The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Registering a company in the Bahamas is “four times’ costlier” than in developed countries, with less than 3 per cent of government procedures able to be completed online.

The Inter-American Development Bank (IDB), unveiling a $30 million project to transform the Government’s digital/IT infrastructure and boost Bahamian economic competitiveness, revealed this nation has an enormous amount of ground to make up on its rivals over the ‘ease of doing business’.

Warning that stifling red tape “increases the opportunities for corruption”, the IDB said the Bahamas suffered from “a silo culture” where just four out of 18 government agencies are equipped to properly exchange information due to a paper-dominated system.

The paper added that governed officials were “inadequately trained” to offer service that focused on citizen and business needs, with the Ministry of Public Service’s $150,000 training budget enabling it to assist just 200 civil servants - only 1 per cent of the total - per year.

The Bahamas also ranked 74th out of 94 countries in the Open Data Index, the global benchmark for assessing government openness on making data available to its citizens. The Bahamas scored just 17 per cent, well below world leader Taiwan at 90 per cent, and behind ‘economic powerhouses’ such as Cambodia, Zambia, Iran, Kosovo and Bolivia.

Pointing out that such deficiencies have resulted in the Bahamas achieving average economic growth of just 0.53 per cent for the past decade, the IDB study said: “Registering a company in the Bahamas is four’ times costlier than in OECD countries. Government bureaucracy affects competitiveness by adding an extra cost to the regular cost of operating a business, and puts a financial burden on low income families that must spend time and money in transportation and waiting lines, thereby losing the income related to the time required to deal with the administrative bureaucracy.

“Time-consuming government procedures are also a deterrent for entrepreneurial activity, since entrepreneurs need to operate with agility in their initial stages to quickly generate revenue with their limited initial capital.”

The IDB report added that a nation’s competitiveness “depends greatly on its ability to limit the burden of dealing with public administration”, as excessive ‘red tape’ and bureaucracy undermine productivity and private sector innovation as well as increasing costs.

“The country’s limited competitiveness has held up efforts to promote economic growth by attracting foreign investment and facilitating local entrepreneurship,” it added.

“The Bahamas occupied the position 119 out of 190 countries in the 2018 Doing Business report due to the difficulties to conduct business activities in the country. Key procedures to do business such as registering a company or a property require numerous steps and long waiting periods, which increase the costs for local entrepreneurs and potential foreign investors alike.”

Putting this into perspective, the IDB added: “Seven procedures are required to set up a company in the Bahamas according to the Doing Business report. The average in the Organisation for Economic Co-operation and Development (OECD) is 4.9 procedures, and in New Zealand just one procedure is required.

“While registering a company costs 3.1 per cent of the income per capita in OECD countries, in the Bahamas this cost reaches 13.8 per cent. Measured in terms of men days, it takes 21.5 days in the Bahamas and 8.5 days in OECD countries.”

Pointing to the direct relationship between transparency and economic competitiveness, the IDB said excessive red tape and bureaucracy “not only negatively affect competitiveness but also increase the opportunities for corruption”.

“Low levels of transparency diminish the trust in government and the democratic governance, while countries with active access to information and open data policies have seen their competitiveness fostered,” the IDB said, in a statement that seems tailor-made for the Bahamas.

“ One of the key instruments to decrease corruption and promote integrity is the implementation of effective oversight and control mechanisms..... The main problem identified by this programme in the Bahamas is the limited competitiveness of its economy.

“Several determinants constrain the competitiveness of the Bahamas, among them a weak infrastructure network; structural problems within the labour market; high energy costs; inadequate air and maritime connectivity; water and sanitation matters; poor access to credit and high financing costs; rising crime; vulnerability to negative climate change impacts and natural disasters; low fiscal space and increasing debt; as well as the inefficiency of government bureaucracy and low levels of transparency.”

The IDB project is targeted at improving an “inefficient government bureaucracy”, with a focus on public administration that tackles both internal processes as well as the interaction with businesses and citizens.

The move to a digital platform and e-government, long touted by successive administrations, has seemingly made little progress, with the IDB study pointing to “complex processes” that depend heavily on paper.

“The operational culture across government agencies follows the ‘silo” model where information is not shared,” the report said. “The silo culture where information is not shared is clearly illustrated by... the Department of Inland Revenue requesting documents issued by different branches of government.

“Government human resources are inadequately trained to operate in a citizen-centred public sector and feel demoralised due to their lack of involvement in the decision-making processes.

“The Ministry of Public Service, responsible for the management of the government’s human resources, has an annual budget for training of $150,000 for close to 20,000 employees, which allows it to provide training to about 200 employees per year (1 per cent of the number of employees).”

The IDB report said the general state of government data, which it described as “incomplete, outdated and not integrated”, limited its usefulness in supporting management and policy decisions.

“Out of 18 ministries, just four have some type of interoperability that allows them to exchange information digitally,” the IDB said, before illustrating how far the Government is from having the necessary digital infrastructure and capability for e-government.

“Although a Cabinet memorandum on e-Government was approved in July 2011, its implementation has been very limited,” the report said. “There is no government branch with the legal mandate to design and implement an e-government plan, and no e-government plan to guide the country’s efforts in this area.

“The only instance created to coordinate ICT efforts across government, the Government ICT Committee (GIC), has never met. The Department of Information Technology (DIT) of the Ministry of Finance, which provides IT services across government and runs one of the Government data centres, has only 18 people. Several of them don’t have sufficient knowledge for the issues they need to handle.

“The department has lots of projects on the waiting list for lack of resources. The Department of IT in the Registrar General’s Department has one professional full-time and one part-time. This office is responsible for the business and property registries, among other tasks.

“According to the National Development Plan Vision 2040, out of 17,353 employees in the public service just 73 are classified as information technology professionals. For these 73, the average years of service is 20.”

The IDB referred to other studies that found the Bahamas “doesn’t reach a third of the level of maturity” on cybersecurity, and added: “Among other things, the report mentions the lack of a cybersecurity strategy, the inexistence of a Computer Emergency Response Team (CERT) and the lack of cyber-forensics in the Royal Bahamas Police Force.

“Out of 400 government procedures managed by the Government, only 11 can be completed online.”

Noting the “limited transparency and accountability” in government, the IDB report added: “The Bahamas performs relatively low among countries assessed under the Open Data Index, being ranked 74th out of 94 included in the survey, and transparency of construction permits and procurement processes is assessed as particularly low.

“The country enacted a new Freedom of Information Act (FOIA) in early 2017, but its roll-out has not yet been completed, and capacity of institutions responsible for overseeing government financial activities and fighting corruption is weakened by limited human resources with adequate training and low access to modern technologies to support its functioning.

“The Office of the Auditor General doesn’t have a tool to see integrated all information related to an inspection process, and its reports are produced on paper. The Anti-Corruption Office operates under the Royal Bahamas Police Force, which affects its independence, and is constrained by limited qualified human resources.”