• IDB’s Bahamas strategy reveals graft stain

• Two-thirds say Customs, trade ‘big obstacle’

• Nation has ‘excess of uneducated workers’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Fifty percent of Bahamian companies seeking construction and import-related permits say they have either been asked, or expect, to pay a bribe to obtain the required approvals, it has been revealed.

The Inter-American Development Bank’s (IDB) newly-released 2024-2028 country strategy for The Bahamas, which has been obtained by Tribune Business, said the results from a survey of the private sector showed actual graft as well as corruption perceptions continue to undermine the cost and integrity associated with conducting business in this nation.

The strategy document, warning that the quality and enforcement of regulations is still endangering the ease of doing business in The Bahamas, added that the findings of its Innovation Firm Performance Gender (IFPG) survey showed some 49 percent of firms applying for construction permits either parted with, or expected to make, “an informal gift or payment” to obtain the approval.

For companies seeking import-related licences, the IDB country strategy said the percentage either paying, or believing they would have to pay, bribes increased to 56 percent or more than half the respondents. “Support for an improved business climate could improve competitiveness and spur innovation in both the traditional tourism sector and potential new sectors,” the strategy report said.

“The quality and enforcement of regulations represent obstacles to conducting business. Bahamian firms participating in the IFPG survey reported on average that obtaining a construction-related permit took them 56 days, an operating licence, 21 days, and an import licence, 16 days.

“When asked if an informal gift or payment in exchange for the permit was expected or requested, for operating licences only 8 percent responded ‘“yes’. However, in the case of construction permits and import licences, 49 percent and 56 percent of surveyed firms, respectively, reported such payments being expected/requested.” These results have never publicly been disclosed before.

The IDB country strategy for The Bahamas argued that “the ongoing adoption of digital government services will go a long way towards reducing inefficiencies and narrowing the window of opportunities for corruption and bribery”. However, while Customs and trade are key revenue generators for the Public Treasury, the report also described them as “a major obstacle to business operations”.

And, while implementation of Customs’ Electronic Single Window (ESW) known as ‘Click2Clear’ was likely to have helped crack down on fraud, tax evasion and other abuses as well as opportunities for corruption and rent seeking, the IDB document said other agencies involved with The Bahamas’ import and export trade were still lagging behind on digitisation and technology.

“Digitisation is an important instrument to improve the efficiency of government services and revenue collection, but additional administrative and policy measures are necessary,” the IDB country strategy said.

“For example, trade and Customs continues to be one of the key sources of government revenues. However, close to two-thirds of Bahamian firms participating in the IFPG survey conducted in 2020 answered that Customs and trade regulations are a major obstacle to business operations.

“Although performance is likely to improve following the recent completion of the foreign trade single window (ESW), other agencies involved in export and import processes (sanitary and phytosanitary clearance) lag behind with respect to digitisation and connectivity with the single window,” it continued.

“With respect to the provision of public services, the pandemic has evidenced the need for connectivity and the value of being able to provide public services digitally. As an example, registering property takes an average of 122 days......

“Insufficient investment in ICT-related projects has resulted in outdated or limited ICT (information and communications technology) infrastructure, with many government branches, particularly on smaller islands, lacking the equipment and connectivity for digital government. The country’s unique geography and scattered population make a clear case for the need to use ICT in offering government services to other islands.”

Elsewhere, The Bahamas’ country strategy said the data shows this nation’s workforce and economic productivity are being held back by “an excess of workers with not enough education”. It added that educational outcomes, meaning the qualifications that high school leavers and other students enter the workforce with, are “not up to the standards of other high income countries”.

Asserting that these woes have been worsened by the COVID-19 pandemic, which forced students into virtual learning for several years, the IDB country strategy said: “Another complex area that offers important opportunities is aligning workers’ skills with businesses’ needs.

“Half the companies interviewed in the IFPG survey considered that the workforce is not adequately educated and would benefit from strengthening education and skills, and that that represents an obstacle for business operations.”

The strategy document added that just 59 percent of Bahamian high school leavers, or just three of every five graduates, obtained a diploma in 2019-2020 - a figure that represented an improvement on the prior year’s 53 percent.

“The workforce with tertiary education represents 31 percent of the total, and the unemployment rate of that workforce segment is 4 percent. Those with complete secondary education account for 57 percent of the total workforce, and unemployment stands at 11 percent,” the IDB country strategy said.

“The remainder of the workforce, with incomplete secondary education at most, faces the highest unemployment rate at 18 percent. These figures point to an excess of workers with not enough education. In addition, digital skill upgrading, on-the-job training and the resolution of information asymmetries could also improve labour market outcomes.”

And, taking a deeper look at The Bahamas’ education system, the country strategy added: “School enrollment for both primary and secondary education has decreased in the last decade. Net enrollment for primary education fell from 80.4 percent to 74.2 percent, while for secondary education it dropped even further, from 79.8 percent to 62.5 percent.

“Data from Bahamas General Certificate of Secondary Education (BGCSE) examinations in grade 12 show that many students from public secondary schools are failing to acquire the minimum expected competencies, including in the basic core disciplines of English and Math.

“This trend is also observed in earlier grades: The results of the Bahamas Junior Certificate (BJC) examinations in grade nine show that from 2016 to 2020, on average, more than 30 percent of the students sitting for the exams failed to achieve the expected competency level in the subjects,” the IDB-authored document adds.

“In addition, the extremely low level of learning in science and Math indicates that Bahamian students currently do not have the skills necessary to prepare themselves to be successful in the field of science and technology.

“Furthermore, the education system does not equip the students with 21st century skills. Academic shortcomings start showing up in primary school and are not effectively tackled early on, which has a cumulative effect through time. The Ministry of Education has a goal to increase the high school graduation rate to 85 percent by 2030.”