The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister yesterday said the number of registered Bahamian businesses has increased by 37 percent over the past two years, adding: “We must diversify within, and not away, from tourism.”

Senator Michael Halkitis, minister of economic affairs, told a tourism diversification webinar organised by Royal Bank of Canada (RBC) that Ministry of Finance data showed registered businesses had increased by almost 13,000 since 2019, growing from 34,780 to 47,717.

A key factor driving this increase, he suggested, was the COVID-19 pandemic forcing many Bahamians to become entrepreneurs “by necessity”, with most growth generated by the expansion of home-based businesses in areas such as catering and landscaping.

Voicing hope that “the lessons learned from the COVID pandemic stick”, and drive greater diversification in tourism and the industries around it, Mr Halkitis said the sector’s near-total shutdown for much of 2020 should not cause The Bahamas to abandon it as the leading job creator, GDP driver and foreign exchange earner.

“I think the point has been made, when we speak about diversifying the tourism economy in the aftermath of the pandemic, a lot of the discussion has been around the vulnerability of tourism and the travel bans,” the minister said.

“While the argument to diversify away from the tourism economy has become more pronounced after that, I think that with our natural resources and proximity [to the US], our job is not to diversify away from the tourism industry but diversification within the tourism industry.”

Mr Halkitis said this diversification must occur geographically, so that more Family Islands “benefit to a greater extent” as well as in the product offering. In particular, he singled out Airbnbs and the vacation rental market as a primary driver of greater Bahamian tourism industry ownership as well as providing a more authentic, cultural experience to visitors.

Disclosing that The Bahamas saw 10,000 Airbnb reservations in February 2022 alone, with an average daily rate of $450.06, the minister added that some 7,000 such properties in The Bahamas are currently listed with the vacation rental website.

“That is very significant for two reasons,” Mr Halkitis said. “The main reason, number one, as has been said, particularly given the effect of the pandemic and change in consumer tastes, we have groups, segments of the market, that do not want to be in a large hotel but be in a smaller environment for safety and to experience the local flavour of the place they visit. We see a significant increase in that segment.”

The shift away from large mega resorts, such as Atlantis and Baha Mar, which has been the tourism model traditionally relied upon by The Bahamas, has also created “an avenue for independent ownership in the tourism industry” that is very much within the financial capabilities and wherewithal of Bahamians.

Mr Halkitis said a shift away from promoting The Bahamas solely “as a place to lie on the beach, which is very nice, and go to the casino”, towards “more event-based” activities by reviving the ‘Sports in Paradise’ brand together with a focus on religious and medical tourism plus conferences, would also help drive diversification.

Turning to the industry’s spin-off potential for Bahamian entrepreneurs, the minister added: “Linkages has been a topic for many years in this country..... We’ve been talking about this for 50 years, and work must continue.” He pointed to the Government’s annual $50m financing commitment to small and medium-sized enterprises (SMEs), as well as the work of the Small Business Development Centre and new crowdfunding rules that allow capital raises up to $5m as avenues for start-ups and entrepreneurs to exploit.

The “coloured economies” of blue (sea), orange (cultural) and green (sustainable development) were identified as further opportunities for Bahamians. Mr Halkitis said there had been 120 new farming projects since 2019, and over 170 new licensed fishing projects in the same timespan, all of which suggested there were opportunities to boost the value chain via domestic production.

“There’s a need to mobilise private sector capital,” he added. “Our tourism industry is recovering. The Caribbean is leading the world in terms of that recovery, and The Bahamas is leading the Caribbean in terms of that recovery. Barring more geopolitical disturbances, we expect that momentum to continue and the economy to improve.

“We are seeing signs throughout in terms of employment and what is coming to the Government, so this is a good time to mobilise private sector capital and deepen the involvement of entrepreneurs in the tourism economy.”

Acknowledging that “barriers to entry” must be removed, Mr Halkitis added: “I think the future is bright, we’re optimistic and bullish on the future of The Bahamas.”