The Tribune

By KENDRICK CHRISTIE

I believe the greatest challenge lies in determining where we should focus the Bahamian economy so that it can thrive in the "new normal" that will emerge once the COVID-19 pandemic has passed. My concern is not only the negative impact on tourism, our number one industry, but also the steadily-contracting financial services industry whose contribution to gross domestic product (GDP) is thought to have shrunk from 20 percent to 15 percent. This is troubling. There is hope, but we must be proactive and realise there was a problem pre-COVID19. What we do now to transform other areas and diversify the economy has become even more critical. Indeed, this quote sums it all up: "COVID-19 has taken the whole world from 2020 to 2030 in one month."

We must realise that previous economic strategies will not bode well for us, especially since the COVID-19 fall-out 19 will impact the world well into 2021. The questions we need to ask ourselves in The Bahamas are: Which industries will enable us to provide growth in our economy and reduce our unemployment rate at a steady pace? The jobless rate has been above 10 percent for 18 of the past 19 years. Then, which industries will expand the middle class, which has been shrinking even before the arrival of COVID-19

Tourism accounts for 60 percent of our Gross Domestic Product (GDP). Even the most positive outlook forecast a 50 percent rebound to arrivals numbers seen pre-COVID-19, with September and October naturally being slower months. Cruise lines have parked their fleets until mid to late June at the earliest, thus impacting tourists arrivals well into the second half. Given all the negative news, I do not see the cruise industry rebounding until later in 2021, and I expect to see closures of some cruise lines and consolidation in the sector.

While I believe our hotel and tourism leaders include some of the best minds in the world, there is no doubt that the fallout from COVID-19 will most certainly dampen tourist arrivals well into 2021. This, then, is a real challenge in that we have a strong number one industry in tourism and its many offshoots - medical, environmental and conferences etc - that has been all but shutdown in the near term alongside a contracting second industry in financial services. It is akin, if I dare use a sports analogy, to Michael Jordan leading the Chicago Bulls with a weak surrounding team. There is sole reliance on one player, and we all know how successfully things turned out once he was paired up with a reliable 'number two'.

Despite the challenges, there are still opportunities for The Bahamas to adapt quickly and ensure it transforms its economy for a COVID-19 landscape that is forecast to be with us for another two years. We must reshape financial services and banking while developing other industries that will not only contribute more to economic growth. but also help to sustain our internal capacity to withstand external shocks such as those we are experiencing with COVID-19.

Here are four areas where I suggest The Bahamas concentrates:

1. The evolution to full digital transformation and payments systems

The Bahamas' much-touted shift to a digital technology model involving online banking, electronic payments and the like has involved a patchwork - rather than comprehensive - approach. Bahamian companies have been migrating to an online presence and e-commerce model out of pure necessity to survive in a curfew and lockdown environment. We have never seen this level of online delivery of so many different products and services before in this country. Post-Covid-19, this must be the order of the day.

The Bahamas needs to establish a national goal of making it less costly for companies, especially small and medium-sized enterprises and 'Mom and Pop' stores, to adopt and use e-commerce solutions. The Government can do this by first eliminating all VAT and bank charges on financial transactions, with banks - in turn - reducing fees for online banking transactions. They can increases charges on checks and drafts to compensate. The Government must also adopt an e-commerce platform across all government agencies. There is one particular government agency that only accepts cash as a form of payment. This is unacceptable in today's day and age, and raises fraud and safety concerns. The Government must lead the way by minimising cheques and drafts, and moving to an online transfer system for all vendors, which would greatly improve the efficiency of our payments system . The success of the VAT portal, with e-filing and online payments, demonstrates we can implement this.

It is my belief that online banking should be a part of the regular offering by commercial banks, and treated as an essential and free service. It makes no sense to have to go into a bank to sign-up for online banking. For commercial banks, fewer fees means more volume. More usage of credit cards, transfers and debit cards by businesses will result in more revenue for their top-line.

For small and medium-sizes enterprises (SMEs), this would mean a conversion from cash-only operations to accepting card and online payment. This will result in reduced theft, less costs involved in protecting their cash, more customers and better tracking of their transactions.. The average cash theft per dishonest employee, as calculated by the National Retail Federation in the US, was estimated at $1,200. We do not have any estimates of this in The Bahamas, but as a certified fraud examiner I would say we are not too far behind this figure.

