The Tribune

By NEIL HARTNELL

Tribune Business Editor

THE BAHAMAS has medium-term infrastructure needs of $1 billion, an Inter-American Development Bank (IDB) report has revealed, blaming the Government for "under investment" in the sector that has failed to keep up with private sector needs.

An IDB document on the proposed Labour Markets Study, which the IDB is set to kick into gear with the Government's Department of Statistics this month, warned that key foreign investors had "discounted" the ability of the Government and private sector to provide the necessary infrastructure to facilitate their operations, forcing them to provide it themselves.

Noting the changed emphasis of its 2010-2014 country strategy for the Bahamas, which is focusing on infrastructure in sectors such as energy, water and transport, the IDB said: "Heavy emphasis is placed on infrastructure development, given the projected medium term needs of approximately $1 billion.

"Historically, the Bahamian public sector has under-invested in infrastructure, and the provision of infrastructure has lagged behind foreign direct investment (FDI).

"In many cases, foreign investors have discounted the public sector's ability to provide infrastructure, and have been meeting their own infrastructure as far as possible......... The focus of the new [IDB] strategy is aimed at lowering transaction costs through economies of scale, increasing employment opportunities generated by infrastructure works and having a counter-cyclical impact on economic activities."

The IDB's estimates are somewhat lower than forecasts of this nation's infrastructure needs that have been given by KPMG Corporate Finance officials at recent Bahamas Business Outlooks. KPMG has estimated this nation has some $2.1 billion worth of infrastructure needs, including sectors such as education and health.

The Government has made progress in tackling this infrastructure gap through projects such as the $409.5 million Lynden Pindling International Airport (LPIA) redevelopment; the $81 million Water & Sewerage rehabilitation; the $155 million New Providence Road Improvement project; the $50 million Air Transport Reform program; $44 million Nassau harbour dredging; and $83 million Arawak Cay port.

As for the Labour Markets study, the IDB paper said the rapid foreign direct investment (FDI) increase the Bahamas experienced prior to 2007 "had a major impact on the labour market by increasing employment, particularly in the construction and tourism industries, and also generating new opportunities for employment in other economic sectors".

And it added: "The boom also created an increased demand for labour beyond the available domestic supply, necessitating the sourcing of foreign labour."

Winston Rolle, the Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) chairman, told this newspaper that the Bahamas Labour Markets Study was readying to "go a little deeper" with an employment survey that focused on workforce training.

"The plan is to tie it in with Immigration, so we can see where the work permits are coming from," Mr Rolle explained. "We can see then how the country is developing and meeting its workforce needs.

"Hopefully, that will also identify areas where we have an oversupply of skills, and then we can look to re-train those individuals to meet the demands of what the market needs."