Perspective

The budget and Grand Bahama

A comprehensive planned turnaround is needed to stop the economic bleeding

Due to factors including repeated natural disasters, Grand Bahama’s economic output has been on a sharp decline over the past several years.

According to figures released by the Department of Statistics, the island’s gross domestic product (GDP) moved from a high of $2.026 billion in 2015, to a low of $1.437 billion in 2020.

Prior to Hurricane Matthew in 2016, which caused widespread devastation in Freeport and catastrophic damage to the island’s electricity infrastructure, Grand Bahama’s GDP grew between 2015 and 2016, from $2.026 billion to $2.034 billion.

Current figures indicate that due to factors including Matthew, Dorian in 2019 and the COVID-19 pandemic, Grand Bahama lost $589 million in GDP over a five-year period.

A breakdown of GDP shifts by categories of economic activity, paint a stark picture of declines in output that point to why record unemployment on the island has stubbornly persisted.

It also points to why a comprehensive plan for economic rebound involving the island’s central and quasi government stakeholders, is critical.

Between 2015 and 2020, economic activity in the wholesale and retail trade sector declined by a staggering $265 million.

The sector lost $84.3 million in economic activity between 2019 and 2020.

Manufacturing, mining and quarrying, electricity and gas, water supply and sewerage recorded an economic activity decline of $130 million.

Accommodation and food services declined by $25.1 million, while real estate, owner occupied and actual rents saw a more modest decline of $4.4 million.

Damage from Hurricane Matthew in 2016 led to the closure of two-thirds of the struggling Grand Lucayan resort property, taking hundreds of rooms offline.

Financial and insurance activities declined by $26 million; education declined by $14 million; and agriculture, forestry and fishing declined by $11.8 million.

As expected, economic activity in the construction sector, spawned by widespread hurricane damage, increased by $50.4 million.

At the end of 2020, Grand Bahama’s output accounted for 14 percent of the country’s total GDP.

While Prime Minister and Minister of Finance Dr. Hubert Minnis spent considerable time highlighting unemployment assistance and hurricane restoration of Grand Bahama’s hospital in Freeport, his 2021/2022 budget communication was silent on the progress or advent of specific projects geared toward economic recovery and growth.

What Grand Bahama needs to hear

There can be no economic growth without a modern and resilient Grand Bahama International Airport.

The facility was recently transferred to government for $1, and Minnis said in his budget communication that work will begin “shortly” to build a world-class airport.

But “shortly” is not a timeline that the island’s stakeholders can plan around, and capital allocations in the upcoming fiscal year do not point to a commencement of construction on a new airport facility for Grand Bahama.

Specific details on the status of entering into a public/private partnership for the construction of a new airport facility should be provided during this year’s budget debate.

It has been approximately 16 months since government signed a Heads of Agreement with Holistica Destinations for the redevelopment of the Freeport Harbor and the Grand Lucayan resort.

Lucayan strip businesses adjacent to the resort have steadily closed their doors because the volume of business has been insufficient to remain in operation.

Government said the HOA was being renegotiated due to the fallout of the pandemic on the global cruise industry, and Grand Bahamians have heard the term “soon” in reference to the end of those negotiations more times than they wish to count.

The 2021/2022 budget does not post anticipated revenue from the sale of the Grand Lucayan resort.

What the island’s residents need to hear in the ongoing budget debate is when a new deal with Holistica will be finalized, and to what extent the new deal deviates from the initial deal announced with much fanfare, and a promise of economic rebirth for Grand Bahama.

Government carried out a partial reopening of the property this year, which some on the island questioned given what was expected to be very low occupancy at the property.

Details on the fate of the employees once a sale is concluded, should also be disclosed.

A detailed update on the proposed Carnival Cruise Lines port project for Freeport must also be provided.

Last week, Education Minister Jeff Lloyd announced in Parliament that government will construct the East End Grand Bahama Comprehensive School, which will replace Sweeting’s Cay Primary School, McClean’s Town Jr. High School, High Rock Primary School and Freetown Pre-School, which were damaged by Dorian.

But what he was silent on was when the Holmes Rock Junior High School – which has sat unfinished for the past four years – will finally be completed.

When groundbreaking for the school took place in September 2016, the Christie administration said construction on the multimillion-dollar school designed to cater to West Grand Bahama’s students, was expected to be completed in 18 months.

A multimillion-dollar government complex for West Grand Bahama, which in 2016 was heralded as a catalyst for much-needed economic activity, also sits unfinished after four years, with no update on when it will be completed.

In early 2019, government announced the approval of several projects for Grand Bahama.

Those projects were Globe United, a European-based medical call center and administrative office; G.B. Biopharma, a company engaged in biomedical services; DevDigital Bahamas Limited, a Bahamian joint venture web development company; Agriculture Enterprises Development Limited, a Bahamian joint venture farming company that will engage in a pilot fruit and nut farm producing coconut, castor and palm oil for the local market and for export; and Bahamas Golden Harvest Limited, Bahamian joint venture chicken hatchery company, producing eggs, chicken feed, cash crops and citrus on East End Grand Bahama.

An update on those projects has not since been provided.

The administration also pledged to repeal and replace the Grand Bahama (Port Area) Investment Incentives Act, 2016, to ensure that all Grand Bahama Port Authority (GBPA) licensees receive equal treatment under the law.

The repeal of the act was a key campaign pledge for Grand Bahama, with the governing party promising to make business easier in Freeport by reducing bureaucracy for investors.

It also promised to “relocate the Bahamas Maritime Authority to Grand Bahama, establishing this island as the maritime capital of The Bahamas and leveraging the container port and shipyard infrastructure to attract additional investment in this sector.”

Whether the administration plans to make good on at least its legislative pledge for Grand Bahama before the end of its term in office, remains to be seen.

The governing party’s manifesto pledges for Grand Bahama also included the establishment of a marine research facility; establishing an investment promotions board with participation by the private sector, the government, the Grand Bahama Port Authority Limited and Freeport licensees; and identifying Crown land in east and west Grand Bahama for the creation of a hydro-farm and a mariculture facility for the production of high demand crops and seafood for export.

Additionally, it pledged to promote Grand Bahama as an ecotourism sanctuary; revitalize and promote a dynamic investment policy to encourage high net worth persons to buy and develop real estate to critical mass that is so badly needed in Grand Bahama; and create incentives to establish a financial services sector in Grand Bahama.

This year’s budget debate is the opportune time to account to Grand Bahama for these and other promises made.

Show More

Related Articles

Back to top button

Adblock Detected

Please support our local news by turning off your adblocker