Some 82 percent of $4.5m in loan and grant applications from Abaco entrepreneurs is in the pipeline for distribution, the Small Business Development Centre’s (SBDC) executive director said yesterday.
Davinia Grant, speaking at the Abaco Business Outlook webinar, said: “We had over $4.5m in requests. We have approved about $3.7m, and persons are working through those disbursements right now. I think it is more important for us to look at what are the new businesses, and what are the new innovations Abaco needs right now.
“We have to look at our relationships moving forward. We have to think about the long game and resilience, because every time after a crisis credit can’t be the response.” Ms Grant said Bahamians not only have to think about how the economy rebounds, but also how to plan for long-term sustainability.
“Grand Bahama’s rebound was shallow, meaning that they didn’t have to rebound as much, but frankly they were challenged much before Hurricane Dorian. But so much of their activity is undergirded by an industrial economy, which didn’t suffer much as a result of Dorian,” Ms Grant added.
“The pre and post-tax revenue numbers, in particular with Grand Bahama, did not have the drastic drop-off that we saw in Abaco. So, for example, for the four quarters from the third quarter 2019 to second quarter 2020, the tax revenue for Abaco, you are looking at about $10m. For the same period for 2018 to 2019, it was $21m.
“So basically 50 percent of its economy – and when we go further into the year we have for tax records, and you exclude a quarter before hurricane Dorian, you will see an even greater drop-off from an annual revenue point of view. You are probably looking at easily a 70 percent drop-off, and this rebound for Abaco having to happen in a COVID environment has its own challenges.”
One factor behind the drop-off in Abaco’s contribution to the Public Treasury, besides the impact of Dorian itself, is the Government’s decision to effectively declare the island a tax-free zone to aid the post-storm reconstruction.
Ms Grant, meanwhile, also focused on the “post pandemic environment”, identifying sectors such as technology and renewable energy as primary focuses for the SBDC. She added: “One island in this archipelago that we really need to be throwing our weight behind is start-ups in Abaco.
“In the new budget cycle we have been fortunate enough to have the Government expand the access through equity.” Rather than take on debt financing, Ms Grant said small and medium-sized enterprises (SMEs) can partner with the Gvernment and allow it to take an equity ownership stake in their businesses for a certain period of time.
Summayah Cargill, the Bahamas Development Bank’s unit head for its strategic development initiative, said: “BDB going forward will be using our full powers to support national development through economic growth in keeping with the national development plan and the sustainable development goals.
“We have three main business divisions and our re-energised focus has had significant impact on our operations. Our sustainable development goal (SDG) focus just means we incorporate considerations for poverty reduction, youth inclusion, gender equity, small skill producer support and, of course, long-term sustainability into our decision-making.
Ms Cargill added: “What we do at BDB in the strategic development initiatives, which is a new area for the bank and the area that I head, is that we combine creative concessionary financing, policy advocacy and capacity building.
“We are taking this new approach because we want people to recognise that, at a development bank, we need to build economic growth at the business level but also at the industrial and community level, and we need to have solutions that take into account multiple components of the economy that has to be financed.”
Noting that Abaco will need infrastructure development to “kick-start” its economic rebound, Ms Cargill said: “At the Development Bank we are able to finance all of those things.
“When we think about the economy and the set of interacting systems, there are key access points that are necessary for economic growth, but individual investors may not be prepared to invest in them because they have a different risk metric. What the BDB can do is take the lead in facilitating these initiatives through guarantees, loans and equity to ensure that these projects receive the financing they need.”
Matthew Chandy, director of reconstruction programming at Bahamas Relief CORE, said: “We are not building homes or repairing homes for people. They are building it themselves, they are repairing it themselves. So we set a certain minimum criteria that we are going to look at, and if they meet those criteria our funds are available to them.
“We give to them in advance, and two remainder payments in stages, and we plan to do about 402 of them. For the small business grants we hope to give grants of anywhere between $5,000 to $10,000 for 120 small businesses.”