The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Small & Medium Sized Development Bill could be presented to Parliament before the 2013 summer recess, and will allow the Government to be more effective in its support for small and medium-sized enterprises, a senior attorney said yesterday.

Merrit Storr, attorney and partner at the Chancellors Chambers law firm, and who played a key role in developing the Small and Medium-Sized Development Agency (SMEDA) framework and supporting legislation, told Tribune Business the proposed agency - which will have a $25 million initial capitalisation - would alleviate the political interference that has clouded its predecessor, the Bahamas Development Bank.

“What the Government is proposing to do is introduce a Small and Medium-Sized Enterprises Development Bill, which will create a new entity that will have the supreme responsibility for developing small and medium-sized enterprises,” Mr Storr said.

“What is different about this is that at the moment the Government has almost an alphabet approach. There are a number of different agencies providing small and medium-sized enterprise support, but they don’t necessarily work in a coordinated fashion.

“This new entity is supposed to ensure that government support for small and medium-sized enterprises is streamlined. It should provide an opportunity for the Government to give more effective support to small and medium-sized enterprises at the end of the day.”

Mr Storr noted that consultation on the new Act has been going well.”The consultation process that is underway is going quite well. We are getting very good feedback,” he added.

“Some of the comments have been about how much political interference there will be with this entity. The Board has a lot of power, and the power of the minister is minimised intentionally because we want this entity to be autonomous. There is still a question as to whether the minster has too much power.

“There is a question over the existing public sector entities, BDB, BAIC and the Venture Capital Fund, and what role will they play post the introduction of this legislation. Some of the Bank’s functions will be transferred to this new entity, but it will retain some responsibilities.

“The Venture Capital Fund will fall completely under this entity but it will continue to operate with its own Board. There has been some questions about the logistics and practicality of that. The feedback has been very good. It’s been very well received. One of the things this organisation will have the ability to do is provide lot of business advisory services for small and medium enterprises. People often have good ideas, but how they get their ideas to the point where they can make it.....”

Mr Storr added: “SMEDA can also guarantee loans. It’s not intended that this entity will lend immediately because the BDB used to do that with mixed results, but this entity will be able to lend guarantees to commercial banks.

“The Government had attempted previously to offer guarantees to banks with limited success, and the reasons for that was that the banks had difficulty in calling on the guarantees when they needed them, and it was a cumbersome process. The bureaucracy of government made that difficult to work. This is an entity that will have the funding and resources available, separate and apart from the Government, so when it offers a guarantee it would be based on its own funding resources. We’re hoping that commercial banks will accept that this is a more viable way to make it work.”