By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Broadband Internet costs and speeds represent potential barriers to The Bahamas embracing the digital economy and improved competitiveness, a multilateral lender has warned.

The Inter-American Development Bank (IDB), in its just-released 2024-2028 Bahamas country strategy report, said this nation's relatively high ranking in the Global Broadband Development Index when compared to other Caribbean countries and the wider Latin American region somewhat masks the fact that its Internet connection fees and speeds fall on the wrong side of "average".

While describing Internet coverage as "ample", the document said Bahamian fixed and mobile Internet connection fees are both higher than the Caribbean average while speeds are significantly less when compared to developed country members of the Organisation for Economic Co-Operation and Development (OECD).

"Although digital infrastructure is adequate, costs are elevated and connection speeds could be improved," the IDB country strategy argued. "The Bahamas was ranked 43rd out of 65 countries on the IDB’s 2020 Global Broadband Development Index. Although this represents a decline of five spots from 2018, The Bahamas is in second place among Caribbean countries, and seventh among Latin American and Caribbean countries."

The Index measures public policy and strategic vision; strategic regulation; infrastructure; and training and capabilities to come up with its overall rankings. "Among Latin American and Caribbean countries, The Bahamas ranked 24th in strategic regulation, eighth in infrastructure, and third in training and capabilities," the IDB country strategy said/

"Coverage is ample, but the monthly fee for a fixed broadband connection in The Bahamas is 5 percent above the Caribbean average and 113 percent above the OECD average, while for a mobile broadband connection the fees are 54 percent and 24 percent higher, respectively.

"Average broadband speeds in The Bahamas are only slightly below the Caribbean average, but they are less than half the mobile broadband speed in the OECD and less than a third of that in the OECD for fixed broadband."

The digital economy, and information and communications technology (ICT), have been identified as a key potential driver of future economic growth for The Bahamas. To realise this objective, cost competitive Internet services and fast connectivity and speed will play a vital role, and the IDB report suggests The Bahamas still has some way to go in this area.

"Since 2019, the Government has made important advances in defining an ICT institutional framework to lead the planning and co-ordination of digital government activities," the IDB added.

"The Government has prioritised ICT initiatives and is advancing the development of national strategies and legislation around cyber security, digitisation and digital identity, as well as the formalisation of a cross- governmental, strategic IT governance model to guide the country’s endeavours in these areas.

"However, these activities are still in an incipient stage and require finalisation, formal approval and execution to deliver promised gains and to strengthen the required information-sharing among different government branches to deliver services more efficiently. Furthermore, the enabling regulatory framework and institutional capacity necessary should be in place."

The IDB said it has already supported efforts to improve the digital provision of public service, and improve the cost and ease of doing business with the Bahamian government. "Through this programme, the Government has implemented a one-stop-shop website and portal, MyGateway, and launched over 45 government services online to increase access," it added.

"The programme has also trained over 500 public servants for the MyGateway portal, simplified over 70 government procedures online, operationalised 150 web services from ten entities using the platform, set up four incorporations and non-profit procedures available online, and prepared legal instruments that support government digital services online."

Meanwhile, the IDB said its Innovation Firm Performance Gender (IFPG) survey had confirmed that more than half of Bahamian companies regard access to finance as "a major or very severe" barrier to conducting business. Just 13 percent and 18 percent of respondents, respectively, said they had access to short-term and medium/long-term credit, with zero possessing any equity financing from owners.

All indicators were below other Caribbean countries, with the most common form of financing said to be supplier credit and customer advances. The IDB country strategy also noted that credit union penetration was just one-quarter of what the sector had achieved elsewhere in the region.

"According to the IFPG survey, more than half of the companies interviewed in The Bahamas characterised access to finance as a major or very severe obstacle to conducting business," the IDB country strategy said. "Only 13 percent of firms reported having a line of credit to access short-term funding, compared to 22 percent in Belize and 16 percent in Antigua and Barbuda.

"Access to medium and long-term loans is also limited, with 18 percent of companies answering that they have such a loan. In Belize, this figure was 24 percent and in St Vincent and the Grenadines, 23 percent. None of the surveyed firms in The Bahamas reported having equity financing, in line with trends in the rest of the Caribbean countries.

"In contrast, the share of financially constrained firms in the European Union is only 5 percent. The most common mechanism for financing is purchases on credit from suppliers and advances from customers," the IDB country strategy added. "In 2020, domestic credit to private sector by banks in The Bahamas stood at 61 percent of GDP.

"Although this was above the Latin American and Caribbean averages, 55 percent and 50 percent, respectively, it was below the average in high income countries (88 percent). Financial inclusion obstacles are in part explained by a slim system of credit unions, with only ten entities, compared to 32 in Barbados.

"Credit unions are highly exposed to the tourism sector and represent about 3 percent of total banking assets. Their penetration in terms of the economically active population stands at 16 percent, lower than the Caribbean average of 66 percent."