This is the time we were warned about.
It is a time when the golden goose we call the tourism industry has laid no eggs.
The coronavirus pandemic has done a lot more than just change people’s daily routines for weeks and months. It has shed light on the vulnerability of many countries’ economy.
In The Bahamas, not unlike in many other jurisdictions, COVID-19 has dealt a significant blow.
To put it into perspective, the tourism industry contributes to nearly 50 percent of The Bahamas’ gross domestic product (GDP) and employs two out of every three Bahamians.
On Wednesday, March 18, when Minister of Tourism and Aviation Dionisio D’Aguilar stood in Parliament and began what he dubbed was the “toughest contribution” he had to make, eager listeners knew this would be bad.
Quite frankly, he said, “There will be no tourists.”
His presentation came just two days after Atlantis, Paradise Island, the nation’s second largest employer, asked employees to choose between vacation or unpaid leave for two weeks.
Meanwhile, in downtown Nassau, there were empty taxi cabs, idle public buses and shuttered jewelry and perfume stores.
Quite a reality check as last year, The Bahamas saw a record-breaking seven million visitors.
But alas, here we are.
With all major hotels closed, thousands of families have been left to go without. And, while provisions have been made for unemployment benefits at the National Insurance Board, for many of these people, it doesn’t come close to what they made on a weekly basis in an industry we were taught would always be here for us.
For many, a hotel job straight out of high school was a great first step into adulthood. But, have we gotten to the point where sun, sand and sea are no longer enough?
Edison Sumner, former CEO of The Bahamas Chamber of Commerce and principal of Sumner Strategic Partners, is one of several of the country’s financial experts who thinks the coronavirus pandemic has presented an opportunity for The Bahamas to do what many have been calling for, for quite some time now — diversify our economy.
“Tourism has been extremely good to this country and will continue to be,” Sumner said. “But, I think we are at a point where we must seek to implement new industries that can become other major supporting factors to the tourism product.
“We know that the four major industries in the country, currently, would be tourism, financial services, retail and the construction industry. I think it’s time now that we introduce another industry that can become another significant pillar of the economy and it has to do with technology.”
By technology, Sumner is talking about digital transformation, IT-based services, for domestic and international use, where The Bahamas can be established as a tech hub for the region and the Americas.
Certainly, we have the infrastructure and talent to do so.
“I think if we put some serious effort into this, we can create a very vibrant industry over the course of the next several years,” Sumner added.
The unfortunate part about our reality is that a few years back, when some within the business community recommended more people working remotely, or from home, it was frowned upon because there are many employers who simply don’t trust their employees or would just prefer to see them in the office.
But now, COVID-19 has forced us to get things done digitally.
While the financial services sector has seen a decline in recent years with some offshore banks leaving the jurisdiction, Sumner thinks that sector will be the first out the gate to really grab a hold of the digital economy.
He, as well as a few other financial experts, are now working with the government in establishing a new e-commerce and digitization policy for The Bahamas.
“Myself and others have been engaged by the government to draft that policy,” he said.
“We are currently doing some consultation with the private sector and we hope to have a report back to the government very soon. And, if that policy, once it’s completed, is implemented, then I think that would be a significant step towards this idea of moving and bringing this new industry to the country, which is going to be this digital economy.”
With that, I took my pen and pad over to the Ministry of Finance and had a talk with Deputy Prime Minister and Minister of Finance K. Peter Turnquest.
Do we have what it takes to diversify?
Speaking with Turnquest, you’d get a full grasp of his belief that the country has yet to grab a hold of what it would take to diversify our economy, all because of the convenience of tourism.
For him, answering this question is both complex and requires out-of-the-box thinking that, quite frankly, isn’t so common here.
“If I had to place a personal opinion, I believe the answer lies in our natural resources, both land and sea,” he said.
“We must do more with fisheries to include fish and conch farming and more support and diversification of the farming sector. This would require a change in the taste and diet of the average Bahamian, as more root crops, I believe, are viable, given soil and economic considerations than the exotic varieties. I hasten to say, I am no expert in these matters, however.”
Another thing Turnquest pointed to was renewable energy and the need for The Bahamas to get into solar as a serious project and not just “tinker around the edge”.
He said, “Any solar installation should be based upon a public private partnership (PPP) model owned by the people of The Bahamas.
“We should be looking to manufacture the panels here using the sand and aragonite we have, thus creating a vertical supply chain. The goal would be to eventually export, once economies of scale bring cost in line.”
Other industries the minister of finance pointed to were health and medicinal and beauty products that he feels can be harvested and processed locally from things like sponges, salt and seaweed.
