By S3S
The captioned article focused on a pronouncement by the current Administration of an initiative designed to “improve the ease of doing business in The Bahamas”. Any efforts to make the country more attractive to foreign investment must be applauded. However, our very new administration may be over-optimistic and confused about what it takes to accomplish this monumental feat with an outcome of improvement in this most important of metrics.
In the above referenced article, the PM announced the despatch of "Investment Attaches" to Embassies around the world in order 'to facilitate trade and foreign direct investment (FDI)'. Previously, the DPM (~Oct. 2021) had mused publicly that the country could aspire to reach the Top 50 countries in the 'Ease of Doing Business' rankings, but given that the World Bank had announced that the 2021 version was the last of its kind due to alleged impropriety and implied that future versions would focus more on the business climate of countries, where does this business development initiative leave our aspirations?
In its last survey, the World Bank ranked the Bahamas 119th (of 190) countries overall in Ease of Doing Business, 77th for ‘dealing with construction permits’, 81st for ‘getting electricity’, 181st for ‘registering property’, 152nd for ‘getting credit’, 161st for ‘trading across borders’, 88th for ‘protecting minority investors’ and 82nd for ‘enforcing contracts’. Though the World Bank has discontinued publication of the report, it also announced that the new focus will be on assessing the business and investment climate, so many of the above metrics are likely to be continued:
“Going forward, we will be working on a new approach to assessing the business and investment climate. We are deeply grateful to the efforts of the many staff members who have worked diligently to advance the business climate agenda, and we look forward to harnessing their energies and abilities in new ways[1].”
To establish a global network of investment attaches may very well increase the amount of FDI in the short term but would do very little to enhance our deteriorating business climate, so the wins will be short-lived. This is because what the business climate requires is not a focus on business development (marketing, sales), but an unrelenting and positive focus on business activity, and evidencing progress in the areas of inflation and toning down the militaristic attitude of labour unions, as per IGI Global’s definition:
“the attitude of government and lending institutions towards business activity. It also includes the tax rate, inflation and attitude of labor unions towards employers”[2].
Of course, if a key factor in the business climate is the attitude of labour unions, then the Bahamas Government has its work cut out! The business climate sits within the wider business environment which includes everything else about a country’s infrastructure: Socio-cultural, Technological, Economic, Environmental, Political, Legal and Ethical (STEEPLE) factors, so again, the Government has its work cut out to ensure all of these factors are addressed in tandem.
Whilst a global sales push by investment attaches is likely to increase the amount of FDI driven in the short term, the proposed initiative is likely to have little sustained effect on our business climate because the latter requires a different set of inputs, as noted above. If the current Administration needs steering towards the factors it should be focusing on , as a prelude to a sales push, it would be well-advised to start with our public, banking, utility and legal services, all of which are implicated in a number of services that directly impact rankings: (i) ‘registering property’, (ii) ‘dealing with construction permits’, (iii) ‘getting electricity’ (at a reasonable rate), (iv) ‘getting credit’, (v) ‘trading across borders’, (vi) ‘protecting minority investors’ and (vii) for ‘enforcing contracts’.
In the old ranking, The Bahamas once ranked as high as 55th (2009) but fell to 84th place (2014), then to 97th (2015) after a: “significant decline in the ease of starting a business and underscored historically problematic issues related to property registration and contract enforcement” (CIA citing WB, 2015) before finally finishing at 119th (2020).
Our steadily declining standing and the fact that we languished in the bottom half of the table through the end, means we are behind three of our direct comparator countries, Barbados, Trinidad and Jamaica[3], which is a great concern because these countries compete for the same FDI we compete for. Therefore, it is incumbent upon the Government to ensure bureaucratic barriers are eliminated, pressure is brought to bear on its public, banking, legal and utility services providers because the speed and efficiency with which they deliver services play a crucial role in determining the country’s business investment climate and environment, thus directly impacting future. We pride ourselves on being a relatively liberal market economy, but we have a long way to go to create and maintain an environment in which we are widely recognised as a place in which it is easy to do business and for which companies compete to do business.
[1]https://data.worldbank.org/indicator/IC.BUS.EASE.XQ?contextual=region&end=2018&locations=BS&start=2018&view=chart 100219
[2] https://www.worldbank.org/en/news/statement/2021/09/16/world-bank-group-to-discontinue-doing-business-report 240722
[3] https://www.igi-global.com/dictionary/corruption-business-climate-and-economic-growth/44784 240722
