The Bahamas is one of the most difficult places for its own citizens to do business or become entrepreneurs!

An Open Note To The Bahamas Prime Minister, The Hon. Philip Davis

As The Bahamas prepares to celebrate fifty (50) years as an “independent” country, one is left to ponder if we have truly made any real strides towards economic prosperity

As this is our country Mr. Prime Minister, then we the people should have more of a stake in it. As Voltaire said, “A multitude of laws in a country is like is a great number of physicians, a sign of weakness and malady.”

"The Way Forward"

By: Dr Kevin Turnquest Alcena

LLB (Hon-1st Cl.), LLM (Hon-1st Cl.)

PhD in Economics / Ph.D. in Clinical Psychology

Ph.D. in Public Health / PhD in Herbal and Holistic Medicine

Titular Professor

Lawyer & Fellow—CILEx; ACIArb; & Snr. Fellow–AMLA

Sept. 21, 2022

Great Economist, Adam Smith said, “A nation is not made wealthy by the childish accumulation of shiny metals, but is enriched by the economic prosperity of its people.” Well if the wealth of a country is incumbent upon the state of its economics, then Mr. Prime Minister - The Bahamas and its leaders have been “…weighed in the balances, and art found wanting” (Daniel 5:27)! As this nation prepares to celebrate fifty (50) years as an “independent” country, one is left to ponder if we have truly made any real strides towards economic prosperity.

The passing of Queen Elizabeth signified the ending of an era of which those left behind have broken through the barriers of hundreds of decades of forced tradition. The tearing down of these invisible walls and unrealistic expectations have now given the future generation’s options and choices their forefathers were forbidden to make.

However, can we as a “sovereign” nation say the same? When one considers the many archaic and draconian measures still in place that hinders progression in The Bahamas, are we really moving forward? Or are we stuck in decades of false traditions and mental slavery that keeps us in cycles of poverty rather than prosperity?

If Smith’s idea of economic prosperity is to be believed, then where is our wealth Mr. Prime Minister?

Do not get me wrong sir - this is not an indictment on you per se, but rather a question for all of those that have made themselves available to represent the public.

Granted Mr. Prime Minister, The Right Honorable Philip “Brave” Davis, you have made excellent headway in trying to transition this country through a pandemic and into recovery, as well as aiming to improve the social and economic status of the less fortunate. There are still some key areas that need immediate attention and with the right team of advisors I do not doubt some of these issues can be resolved.

Firstly, let’s take a look at the issue of Bahamians helping Bahamians. The Bahamas is one of the most difficult places for its own citizens to do business or become entrepreneurs! The process at Inland Revenue itself is nonsensical. It’s almost completely automated, which makes it difficult to speak to someone on the phone or even in person. What’s the point of having a building full of people if you cannot speak to anyone?

Moreover, if the system has been automated, why is the turnaround time so long? Furthermore, you are required to fill out the application for all agencies on one website, yet, we still have to wait for each of these agencies to separately respond, especially Environmental Health and Ministry of Works!

May I suggest that if one agency is used to fill out the application, then the system should be digitized so that all agencies can tap into a central portal that will allow all relevant parties to receive a notification of when requests come in, and they can begin working on them simultaneously so that the response time and confusion are drastically diminished!

Another issue with doing business in this country is the bureaucracy and the ridiculous criterion of having a “letter of good standing” from N.I.B. If this institution is supposed to have an entire unit dedicated to ensuring that employers are paying their contributions, why then is this letter necessary? If the personnel hired for this task are doing their jobs by prosecuting those who are not meeting their obligations - then this procedure can be quelled.

As this is our country Mr. Prime Minister, then we the people should have more of a stake in it. As Voltaire said, “A multitude of laws in a country is like is a great number of physicians, a sign of weakness and malady.”

Secondly, the government needs to devise a national plan to eradicate illiteracy and the decreasing national average. Social promotion has and still does not help in meeting the needs of our children.

