The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian software firm’s founder yesterday said this nation must urgently “figure out” ways to “free-up capital” and bring more viable commercial and entrepreneurial ideas to life.

Duran Humes, also chief executive of Plato Alpha Design, a software consulting firm, told Tribune Business that a recent Inter-American Development Bank (IDB) report had reinforced the view that Bahamian business creativity and ingenuity is being stifled by an inability to secure the financing necessary to bring concepts and proposals to reality.

Pointing out that many local small and medium-sized enterprises are “hard strapped”, and struggle to access or attract external forms of financing, he added that “a lot of potential is untapped” and potentially going to waste despite the best efforts of the Small Business Development Centre (SBDC) and others.

And Mr Humes also told this newspaper that The Bahamas needs a “cultural” change whereby politics, and changes in administration every five years, no longer stifle innovation and creativity based on which “side of the aisle” an entrepreneur supports.

Disclosing that this has impacted multiple firms, individuals and industries besides technology, he warned that it simply acts as a disincentive for Bahamian innovators and drives them to take their products, processes and ideas to other countries which results in a loss for this country’s economy.

The IDB, in its latest Caribbean quarterly bulletin, revealed that the “sluggish” Bahamian economy’s growth under-performed its regional rivals by five percentage points over the decade to 2023 due largely to declining productivity and lack of “technological progress”.

It blamed The Bahamas’ under-performance on declining total factor productivity (TFP), which is described as a measurement of an economy’s technological progress, adding that this has been falling steadily ever since the 21st century began.

And, warning that the number of Bahamian firms “planning to innovate” is some 15 percent behind the Caribbean average, based on the Innovation, Firm Performance, and Gender (IFPG) survey conducted by Compete Caribbean in 2020, the IDB assessment added that there was also “a more pronounced trend” in this nation for the number of SMEs to decline as innovation increases.

Mr Humes, agreeing with the report’s findings that access to credit and capital is “critical” for Bahamian business growth and job creation, acknowledged it is well-known that financing sources in this nation are “fairly limited” when compared to the world’s most-developed capital market in the US.

“Most of the businesses are hard strapped, which can be a good thing and a bad thing,” he added. “There’s a lot of good ideas and concepts which Bahamians have that they may not be able to execute on.  We have to figure this out and make these concepts come to life, but a lot of potential is untapped.

“Going into the future, hopefully we can see the SBDC go into that space, and the banks will help out to free-up some capital for businesses to help bring some of those ideas and concepts to reality. “

When it came to obstacles to innovation, more than 60 percent of both ‘innovative’ and ‘potentially innovative’ Bahamian companies cited the local market’s size as being too small to justify the cost plus the lack of required skills and qualifications among the workforce. And almost three-quarters of companies deemed ‘innovative’ or ‘potentially innovative’ said they were unable to access external credit or financing sources.

“It is clear that the two prevalent issues for Bahamian firms in terms of innovation are costs (implementation and financing) and skills,” the IDB assessment confirmed. “Firms trying to innovate report that they are constrained by lack of financial resources - 78.2 percent in The Bahamas versus 90.3 percent in the Caribbean.

“Around 72 percent of Bahamian firms, innovative and potentially innovative, are fully credit-constrained and 15 percent partially credit-constrained, coinciding with the regional average of 71 percent fully constrained and 9 percent partially constrained. Interestingly, only 19 percent of Bahamian non-innovative firms are fully credit-constrained versus 67 percent in the Caribbean.”

As for workforce development and skills, the report added: “Even though firms consider the qualification of employees a pervasive constraint, Bahamian workers are on par with the regional average for skilled workers as a proportion of the total workforce, with around a half of workers from all types of innovative firms being considered skilled.

“Expanding into what Bahamian firms believe to be the causes affecting workers’ skills, the most frequently mentioned is poor quality education and training by local institutions, which particularly affect potentially innovative firms (82 percent), followed by shortages of local professionals (roughly 66 percent) and lack of training in soft skills by local institutions (60.7 percent for potentially innovative and 68.4 percent for innovative firms).”

Mr Humes, though, argued that The Bahamas “definitely has the skills locally” to execute on software and technology-based projects, arguing that the IDB report - and Compete Caribbean survey findings from which it draws heavily - “does under-rate our abilities a bit”.

He said: “We do have the skills or highly-skilled Bahamians. That’s part of the reason why a company like ours strives to only hire Bahamians and doesn’t go outside the country for any of our staff. Other companies do what we do. We reinvest money back into the country rather than just pulling money out.”

The Plato Alpha chief also warned that the “politically hot climate” that is often typical in The Bahamas acts as a further barrier and obstacle to innovation/creativity by Bahamian companies as progress too often depends on “what side of the aisle you choose to go on”.

“That happens a lot,” he added. “Everyone knows it happens. Most of the time, when your side of the aisle is in office, you push forward, but when the other side of the aisle comes in, those innovations are thrown out. That’s a cultural thing that, hopefully, we can make progress on and get thrown out - hopefully in my lifetime.

“You have persons who spend five, seven, ten years working on a project just for the other side to come in and suspend the project. It’s happened multiple times in multiple areas, not just in technology but a whole bunch of different things. We’ve got to see it where the country does better, and not just do it for ego.”

Emphasising that he stays clear of politics, Mr Humes warned that such attitudes “drives people from innovating locally” and they develop their ideas and concepts in other countries. “We need them to be here and do what they do,” he added, “not in the US, Canada or China.” However, he agreed with the IDB that “all hope is definitely not lost” when it comes to Bahamian innovation and entrepreneurial creativity.