By NEIL HARTNELL
Tribune Business Editor
The government is aiming to "speed up" financial help for Dorian-hit businesses, the deputy prime minister said yesterday, although its $10m facility is likely to meet less than 25 percent of their needs.
K Peter Turnquest told Tribune Business the process was "not going as fast as we'd like", with the government now seeking "to address the issue internally" in a bid to restore micro, small and medium-sized businesses (MSME) to full health "as quickly as possible".
He spoke after the government revealed that the demand for post-Dorian assistance among entrepreneurs on Abaco and Grand Bahama could be more than four times' greater than the $10m loan guarantee, grant and equity financing initiative it put in place in the category five storm's aftermath.
It disclosed that the combined losses suffered by the 160 MSMEs that have submitted financial assistance requests to-date, representing just five percent of 3,546 such firms on the two Dorian-hit islands, are equivalent to $8.65m or 87 percent of the $10m made available.
With the Small Business Development Centre (SBDC) estimating that Dorian impacted 75 percent of Abaco small businesses, and 60 percent of their Grand Bahama counterparts, the government said these projections - when combined with the average $18,000 in funding provided to successful applicants to-date - showed "the recovery costs for small businesses may reach some $43m".
This indicates that The Bahamas needs to bridge a $33m funding gap to restore MSMES in the disaster-hit areas to full health. A government paper, drawing on Department of Inland Revenue tax filing data, said such companies - defined as having a workforce of less than 50 persons, and with annual revenues of under $5m - generated $411.126m in combined sales in 2018 and employed 4,500 people.
The MSME sector will be a key focus at next Monday Dorian "pledging conference", where the government is teaming with the United Nations Development Programme (UNDP), supported by the US and UK governments, to seek recovery donations from the private sector, high-net-worth individuals, other governments and donors who have expressed interest in assisting with the recovery.
Mr Turnquest yesterday acknowledged that reviving the small business sector on Abaco and Grand Bahama was "critical" to post-Dorian recovery given the vital role it plays in driving economic growth. He added that communities on both islands were depending on businesses to re-open for their own revival, and the return of pre-storm populations.
"The small business sector is a key driver of the overall economy," he told Tribune Business. "It's critical we get things up and going as quickly as possible, as this is going to drive the economic recovery and return of the population into these communities.
"Many of the small SMEs, in particular, were devastated in terms of property damage as well as loss of inventory. Getting them all started is a significant challenge for sure."
Mr Turnquest conceded that while "significant progress" has been made in providing SMEs with much-needed financial assistance, "it's not going as fast as we'd like. We recognise that, and are trying to address the issue internally to hopefully speed up getting money into the hands of business people so they can get back into business as quickly as possible".
The deputy prime minister argued that economic recovery "goes hand in hand" with the rebuilding of communities in Grand Bahama and Abaco, adding: "One goes with the other. It's really a holistic approach we're trying to achieve here."
The Government's MSME paper, released ahead of next week's "pledging" conference, said: "The backbone of any economy is the existence of small and medium-sized enterprises. This is especially true of the islands that were impacted by Hurricane Dorian, which have suffered an estimated $1.02 bn loss as a result of the damage left by this unprecedented storm."
It added that Department of Inland Revenue data showed Abaco's MSME sector generated $316.145m in collective top-line revenues in 2018, with 1,732 businesses employing 2,365 workers. Their Grand Bahama counterparts produced $94.982m in sales, with 1,814 companies providing work for 2,128 employees.
Referring to its $10m funding facility, the Government report said: "Since launching the funding programme, we have received 160 completed applications from MSMEs seeking to rebuild. On average, 10 new applications are started daily.
"These initial applicants represent only 5 percent of the total MSMEs for these islands - and 12 percent of the total employees - yet their estimated losses represent 87 percent of the allocated funding." Total funding requests came to a similar percentage at $8.549m.
The Government paper continued: "To date, 36 companies have received $647,000 in funding. This subset of clients has requested $2.17m in assistance. The expected economic impact from these 36 companies after their first year of recovery is $6.7m, equating to a potential return on investment of $3 to $1. One hundred and thirty-five jobs will be retained and three created....
"Based on business community surveys and on-the-ground assessments, the SBDC estimates that 75 percent of the MSMEs in Abaco have been impacted and 60 percent in Grand Bahama. Taking into account these estimates and the average funding approvals to-date ($18,000), the recovery costs for small businesses may reach some $43m.
"Some of these businesses are insured. Others have direct access to private sector capital. The Government has stepped in to provide $10m in financial assistance for that segment that may not be ordinarily able to access private sector capital on their own."
Mr Turnquest said Dorian had reinforced "the importance of ensuring we have a system that supports MSMEs and their need for capital", especially given the long-standing complaints from Bahamian entrepreneurs about their inability to access financing from banks and other traditional sources prior to the storm.
And he said it was "critical everybody has learned their lesson" when it came to properly insuring property, inventories and other business assets against storm-related losses and damages.
"Hopefully those lessons translate into action, and persons see the need to protect their investment," Mr Turnquest added.
"Not as a personal or luxury item, but as a critical component of their business plan. As we think about climate resiliency this is all part of the deal."
Mr Turnquest said it was "very important" that next week's pledging conference is successful, as "the more we can receive or obtain in donor funding the less the financing costs for us, and the more we are able to do overall to assist our citizens".