There are over 5,000 students leaving school every year in this country with less than 20% attending college. So, what happens to the other 80%? What prospects do they have if they cannot meet the basic needs of reading and writing? Stephen Covey said one of the “Habits of Highly Effective Leaders” is being innovative.

It is imperative that technical schools be erected to help those that cannot comprehend or pass ten (10) academic subjects. Jamaica, for example has fourteen (14) Technical Schools and two (2) Agriculture schools, which means they are even training their students to feed themselves and their families.

If our brothers and sisters in the Caribbean understand the importance of alternative education, why haven’t we? The government should take a note out of Haiti’s book - in that it has asked Cuba to assist them with their illiteracy problem.

The Human Resource of our country is the most critical part of any nation because we are a service based economy. Another alternative to alleviating the educational problem could be the introduction of a National Service. This would assist those males and females between the ages of 17-21 who are delinquent and continue to be a menace to society, but are not old enough to be placed in Fox Hill Prison.

The programs in place are not helping and only making these young people aggressive and unproductive citizens of society. Something must be done, and the usage of the old Victorian system has already set our kids up for failure. “Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will live its whole life believing it is stupid” (Albert Einstein).

Thirdly, as I have said many times before, the national debt dilemma truly needs to be addressed. A national plan begins with having the right set of people in place that can not only give advice, but wise counsel. Proverbs 11:14 says, “Where no counsel is, the people fall: but in the multitude of counsellors, there is safety.”

Mr. Prime Minster, wise counsel can keep you and this country from destruction. Simply appointing people to this post or this position does not expand knowledge or make for a great plan. There is no economic think tank or advisory board that can steer this country in the way forward.

We need persons with international connections that can help the country with debt management, and transition to a position of prosperity. Stephen Covey said, “Make time for planning; wars are won in the general’s tent.”

We are continuing the same old structure of bringing back and allowing bureaucrats to dictate or give advice on the way forward. We are looking to you for a paradigm shift in how we do business in this country, because at present - we are digressing.

We see a cycle of people repositioning themselves over and over again; the former this one or that one, and all at the expense of the taxpayer’s money.

The Opposition Leader suggested a good recourse for decreasing our debt; that being allowing Bahamians to buy bonds into our debt. This alternative makes good economic sense and is innovative. The old anachronistic structure at Central Bank needs to be change and rid ourselves of some of these committees. The country is too small and too deep in debt to continue down this path.

Recently, there have been some Bahamians who have decided to open a council in Miami and become digital nomads. This is because the taxes here are too high and defeats the purpose of trying to improve one’s social economic status.

How are we going to help the 49,000 people that is out of work with the existing structure in place? We need to deregulate the country, and allow for ease of doing business for both Bahamians and foreigners.

N.I.B. should be privatized before it goes broke from all the borrowing and mismanagement of money that takes place.

Another ingenious idea to assist in ridding us of this national debt is the implementation of a National Lottery. We have the knowledge and people with the ability and connections to direct the leaders on how to go about doing this. A National Lottery can aid in supplementing Social Services, Education and Youth and Sports, because as it stands - we have no monies to overhaul these ministries.

Also, looking at a Public Service Reform and reducing the public service by at least 20,000 as we can no longer maintain it - will be a big step in moving in the right direction.

In concluding, Matthew 20:26 states, “…Instead, whoever wants to become great among you must be your servant.” Mr. Prime Minister, as a great leader - you are called to serve the people and to do so, you must meet the people where they are at.

Progression requires change, and it must begin with those who have taken a step forward and chosen to lead those they are in authority over. Many are still struggling to get by and need help in getting to their destination.

It’s time to be more than just innovative, but think outside the box; time for something new. As Barak Obama said, “Change will not come if we wait for some other person, or if we wait for some other time. We are the ones we've been waiting for. We are the change that we seek.”

Source 

The Bahamian government must be dedicated to ongoing funding of education at all levels... ...Further, a corresponding factor is the need for our leaders to actively pursue the diversification of our economy... ...The lack of diversity within our economic model and the depressed economic environment in The Bahamas does not favor young and up-and-coming professionals, entrepreneurs and investors...

