The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to grow the Bahamian economy from the ‘bottom up’ through small business development, a leading consultant suggesting this nation needed to increase annual GDP to $12 billion to escape its looming fiscal crisis.

Mark Turnquest, of Mark A. Turnquest Consulting, said that in seeking a 50 per cent GDP increase, the Government needed to shift its focus from the traditional ‘top down’ growth approach that had relied chiefly on foreign direct investment (FDI and large-scale resort projects.

In both an interview and article on Page 5B of today’s Tribune Business, Mr Turnquest said major FDI projects had not generated the economic ‘trickle down’ benefit expected, these having failed “to seep down over Centreville Wall”.

Arguing that a focus on small and medium-sized business development would increase Bahamian ownership of the economy, Mr Turnquest suggested it could also lead to more sustainable investment, as those involved had a greater stake in what happened to their nation.

And he added that it might also foster improved Family Island development, with more Bahamians encouraged to return to their home islands.

Praising the Christie administration’s moves to press ahead with passage of the Small and Medium-Sized Business Development Bill in 2013, Mr Turnquest said the former government’s ‘top down’ strategy of major infrastructure projects did not have the expected economic impact.

“We’ve ended up with downgrades from Moody’s and Standard & Poor’s, high deficits and unemployment going up. Everything is going south,” Mr Turnquest told Tribune Business.

“Talking to business owners, even medium-sized business owners are feeling the pinch, and things are not looking good at all.”

While the recession and New Providence Road Improvement Project had taken a further toll, Mr Turnquest added: “The whole government is moving forward in the direction of where it should go. I can see the progress; it’s not just talk, talk. I’m motivated and can work with the Government.”

He added that passage of the Bill, together with the establishment of the Small and Medium-Sized Business Development Agency (SMEDA), could have a “tremendous” impact on investment and financial support for SMEs, encouraging more entrepreneurial ventures to come forward.

“We need a ‘bottom up’ approach,” Mr Turnquest told Tribune Business. “It means going to all the Family Islands, identifying the best economic strategies to use to impact their contribution to GDP, but still keeping the natural heritage, culture of each island.”

This, he added, would involve examining each island individually to assess which industries were the best fit to advance their respective economies.

Calling for a private-public partnership on such an initiative, Mr Turnquest said: “This is the new way to go. A bottom up approach, helping the small economies, small man, entrepreneurs so they can contribute directly to their island. We’ll see Bahamians go back to their home island and invest, as they will have a sense of ownership in its development.”

Focusing on Bahamian ownership, he argued, would create a form of sustainable development to supplement the economic contribution of FDI projects and major resorts, plus industries such as financial services and construction.

“It’s quite obvious that when it comes to economic development and growth, they cannot sustain us,” Mr Turnquest said. “It doesn’t really seep down over Centreville wall.

“We need to stop neglecting small businessmen and focus on their development, so we can meet these projects half-way and see the economy stabilise better.”

Pointing to the weakness of the so-called ‘top down’ approach, Mr Turnquest said financial services was still under regulatory pressure from the G-20, while China State Construction’s position as lead contractor on the Baha Mar project had weakened its impact for the Bahamian construction industry.

Tourism, too, was at the mercy of global forces, with Bahamian resorts still struggling to regain pricing power and yields post-recession.

Acknowledging that his ‘50 per cent increase in GDP to $12 billion’ was a target to aim at, Mr Turnquest said this could only be achieved by a focus on small business development combined with other initiatives, such as tax reform.

Reflecting the high level of Bahamian unemployment, he added: “What we are right now is a huge, heavy social welfare state. There’s no productivity going on. That’s not good.

“We are on the right track, but it can’t be business as usual. After 40 years of independence we are now at a quagmire, a crossroads, whatever we want to call it, and have to make a turnaround.”