Of course, as a representative of a Grand Bahama constituency, he mentioned that the island should be transformed into a tech hub with a hard-built ecosystem for data storage and centralized back office data functions and a knowledge economy based on programming, coding, etc.
But, as businesses look to minimize the financial impact from the novel coronavirus, I had to ask Turnquest what kind of effect he thinks this pandemic will have on the country’s economy perhaps three to six months out.
His response? We are in for flat-line or negative growth over the next six months to a year.
“Our economy is heavily dependent on the United States’ economy, in particular and influenced by Europe and Asia to a lesser, but notable extent,” he said.
“Assuming the virus subsides over the short-term, the lasting tail effects will likely affect us well into the new year, as confidence in international travel and demand builds up in both onshore and cruise vacations.
“Too, persons will have to regain disposal wealth that will take a severe hit in the short-term before they embark on a luxury vacation. That said, I would anticipate a pent-up demand from all those who have held back their vacations, which should provide some offsets.”
He said, as a result, the job market will be tough in the medium term and social spending will be high on the government’s part, necessarily, to respond to the demand creating its own challenges.
Can The Bahamas feed itself?
With the country’s heavy reliance on tourism, we’ve come to the point where one would have to sit and think ‘what if’? What if we really get to the point where we, as a nation, would have to feed ourselves?
Frankly, at the moment, we can’t.
Today, if we were cut off instantly, The Bahamas would have tremendous difficulty feeding itself based on the fact that 80 to 90 percent of food consumed in this country is imported, according to Minister of Agriculture and Marine Resources Michael Pintard.
The economic fallout from the terror attacks of September 11, 2001, certainly gave us a preview of the situation our country would be in if big brother America were to suffer like it is now.
“Agriculture is a major potential revenue generator,” Pintard said.
“Throughout a number of Family Islands, agriculture sustains communities. If you look at areas like Long Island, Spanish Wells, Andros, Grand Cay or Sweeting’s Cay, they are sustained by marine resources as well as agriculture. We have an obligation, as a country, to pay closer attention and increase the national budget to this sector.”
Pintard was bold in his plea for priority to be placed on agriculture. Approximately, $32 million was allotted for agriculture and marine resources in the government’s 2019/2020 budget. The commitment, he said, should be much more.
“It cannot just be a verbal commitment, but it has to be reflected in the allocation to the sector. Unfortunately, it was one of the ministries that budgeted the least amount of money.”
Pintard said an ideal situation would be for an additional $10 million or $20 million to be added to that ministry’s budget.
In the absence of more money, the Ministry of Agriculture is looking to PPPs where he said the government of The Bahamas would have to show the world that it is serious about agriculture.
But, more Bahamians must also develop a sense of pride in locally grown and harvested products.
Farmers and fishermen won’t necessarily continue to do the work if there’s no demand or support here at home. While there are those who are fortunate enough to have large companies to buy, the average Bahamian does not.
And, when it comes to employment, many of those Bahamians who find it hard to find a job in many other industries, should be able to do so in agriculture, all while learning to feed themselves and their family, if need be.
Pintard said a few of the things the Minnis administration will and should be judged on is the access to land for Bahamians, including the certainty of access to land where farmers are able to make the relevant investments, long-term leases and land tenure.
But, back to the question, how far are we from being able to feed ourselves?
While the agriculture minister shied away from making what he called a ‘bold prediction’, he did, however, say the ministry has just hired the largest number of fisheries officers in the last 20 years, made way for more studies to provide useful information and is hiring a large number of extension officers to guide farmers with growth and development.
“I am confident, if I’m in this chair with the team that we are assembling, we are now in a position to make evidence-based and data-driven decisions,” he said. “Having said that, there are several areas where we are going to, over a 24-month period, be self-reliant.”
Those areas, he said, include the growth and production of tomatoes, bell peppers, bananas, eggs and avocados.
Pintard said his ministry has consistently ramped up the percentage of locally produced bananas.
In addition, he said within 24 months, more than 60 percent of eggs in the country should be locally grown.
For poultry, rather than producing less than five percent of what is consumed, Pintard foresees a local production rate of more than 30 percent.
As for meat like mutton, Pintard foresees The Bahamas becoming a net producer, rather than importer.
What’s to come?
It’s no secret that on the other side of this pandemic, there will be a different Bahamas.
Prime Minister Dr. Hubert Minnis has stated that Bahamians should be prepared, as the country and the economy they knew prior to COVID-19 will not be the same. And, we’re not alone in this fight. Many countries around the world will face similar plights, changing the world as we know it.
While this may sound scary to some, there’s a way to look at this glass as half full.
There’s a diamond that can come out of this rough.
But, it’s going to take a lot of innovation, a lot of out-of-the-box ideas and a whole lot of open-mindedness to help diversify The Bahamas’ economy.