Where do we go from here? Pt. 2

By Arinthia S. Komolafe:

A major obstacle that youth and our emerging leaders face is the lack of adequate education and/or opportunities to pursue higher education.  During 2009-2010, a major topic of discussion was subsidies provided to learning institutions.  The government announced that it was decreasing its subsidy to independent schools by 20 percent.  Many were outraged by this move; not least the parents themselves who were already faced with rising education costs and would consequently rethink their desire to privately educate their children.  In some cases many were forced to enroll their children in the public school system.

Proponents of the subsidy argue that parents who choose to send their children to private school are paying double, as their taxpaying dollars are already used to fund public schools.  At the same time, they take additional funds out of their pockets to educate their children privately.  It is worth noting, however, that those opposed to such subsidies believe this reduces the amount of funds available to public schools who ultimately suffer among other things the plight of underpaid educators, understaffed schools, inadequate infrastructure or reduced supplies.

The government’s reasoning for subsidy reduction was that certain independent schools received higher subsidies in comparison to public schools.  However, this argument was perceived by some as skewed, as the government itself operates approximately 160 institutions and is responsible for operating expenses, wages and other costs.

Nevertheless, the most alarming revelation was the statement that all but three of the independent schools were in contravention of the education (grants in aid) regulations by not submitting the requisite returns of income and expenditure.  It is necessary to ascertain upon which basis the government decides the level of subsidy it disburses – bearing in mind that independent schools also receive grants from private donors and/or the denominations that they are affiliated with.

Although there is a strong case for maintaining these subsidies, increased accountability should be demanded from recipients of tax-payers’ funds.  It was recently stated that many of the independent schools have become compliant.  However, the public has not been advised of how many of the independent schools remain non-compliant.  Ironically, it’s difficult to imagine that the government would aggressively ensure compliance with these regulations, when the government itself appears to be acting ultra vires of the same by exceeding the limits apportioned to various classes of schools. It is therefore incumbent upon the government to make the necessary amendments to adjust for the increases and/or new recipients of grants.

Nevertheless, subsidies provided to independent schools, (which generally produce better national results compared to the public system) can provide a good foundation in primary and secondary education to afford more Bahamians an opportunity to pursue tertiary level education.  Statistics reveal that only 20 percent of The Bahamian labor force attain a university degree.  It should also be noted that these statistics include expatriates, therefore decreasing the ultimate rate for Bahamians. The statistics are not unconnected to the lack of opportunities to obtain higher education in a broad range of fields locally.  The inability to receive diverse higher education outside of a few concentrated areas in The Bahamas has led several Bahamian students to pursue education abroad.  In 2010, the government questioned the wisdom of maintaining current subsidies of approximately $4 million for 197 Bahamian students attending University of the West Indies (UWI).  The real question should have been the potential downside of removing the aforesaid subsidies.  Removal of subsidies of this nature at this time will decrease the opportunities for Bahamians to become qualified in fields such as medicine at a reduced cost until such time as they can do so locally.  It is sad to say that in 21st century Bahamas, Bahamians are still not able to qualify as doctors and engineers locally. Until such time as The College of The Bahamas has been converted to a university and provides science and technological services, the discussion should remain a moot point.

Debt and education

Flowing from this inability of Bahamians to be educated locally is the burden of debt acquired in pursuance of tertiary education abroad and hence the student debt loan crisis.  The government Guaranteed Loan Fund Program (GGLFP) was suspended by the current administration in 2009 at a time when many parents cannot afford tertiary education for their children in the absence of awarded scholarships.  As a result, persons unable to take advantage of the GGLFP are often left with no option but to obtain consumer loans from banks and other financial institutions where rates tend to be unfavorable.  Some aspiring students who cannot obtain loans are forced to depend on their parents who in turn resort to remortgaging their homes in order to give their offspring a chance to achieve the Bahamian Dream.

