Minister of State for Investment (Office of the Prime Minister)

At the end of last year, you said that “The Bahamas has faced a number of economic restraints in recent times, but there is reason to be optimistic about our country’s growth.” Do you still agree with this and what do you think needs to be done in order to further strengthen the economy?

I still believe that we are facing many challenges, however, one of the beauties of doing business in The Bahamas is that we are the gateway to the Americas and also to Europe. Our geography makes it very easy to access and the layout of our islands presents many investment opportunities, whether it is in industry, tourism or financial services. Quality of life is one of the main selling points that people look for that we offer, particularly to Americans and Europeans. If you look at our second home market, it is one of the most robust in the world. During the recession when most developments in the Caribbean were failing or shut down, developments like Albany, Old Fort Bay and Lyford Cay were flourishing and last year around the Easter weekend, Albany did $120 million in sales. Individuals were just excited to be a part of the community that offers so much in terms of its quality of life and all of the other features. So we are very optimistic that quality of life will continue to drive the economy and that individuals looking to an alternative to the hustle and bustle of New York, Los Angeles and London will want to come to a nice island destination where you can access first grade financial services and transportation systems. Our investment in infrastructure has been one of the most aggressive in the Caribbean. We have one of the most attractive airports in the Caribbean and a road network that is first world. People are comfortable with that and they want to be able to live in a destination that offers everything plus the sun, sand and sea that they don’t get at home.

As one of the Small Island Developing States, the Bahamas relies strongly - but not totally - on FDI to fuel economic growth. Do you think the country is reaching its full potential in terms of FDI?

We are not. There is still a lot of work to be done. We have been singularly focused on the tourism and resort sector for a number of years when in fact The Bahamas has the opportunity to be so much more to so many more people, for example, in industry, manufacturing and pharmaceutics. If you look at Grand Bahama and its infrastructure and the port, the largest and most efficient man made port in the western hemisphere, you can see that we are not really meeting our full potential. There are a lot of expandable opportunities. We have a very strong workforce in relative terms and also some of the world’s largest companies that have used The Bahamas as a base so there are a lot of expandable opportunities. We must identify them and strengthen the platform to capitalize on these opportunities. I think they are mainly in the areas of manufacturing, shipping and logistics. We are not maximizing that port because I believe that The Bahamas can be the shipping and logistics hub for the eastern seaboard of the United States, Europe and Asia. We can become the consolidation point because the cost of operations in Grand Bahama I think is very competitive when you look at the Port of Miami, Los Angeles and New York.

It is important for the country to obtain a balance between domestic and foreign investment. Given local investment sends a strong message of confidence to foreign investors, how would you describe local investor confidence and participation levels today?

The confidence level is high. We still haven’t transitioned fully into the new generation of local investors taking their seat at the table in a big way. The example I usually give for local investment is that we haven’t maximized the benefit of the large amount of FDI that we have secured over the years. In the 1980s when we built the Crystal Palace, which is now being replaced by Baha Mar, we had to import lots of labor and foreign contractors to assist with the building of that and provide some of the services attached to it. That should have been a learning experience for us but in the 1990s we did the same thing with Atlantis. Local participation was a bit better but not nearly where we needed to be. Now we are facing the same thing with Baha Mar, where many of the subcontractors and service providers were not a part of the local economy. It goes to show that there is opportunity for local investors to benefit a lot more and that the government has to work with the private sector to determine what the issues are that need to be resolved to ensure that whenever we build the next $3.5billion investment that 95% of the content is local.

Is your ministry doing anything about this?

Yes. This is what the National Development Plan (NDP) is about. It’s about updating the business plan for the country and ensuring that there is a mechanism and road map to resolving all of the current challenges. It started as an economic development plan and I looked at where we were as a country. I used the Chamber of Commerce so I understood the challenges for local businesses. So we started out looking at solving the economic challenges but then we realized that in order to solve the economic challenges, we needed to solve all of the other challenges such as social ones.

The Ministry of State for Investment is, amongst many things, responsible for the promotion, facilitation and administrative processing of investments as well as economic development and planning. Could you please explain to HBR’s readers what are your current priorities as Minister of State for Investment?

The current priority is to build a stronger economy. I think once you start to build a local economy where business owners have better access to capital, better results with their bottom line and equal or better access to all of the opportunities that arise as a result of FDI then we will see all of the other issues beginning to solve themselves. I think we do have some challenges and they were shown during the recession. We do have some weaknesses in governance, which shows weaknesses in our financing system. Our commercial banking system is heavily weighted in real estate and holdings so if you look at the balance sheet of most banks, they are heavily concentrated in mortgages attached to real estate and that’s been taking a hit. The business content does not reflect what we would like to see in the economy. We want to see a greater balance between home mortgages and capital that has been extended to businesses because that begins to put people in a better position to pay off their home mortgages, if they have revenue that is being generated through business opportunities. So that is one problem that we are looking at ways to tackle.

You have said previously that in developing the NDP, one of the first things you identified was that the downstream benefits to Bahamian businesses from large foreign direct investment projects have not been as robust as it could. Have you seen any improvements in this area and what role, if any, is your ministry playing in maximizing the returns from FDI in terms of sustainable job creation, skills and knowledge development and capacity building?

