Financial Services Key To Bahamas Economy, Report Concludes

by Amanda Banks, Tax-News.com, London

25 April 2007

An Economic Impact Assessment of the financial services industry commissioned by the Bahamas Financial Services Board (BFSB) has concluded that financial services plays a vital role in supporting economic growth and employment in the Bahamas.

The study was conducted by Oxford Economics (OE) with the lead consultant, Adam Sacks, also being responsible for a similar study for the Ministry of Tourism.

The Central Bank of the Bahamas and the Department of Statistics (DOS) provided active guidance and assistance during the study. It is anticipated that the sector contribution and growth will be monitored through ongoing comprehensive reporting, made possible by a capacity building component of the OE project. OE will conduct a capacity transfer workshop for DOS staff in June.

BFSB’s CEO & Executive Director, Wendy Warren explained that the study was undertaken to obtain a comprehensive picture of direct, indirect, induced and catalytic impacts of the sector. “Our objective is to have data which will enable us to engage in wide ranging communication with all stakeholders, not only on the contribution of the sector to the nation, but also on the need for continued development and growth of the industry,” she said.

Financial Services Minister, Vincent Peet, added: “The Ministry was pleased with this initiative which is part of our ongoing efforts to develop empirical information on the financial services sector in the Bahamas, and reflects the collaborative approach that is the hallmark of our relationship with the BFSB.” The Minister went on to note that “the information gleaned from the Oxford Economics study will complement the information gained from the Strategy and Branding Survey conducted by PWC and will greatly assist the Ministry in its promotion of the sector".

The OE study indicates that the direct contribution of financial services to the Bahamian economy over the period studied was 15%. Tourism, the jurisdiction's other major economic pillar, contributed 21%. Of the 15% direct contribution of financial services, over one-third (5.5% of Bahamas GDP) was generated by international financial service providers. Additionally, many of the domestically licensed banks also provide services to international clients.

Financial services supports around 22,000 jobs in The Bahamas, representing over 13% of total employment.

The report noted the financial services sector is responsible for oiling the wheels of other industrial sectors, encouraging investment and improving the quality of that investment, providing a secure home for savings and access to capital markets for firms and households alike, as well as providing high paying job opportunities for Bahamians.

In its final report to BFSB, Oxford Economics stated that: "Financial services plays a crucial role in supporting the Bahamian economy, both directly by providing highly rewarding employment opportunities for Bahamians, and indirectly by procuring from and providing vital services to other key sectors of the economy, such as tourism and real estate, and to individuals."

The Economic Impact Assessment arose from a BFSB Working Group that had been engaged in reviewing various options to best utilise existing data and in looking at the indirect contributions of the financial services sector that were not being tracked. BFSB commissioned the study to obtain empirical data on the long-standing and significant socio-economic contribution of the sector to the Bahamian economy and to assess the importance of financial services and its associated activities in the Bahamas.

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