This week, Bloomberg reported a significant increase in student loan debts over the past three to four years.  The report was compiled from a survey of about 860 bankruptcy lawyers under the umbrella of the National Association of Consumer Bankruptcy Attorneys in the United States.  It was reported that student loan debt (both federal and private) in the United States is approaching $1 trillion and surpassed credit card debt for the first time in 2010.

In The Bahamas, it is estimated that some 5,000 applicants have benefited from the GGLFP since its inception in 2001.  At its debut, the program had nearly exhausted its $100 million statutory budget in less than two years, placing the sustainability of the fund at risk.  It is estimated that approximately $70 million of funds were in default before suspension of the program.  It was further stated at that time that the continuance of the program depended upon the defaulters repaying their outstanding debts.

The importance of planning for our children’s future via investments in educational funds and college funds cannot be overemphasized.  The program was plagued by multiple challenges that seemed to disadvantage the recipient of these loans.  The rate of interest, which had originally been subsidized at 50 percent by the government, was exorbitant and on the same level as that of mortgage loans.

It is worth noting that the subsidy has been reinstated in certain circumstances.  The payment terms were unfavorable and required recipients to pay large monthly payments in a short period of time, at times not taking into consideration other payment obligations of the recipient like additional student loans or car loans.  The lending institutions driven by profits, failed to take into consideration the proposed monthly payments in comparison to the earning capacity of the recipient.  As a result, the high monthly payments provided more of a burden for the recipient and/or guarantor who was accustomed to paying low interest payments that were presumably based upon their credit risk at the time the loan was approved.

The overall management of these student loans including the payment schedules, terms of payment, notification of past due payments and structuring of payments by financial institutions leaves much to be desired.  It could be argued that the poor management and minimal attention paid to this program by these institutions is because payment from the government is guaranteed in the event of defaults.  How much attention is given to the management of this program and other student loan programs to ensure that the interests of the students/borrowers are protected?

Huge monthly payments have in many cases exhausted a recipient’s debt-service ratio and have prevented many young professionals from qualifying for mortgage loans or funding for their entrepreneurial pursuits.  Consequently, many individuals are delayed from moving toward ownership in the Bahamian economy.  The extent of the challenges faced by young and up-and-coming professionals will more than likely be further exposed once the proposed credit bureau is fully implemented and operational.

Govt decision questionable

The Obama administration is proposing an overhaul of the student loan program in America by removing the current subsidies to private lending institutions.  The proposed term to forgive loans will be reduced from 25 to 20 years and the proposed monthly payments will be capped at 10 percent of the recipient’s discretionary income, representing a reduction from 15 percent.  Further, students with multiple loans will be given the option to consolidate and take advantage of lower interest rates.

A similar approach ought to be considered for existing defaulters and future reinstatement of the program in The Bahamas.  The government’s decision to suspend the program indefinitely and not address the student loan debt crisis is a flawed one.  This decision does not send a good message on government’s commitment to higher education of the youth in The Bahamas.  Further, the lending institutions must be engaged to re-evaluate their requirements and terms for student loans.  A universal amnesty period should be looked at for all outstanding recipients to pay a one-off minimal amount and restructure their loans, extend payment terms and effectively reduce monthly payments.

The government must be dedicated to ongoing funding of education at all levels.  Further, a corresponding factor is the need for our leaders to actively pursue the diversification of our economy.  The lack of diversity within our economic model and the depressed economic environment in The Bahamas does not favor young and up-and-coming professionals, entrepreneurs and investors.  These realities make the Bahamian Dream seem so unreachable, unattainable and at best a mirage.  A brain drain is certain to be a surety in our future, unless we place more emphasis upon education.  The question as to where we go from here is one that only the government and our leaders can answer through their policies, decisions and actions.

•Arinthia S. Komolafe is an attorney-at-law.  Comments can be directed at: arinthia.komolafe@Komolafelaw.com

Feb 09, 2012

thenassauguardian

Where do we go from here? pt. 1

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