of the SME sector in the Bahamas.
Public and private sector executives will be elected to SMEDA’s Board. Members of this Board will be mandated not to make decisions based on political, gender or cultural motives. SMEDA’s Board will have the authority to make recommendations that modify particulars of the SME Act ,based on economic conditions or at the request of stakeholders.
Presently, a strategic plan is being developed for how SMEDA would be structured, so that it can operate in an effective and efficient manner.
The SME Act, from a domestic perspective, should provide the foundation for improving economic conditions in the Bahamas.
The SME Act, from an international perspective, should attract foreign investors who want to partner with local entrepreneurs in fields such as 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 revitalise the entrepreneurial spirit in all islands of the Bahamas. It will outline policies and initiatives that will assist in the development of SMEs - a major driving force in our nation.
The SME Act will increase the national economic value of SMEs in the Bahamas. In addition, its purpose is to synchronise and unify the efforts of the Government, financial lending institutions, non-governmental organisations (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 programmes when it comes to financing and developing innovative products and services.
The major reason why there is not an explicit master plan for SME development in the Bahamas is because of the absence of legislation to drive national strategies.
The SME Act will encourage Bahamians to become entrepreneurs because it will outline incentives /concessions that will be offered.
The hiring of a specific number of Bahamians.
The SME Act will encourage Family Island development by providing incentives/concessions to Bahamians who want to open small, complementary businesses (tour operators, movie theatres, agriculture, Laundromats etc.) that will increase the employment rate, improve infrastructure, encourage Bahamians to reside there permanently and entice more domestic and foreign tourists.
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.
The SME Act will reduce the national debt and deficit because it will decrease Government spending, particularly on hiring civil servants, and increase Government license, fees and tax income because more businesses will be operating in the Bahamas.
Incentive programs will be developed to encourage the creation of innovative products or services that will tremendously improve economic development.
Business recovery programmes will not focus on unemployment hand-outs, but will assist business owners in maintaining current employment levels.
The Bahamas Development Bank, the Bahamas Agriculture and Industrial Corporation and the Bahamas Entrepreneurial Venture Fund will harmonise 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 SMEDA.
Acquiring a Business License will be less tedious because all the relevant regulatory bodies would be under one roof.
New entrepreneurs that create innovative products or services will have easy access to financial funding and business support services.
Favourable 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.
SMEs that operate in a socially responsible manner (are up-to date in NIB, Customs duty payments, VAT etc.) will find 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–private partnership relationship) will focus on revitalising the cultural tourism, agriculture, fishing, fish farming and manufacturing industries. In addition, the hemp, sisal, sponging and forestry industries will be successfully revitalised.
Commercial banks, credit unions, and government financial funding programmes will focus on providing adequate capital to variable SMEs in introductory, growth and maturity stages of the business life cycle.
All financial lending institutions will engage in collaborative activities to develop various funding packages that address all the financial requirements of viable SMEs.
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 Organisation, The Inter-American Institute For Cooperation on Agriculture will collaborate with SMEDA to oversee the enforcement of the SME Act.
Business, accounting, medical, technical, merchandising, manufacturing, construction, real estate, fishing, agriculture associations will lobby for industry-specific programmes and incentives that would increase competitive capabilities and offset the negative impacts of the Economic Partnership Agreement (EPA) and joining the World Trade Organisation (WTO).
This definition will clearly indicate the difference between ‘small businesses’ and ‘medium-sized businesses’.
Stakeholders that cater to SMEs will be requested to honour this definition.
The present incentive legislation will be encompassed in the SME Act.
The SME Act will outline new incentives 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 programmes 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.
Government lending agencies, commercial banks, credit unions and other financial lending institutions will 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 the SMEs’ life cycle: (Introductory, Growth, Restructuring, Recovery).
The NFS will have clear policies, and loan packages will be categorised into specific programmes based on financial requirements.
The NFS will be properly overseen by SMEDA.
Management, marketing, human resources, computer, finance, accounting and entrepreneurship training will be provided at affordable prices.
Business Support Programmes (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 SMEDA to offer their services at affordable rates.
Business coaches and consultants will be assigned to SMEs on a need-by-need or contractual basis.
Technical training, BSPs and financial funding will be linked together so that SMEs will have a greater chance to operate viable businesses.
The major benefit of the SME Act will be that, through its aggressive financial and overall SME support policies, the Bahamian economy will become diversified and therefore more protected against future recessions.