The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian businesses have warned that commerce on islands hit by future Dorian-type natural disasters will almost completely shutdown with this nation forecast to be the worst-impacted of major Caribbean territories.

The Inter-American Development Bank (IDB), in its latest Caribbean quarterly bulletin, revealed that just 1 percent of Bahamian business owners believe they will be able to "remain open for business" if they cannot access their customer markets, primary physical location and basic utility services following a natural disaster such as a major hurricane.

Together with Barbados, The Bahamas ranked joint bottom among major Caribbean nations in terms of the proportion of businesses able to continue operating during and after such an event. The finding further exposes the need to enhance private sector resiliency, and that of key infrastructure such as electricity and communications, given that rival territories appear more confident about their ability to bounce back from major storms.

Some 5 percent of Jamaican businesses, and 10 percent of those in Trinidad & Tobago, voiced confidence about their ability to keep operating during and in the immediate aftermath of natural disasters, while for Guyana and Suriname the percentages were 23 percent and 10 percent, respectively.

"The last five years have been challenging for Bahamian businesses," the IDB report said, with deft understatement. "Hurricane Dorian struck in 2019, leaving physical damage worth approximately 18 percent of GDP, of which 91 percent was borne by the private sector. A few months later, Bahamian borders were shut for almost two years because of the COVID-19 pandemic, which contracted real GDP in 2020 by 23.8 percent....

"Not surprisingly, 100 percent of Bahamian firms in 2020 were concerned that their business operations would be disrupted by a natural or human-caused national disaster, as reported in responses to the Innovation, Firm Performance and Gender (IFPG) Survey conducted by Compete Caribbean in 2020.

"This very high level of concern was echoed by other Caribbean countries that depended on tourism or were occasionally affected by hurricanes, while countries such as Guyana and Suriname, which are neither services-oriented nor typically affected by hurricanes, showed sharply lower levels of such concern (both at 70 percent)."

And, when it came to the ability of Bahamian companies to remain open in the aftermath of a future Dorian-type event, the IDB survey said 99 percent of respondents revealed they would be unable to do so. "The Bahamian business owners believed that they would not be able to remain operational if, during a natural disaster, they were to lose access to their markets, basic utilities or place of business," the IDB report said.

To address the situation, it added that "substantial investments by both the private and public sectors in physical and digital infrastructure" will be required in The Bahamas. Noting that "if the private sector is the engine of the economy, then infrastructure is the highway on which those engines need to run", the report added that this nation's utilities are already challenged even in the best of times.

"In The Bahamas in 2019, more than four out of five businesses reported power outages, while more than three out of five reported disruptions in Internet service. Across the Caribbean, regardless of level of development and exposure to hurricanes, disruptions to Internet service and electricity are the norm," the IDB report added.

"However, in The Bahamas, unlike its peers, mobile service has proved to be the most reliable and resilient for businesses. Mobile telecommunications is relatively less dependent on fixed, connected infrastructure, which contributes to its reliability during natural disasters.

"On the other hand, the unreliability of energy and telecommunications in The Bahamas broadly suggests a need for improvement. According to IDB calculations, based on income per capita in The Bahamas, energy, telecommunications and digital adoption were ranked as key development gaps in need of further investment."

The report said the Compete Caribbean survey found that, unlike its regional competitors, large firms in The Bahamas were more likely than smaller enterprises to reject payment for goods and services by credit card. Some 56 percent of large business respondents said they accepted credit cards, compared to 73 percent of smaller businesses. And, while 7 percent of small businesses at that time accepted digital or mobile money payments, no large firms did.

It was suggested that the continued reliance on cash was one factor why adoption of the Sand Dollar, the Central Bank-backed digital version of the Bahamian dollar, has been relatively slow up to this point. "Unlike peers across the region, Bahamian large firms were more likely than their smaller counterparts to refuse credit card payments, both in person and remotely," the IDN report said.

"Even before the roll-out of the Sand Dollar in 2022, the level of resistance to payment methods outside of cash was high and may partly explain the slow uptake of Sand Dollars by citizens and firms..... During a hurricane, when power service is intermittent and access to cash from banks and automated banking machines is restricted, mobile phones may offer an opportunity for business continuity across the islands, and for much-needed financial services for residents in underbanked Family Islands. Mobile phones can provide not only communication, but also be leveraged for means of payment."

Warning that The Bahamas will struggle to hit its economic growth targets without improved infrastructure, the report concluded: "Both the COVID-19 pandemic as well as the rising threat of natural disasters mean that businesses must find new ways to maintain continuity while increasing productivity.

"New technologies such as mobile money offer new opportunities, especially within the e-commerce space, for both businesses and residents across the sparsely populated Family Islands. Yet investment in traditional infrastructure is also needed, particularly for the provision of power.

"That infrastructure is still overwhelmingly dependent on aging infrastructure that is prone to outages. If the private sector is the engine of the economy, then infrastructure is the highway on which those engines need to run. Without it, it will be more difficult for the Bahamian economy to reach its goal of sustainable growth and development."