We will truly see transformation when one can traverse the whole of New Providence for a week, receiving and paying bills to government agencies and making purchases at private companies using a debit card or digital currency without having to take a single dollar bill out of their wallet or stand in-line to deposit a cheque.

2. Highlight and use the strengths of our archipelago

We have a unique opportunity as an archipelago to demonstrate to the world that we have managed COVID-19 proactively and strategically. We have had several islands, some of which are well-known internationally, with no known COVID-19 cases, such as Exuma and Eleuthera. It is my view that these islands should be able to relax their respective lockdowns even as they continue airport shutdowns to allow those economies more freedom to function. The sparsely populated southern Family Islands have been allowed to do just that, and others are likely to follow suit soon.

We already see the Government allowing different shopping practices for some Family Islands due to their unique situation. I think we can allow some islands to open further, albeit with international airport arrivals on hold, but with local movement and shipping using proper screening and social distancing.

3. The immediate development of a nationwide Agri-Business plan designating North Andros, parts of New Providence and other islands as development clusters

The New York Times recently predicted shortages in the US food supply chain, particularly with meat and other products, due to the COVID-19 crisis. Many Bahamians are being innovative and learning new skills in the midst of this pandemic, whether sewing, gardening or farming activities. Hatcheries and local farms have been inundated with demand for produce. The Government must implement a plan to raise the subsidies and quotas for farmers while holding them to certain quality standards and production methods.

While we will always have to import a certain level of product from abroad, we have local demand for Bahamian goods and would do well to increase the amount produced locally as this will increase employment and reduce the impact of external shocks.

Who is going to think of creating the first 100 percent "Bahamian Grown" grocery store chain with every produce and egg product, tamarind juice, mango, and banana produced in The Bahamas. Would this not be a marvellous thing, and a consistent source of pride and revenue, too?

4. Transformation of our Education system to incorporate online learning and more vocational training

The key to transformation is to begin early in the educational life of our people. The Ministry of Education has called for a focus on kindergarten and primary school learning, as most of what we learn occurs up to age nine. This is scientifically supported, and a good way to begin the reforms we truly need.

Then we revamp the entire education system. It is true that we have had mixed success in developing a "centres of learning" approach, with a number of public schools enjoying huge success on national exams. Yet with a 46 percent diploma rate, more must be done. We should also make certain schools centres of learning for specialisation and a more diverse field of study, including coding and information technology; medical equipment and software; agriculture; manufacturing techniques; sewing; straw work. These are all focused on training students in a more skill-set based curriculum that is better suited to today's economy. Our goal should be to lower the cost of Internet service for every Bahamian, so that we have a fully-serviced market with all homes having some basic level of service. We cannot move forward with the patchwork level of Internet access that we have now.

We are currently preparing students for fields of study that are shrinking, whether it is banking, tourism or anything with a 'bricks and mortar' presence. Online remote work is not a thing of the future; it is here now to stay. In the US, remote work is estimated to have grown by 91 percent over the past 10 years. We must visualise these changes and prepare for new types of industries. The way that we prepare students needs to change to fit the new world order.

My hope is that the Government-appointed Economic Recovery committee not only navigates the short-term challenges but looks long-term - ten years or more down the road. We must do certain things now to prepare our people, and our way of doing business, to ensure we do not go down this path in the future. I will be sharing other suggestions for consideration with them.

The greatest leader of them all is the one who prepares for problems that do not yet exist but are much anticipated, and for rewards he or she may not personally benefit from, but his or her people will. That is the selfless and visionary leadership we need from our political and civil leaders right now.

NB: Kendrick Christie is a chartered accountant, certified fraud examiner and justice of the peace in The Bahamas. He has been practicing in the audit and accounting arenas for 25 years, and written many articles on fraud and The Bahamas economy. He is an assurance and forensic partner in Crowe Bahamas, a firm in Crowe Global, the eighth ranked accounting firm in the world, and principal of K.Christie and Co. Chartered Accountants and Fraud Examiners.