The Tribune

By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

A Government senator yesterday argued that Bahamian banks must stop viewing entrepreneurs as lending risks and instead see them as future customers, noting that access to financing - not a lack of capital - is holding back the country's small businesses.

Contributing to the Senate debate on the ‘Speech from the Throne’, Kevin Simmons said one of the biggest barriers facing Bahamian entrepreneurs is obtaining financing despite the country's banking sector remaining profitable and well-capitalised.

"We sometimes speak as though this country has no money," said Mr Simmons. "That has never been the problem. The problem is where the money sits and what it is permitted to do."

Using remarks previously made by Prime Minister Philip Davis KC at the Bahamas Business Outlook conference, Mr Simmons argued that even the Government has acknowledged financing remains difficult to access for Bahamians seeking to build businesses.

"The Prime Minister put it plainly himself at the Business Outlook," he said. "He said Bahamians have no credible access to funding beyond consumer loans and mortgages, and that our own banks will not lend to our farmers and our fishers.

"When the head of a government says that out loud, it is not a complaint, it's a diagnosis, and every Bahamian who has been turned away at a counter knows how accurate it is."

Mr Simmons stressed he was not advocating that regulators loosen the rules governing commercial banks or compromise financial stability. "Let me be careful with the word reform, because it is easily twisted," he said. "I'm not asking anyone to weaken the rules that keep our banks safe. The soundness of our financial system was hard won, and it should be defended in this chamber."

Instead, he argued that banks should make greater use of their liquidity by financing viable Bahamian businesses.

"Our banks are sound and they are profitable. They hold substantial liquidity idle... and they post strong profits year after year, while a young Bahamian with a real plan, a real market and no collateral still cannot get past the counter,” Mr Simmons said.  "We are not a country short of capital. We are a country whose capital has been taught to sit still."

Mr Simmons said institutions such as the Small Business Development Centre (SBDC) have already demonstrated that Bahamian entrepreneurs are capable of building successful enterprises when financing is available.

He noted that the agency has channelled more than $100m to Bahamian entrepreneurs, adding that commercial lenders should view start-ups differently. "Financial institutions need to see a Bahamian start-up as a customer to win rather than a risk to refuse," he said.

Mr Simmons also linked the Government's proposed land reforms to improved access to financing, arguing that many Bahamians are unable to borrow because they cannot establish clear title to family land. "Land is one thing that is vital to most people in securing loans," he said. "For most Bahamians, family land is the only collateral they will ever have."

Mr Simmons said a farmer who has occupied family land for decades often cannot use that property to secure financing because ownership has never been regularised.

"A man who cannot prove what he owns cannot borrow against it, and no bank will lend to him without it," said Mr Simmons.

"Picture the Family Island farmer who is asking to grow more food. He sits on family land he has worked for 40 years, and he cannot pledge an inch of it because the title was never made clean."

Mr Simmons argued that land adjudication and title reform could transform dormant assets into productive capital. "Clean up the title and you have done more than tidy a registry," he said.

"You clean up the title, that person can pull up to the bank. You have now turned that farmer into a borrower, and his land is now capital."

Mr Simmons said this was one of the reasons he welcomed the Speech from the Throne's commitment to advance land adjudication and land registration legislation, arguing such reforms will remove barriers preventing Bahamians from building wealth through entrepreneurship.

He compared today's financing challenges to earlier struggles for equal opportunity, saying that while previous generations dismantled barriers based on race and political rights, another barrier still remains.

"I remember a Bahamas where the counter a man could stand at was decided by the colour of his skin," he said. "My generation tore that counter down. We won the vote and we won the country."

"The counter that stops a Bahamian today is a quieter one. It is the bank counter. He cannot get past the loan. He cannot reach the capital that will not see him. We did not build this country to leave that last counter standing."