By Ashley Penn-Nixon
The economic stability of the country was pushed to the forefront following the 2020/2021 budget communication as the Deputy Prime Minister and Minister of Finance K. Peter Turnquest outlined the way forward following the COVID-19 shortfall.
Turnquest delivered a sobering projection for the 2020/2021 fiscal year in the House of Assembly Wednesday while revealing a number of firsts for The Bahamas, including health initiatives, no new taxes, a back to school VAT holiday, small business incentives and a number of tax and duty reductions.
Small business growth and development was at the head of the finance minister’s communication as he noted a significant portion of the budget has been allocated to jumpstart entrepreneurship in the country.
“We set an objective three years ago to build an entrepreneurial ecosystem, and our investments to date have made the environment for entrepreneurship stronger than ever before. We have increased the capital Budget allocation for small business growth and development from $5 million last year to $55 million in the new Budget,” Turnquest said.
“We are pleased to see that the entrepreneurial spirit of Bahamians has been awoken, because now, people have confidence in the programs available to support their ambitions,” he continued. “This is largely thanks to the work of the Small Business Development Center and its partners. The SBDC will continue to innovate, by exploring ways to leverage the Government’s investment to make other forms of capital available to Bahamians such as private equity through angel investing and crowdfunding.”
Speaking to the importance of small and medium-sized businesses, the deputy leader noted that as a result of COVID-19, a demand issued for services from these small-scale businesses thus creating revenue during a crisis.
“Micros, small and medium-sized businesses (or MSMEs) make the economy more resilient, as they stay ready, nimble and poised to adapt even more so than large companies. When the economy needed delivery services, MSMEs sprung into action, he said.
“The economy needed quick access to online markets, and MSMEs provided online solutions for other MSMEs. Rental car companies pivoted by using their vehicles for deliveries. Tailors and seamstress pivoted to making masks. They turned a byproduct—scrap fabric—into a new source of revenue. In this time of crisis, the determination, foresight and agility that characterizes MSMEs has proven beneficial for all Bahamians,” Turnquest added.
In addition to entrepreneurial empowerment, the finance minister also noted that a digital transformation has begun and will continue after the passage of the COVID-Q19 pandemic.
“Put simply, the COVID-19 pandemic has transformed that pointed goal to an absolute imperative. We saw the explosion of digital commerce in The Bahamas in response to the curfew and lockdowns necessary to mitigate the spread of COVID-19. Even when the virus poses no more threat, the transition to digital commerce will remain. Hence, this government’s push toward a national digital transformation comes at no better time than the present,” Turnquest said.
“To date, this government has advanced its digital agenda through the conversion from the old Electronic Customs Automated System (eCas) to the new Electronic Single Window at the Customs Department, the digitization of passport registration at the Passport Office, and the ongoing revamp of the Real Property Tax system, which will allow for the complete automation of the existing system. We project this year that the Digitization will extend at a minimum to the Road Traffic Department and the Office of the Registrar General,” he added.
As a result of the national digital transformation, the financial sector is said to have established goals related to the reduction of cash and cheque utilization across the country as follows:
- A 50 percent reduction in the utilization of cash within the next five years; fuelled by more transparent, business and consumer-friendly regulations around the use of debit and credit cards, and the full integration of the Sand Dollar.
- A 50 percent reduction of the utilization of cheques in 3 years and 80 percent reduction in 5 years; boosted by greater utilization of the electronic clearinghouse to allow for direct payments.
According to the finance minister, the said targets will mitigate a number of stumbling blocks as it relates to digital transactions.
“Setting these targets and establishing a task force to make this happen will ensure that we can, in a measurable way, determine our success in removing the legal, bureaucratic and even cultural obstacles in the crucial shift to digital transactions,” Turnquest said.
He also shed light on the future of cash in a digital era as “sophisticated financial services” is said to be the ultimate goal throughout the country.
“The aim of this initiative is not to eliminate the use of cash. Cash will continue to be a feature of the payment system. However, the further entrenchment and utilization of digital means has the opportunity to expand financial inclusion, to open new business opportunities, to bring sophisticated financial services to even the most remote parts of the country and to improve personal and business security,” Turnquest said.
“The work of the imminent task force will be to engage business communities and civil society to ensure appropriate attention to privacy, cybersecurity, as well as to ensure a proper understanding and buy-in of this initiative by the general public,” he added.
Turnquest warned the government’s fiscal plan will come at “a necessary, but unprecedented cost”. The fiscal deficit is budgeted at some $1.3 billion, or 11.6 percent of the Gross Domestic Product for the upcoming fiscal year and, Turnquest said, represents the largest deficit to be incurred by any Government in the history of The Bahamas.
Laying out government’s plan to protect the citizens and residents of The Bahamas and stabilize the economy on the heels of a catastrophic, monster storm and in the midst of a coronavirus pandemic, the minister of finance says the country’s rebound will be heavily dependent on how quickly travel resumes.
Pointing out that “unprecedented times call for an unprecedented budget,” Turnquest said the 2020/2021 budget is unlike any the country has ever seen before.