By NEIL HARTNELL Tribune Business Editor THE proposed Agency to facilitate small and medium-sized business growth in the Bahamas is designed to avoid the pitfalls being experienced by the Bahamas Mortgage Corporation (BMC), a leading private sector executive yesterday saying borrowers did not view repaying monies lent by the Government as "a priority". Amid calls from some quarters for the Government to privatise or outsource the BMC, and get out of the business of low-cost housing development and lending, Winston Rolle, the Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) chairman, said that Corporation's current financial position showed why the Small and Medium Sized-Enterprise Development Agency would avoid lending. Recalling discussions between the Government, private sector, Inter-American Development Bank (IDB) and others over the Small and Medium-Sized Enterprise Development Bill, which has yet to make it to Parliament, Mr Rolle said the decision was taken for the Agency to not be a lender itself. The concern, he explained, was that the Agency would be perceived as a government entity if it lent money to small Bahamian businesses directly. This, in turn, would likely lead to the loan recipients failing to meet repayment terms, and not treating service with the priority they should. Urging that "politics" be removed from all government corporations and agencies involved in lending money, Mr Rolle told Tribune Business: "One of the things we looked at in the Small and Medium-Sized Enterprise Development Bill was whether the SME Development Agency should be lending." Explaining that the Agency would not be a government-owned or controlled entity, the BCCEC chairman said the consensus was that it "could be perceived as such" if it was involved directly in lending to Bahamian small businesses and entrepreneurs. "Once that happened, people would not see it as a priority to pay back," Mr Rolle said. With regard to the proposed Agency, he explained that the plan was that it would "not provide funding directly but, after vetting business proposals, provide government guarantees for the true lenders, the commercial banks and the financial institutions". When it came to the Bahamas Mortgage Corporation's (BMC) current predicament, Mr Rolle noted that its current chairman, FNM Senator and election candidate, Dr Duane Sands, was advocating that the BMC not be placed under the same minister as the Ministry of Housing "because some persons see it as being a conflict of interest". However, the BCCEC chairman added: "A fundamental problem we see with a number of government agencies in the business of lending is that once persons access those funds, they don't see it as a priority to pay it. "They see it as either their monies or government monies that are supposed to be free monies....... For the most part, they don't see the Government going through the recourse of taking them to court, because it wants their votes, and that gives them the opportunity to get away with it." Mr Rolle said that based on what he was hearing from Dr Sands, it was likely that a significant proportion of the BMC's 39 per cent portfolio arrears related to home owners who, rather than being unable to pay, simply did not bother to meet their obligations. While not advocating privatisation/outsourcing of the BMC and other money-lending areas of the Government, Mr Rolle nevertheless agreed that reform was necessary. "We need to look at some of the other models that work," Mr Rolle said. "We need to remove the politics from those government agencies and institutions as much as possible, and go through providing direct subventions to those agencies as opposed to lending. "These institutions need to be independent, and go through the proper processes - not only as it relates to lending out money, but recouping those monies as well." Rick Lowe, an executive with the libertarian think-tank, the Nassau Institute, yesterday argues strongly that the BMC ought to be outsourced to the private sector or privatised, adding that the Government needed to get out of such 'businesses'. "It's not a function of government," Mr Lowe said of the BMC's involvement in lending to low-cost home buyers. "I know they want to help, and they do these things because they think they can help and, unfortunately, people take advantage of the Government. All over the world that's the way things seem to work when the Government is involved. "The Government, generally, should be getting out of these sorts of business. If you administer it [the BMC] the way you should, people will say you are mean, and when you don't you are also painted as a demon. It's a no-win situation." Noting that ultimately it would be all Bahamian taxpayers called upon to bail out the BMC, at a time when the Government's fiscal position was already under severe strain, Mr Lowe said in relation to the Corporation: "It's definitely not something the Government should be doing. "Once politics enters the picture, reason tends to leave. If government concentrated on its core functions, I think we'd hear far fewer of these problems."