We have been trying to stir as much as possible the opportunities that become available to Bahamian businesses and there is only so much intervention a government can do. There is a line that you can’t cross. If you want to do a project in some countries such as Cuba there are very rigid rules about how that is to be done. We are more flexible here where a large developer and we have a work permit system that allows them to bring in workers. We have a National Economic Council if they want to being a contractor or service provider that will help to feed their development. We allow that and some countries don’t. At what point do you say no to a developer in favor of Bahamian business so that a Bahamian business can benefit more. We have to ensure that the technical capacity to deliver is resident in Bahamian businesses and we have been working heavily with the Chamber of Commerce to look at areas where we can build capacity so that Bahamians can offer the first rate service that most large multinational developers are looking for and that helps to improve the benefits to Bahamian businesses.

On a more personal note, you have extensive experience not only in politics but also in the private sector, having founded Nassau Water Ferries Services in 2005 and lead the Chamber of Commerce. What would you say has been the most valuable lesson that you’ve learnt over the years that enables you to succeed today in your role as Minister?

The most valuable lesson I have learnt is that there is a huge disconnect between the public and the private sector. One of the things that we are working on with this NDP is to bridge that divide. There is a level of distrust on both sides; government believes that business is only interested in profit and businesses believe government is only interested in taxing them. So we have to find a mechanism to bridge that gap and develop a mutual understanding of what the priorities should be and what are the opportunities, if identified and pursued, would bring to the country, not only to businesses or government, but the country.

The second most valuable lessons is that the way government is currently structured represents a time that has long passed, and that is why this NDP is so important. One of the elements of this Plan is a focus on governance, there’s a whole section on it. We have to identify where we are, what the current needs of governance may be and how we transition from the old archaic, monarchy-inspired system. We still use the British Westminster system of government. The current needs, particularly in business and ordinary citizens, go far beyond what our current system has. So we hope this NDP will put us in a position where we are changing and modernizing the government and we are getting people the structure and infrastructure that they need to be successful.

What is your role in this NDP?

I am leading it, it is under my Ministry. I’m not a politician, this is my third year in politics but I have realized that my time is perishable. Any given day I could be back in the private sector and I don’t want the NDP to be a victim of that perishability. We established a steering committee that is chaired by the private sector. Even though I play a very strong role in the leadership of the NDP and am the Minister responsible for it, I try to keep the public’s view of that to a minimum and want the private sector players to be seen as the group that is leading it. God forbid if there is a change in government, the transition of the NDP should be easy and seamless, and the new government doesn’t have to deal with a political figure. It can continue the NDP by working with the private sector. It also provides more accountability. I don’t think any government is going to tell any stakeholder group made of all the leading advocates for development in the country that we are not moving forward with the plan that they have worked really hard on, so it’s strategic in a sense but it is designed for sustainability.

What inspired you to enter politics?

I was asked in 2002 but wasn’t interested, was still very young in my career and was completing my masters. Then came 2007 and I was asked again but had a new business that was emerging from startup. Then in 2012 this was at the height of the recession and I just looked at the decision-making and execution of government and it was so poor. I realized that if people such as myself didn’t get involved, we would continue down a path of destruction for a lack of a better term. The only thing that separates the Bahamas from being the best little country in the world is having a strategic plan and having the mechanisms to execute it. We have all of the natural elements and geography that is unmatched, the gateway to America is the gateway to Europe. Nothing happens but by us is a term I commonly use. Everyone wants to do business with us. During the recession, we were not as bad as most countries; what happened was our management was so bad that it made it bad. During recessions industrialized countries spend money on infrastructural projects to keep the economy going. Some of that money is borrowed money whilst some of it comes from cash flow. With borrowed money, the goal is to spend it but get as much of it back as possible. If you’re spending it on yourself, you’ll get some return on it but for us the main issue was that a lot of the infrastructural projects were not done by local money. The inputs were all imported so we didn’t get the maximum benefit from it. So we are paying a debt far more now than we should be shouldering because we just didn’t build the country and the infrastructure to be able to sustain ourselves. I guess one of the risks of being a small island developing state is not always having all the inputs at your disposal to get maximum benefits. But given what we have done and at the scale we have done over the years, if someone had made the decision in the 1970s or 80s to build as much infrastructure as we can ourselves, the cost of the investment would be a lot lower and the benefits today would be extremely high. We wouldn’t be battling with debt to GDP of 60%+. My presence here is to hopefully inspire better decision making with the assets that we have at our disposal. It’s not been easy; it’s a big dinosaur or a train that is flying down the track at 250 miles per hour and you don’t just stop it and turn it around. It’s something you have to work at and you have to have a deliberate plan. General Paton, I think it may have been during the American Civil War, said that you have to plan deliberately and executive violently and I think that’s what we have to do.

Minister, Harvard Business Review’s readers include many of the world’s most influential business and political figures. What final message would you like to send to send them about The Bahamas and your Ministry?

The Bahamas remains one of the most attractive places to invest given our geography, people, quality of life and opportunities. Even though I consider The Bahamas to be a mature economy, there is still in that maturity a tremendous amount of expandable opportunities in tourism, financial services and industry. We need the right partners and individuals with capacity and individuals that have ingenuity and innovation. We have not had the innovation sector as much as we should and if you look at our expandable opportunities, it’s innovation. The Bahamas is well positioned as an innovative destination for investment.