By Steve McIntosh From cml Financial Services & Legal Recruitment

For several years now I’ve been on something of a Quixotic ride to persuade policy-makers in Cayman that the country needs an independent development agency.  (Here, for example, is an article I penned for the Journal more than three years ago http://www.compasscayman.com/cfr/2010/10/05/Opportunity-knocks/).

What’s an independent development agency you ask?  A development agency is a quasi-non-governmental organization whose sole mission is to attract inward investment to a particular location.  An independent development agency is one that is normally part-funded by the government but independently managed.

Why is it important?  Well, think of an independent development agency as a country’s sales and marketing arm.  When a company is considering where to set itself up, the development agency is normally the first port of call, rolling out the red carpet for decision-makers, articulating a value proposition to the investor, and doing what is required to close the deal.

Starting an independent development agency is not a radical proposal.  Nearly every country, state, province, region and city in the western world has one.   It’s just what countries do when they want to attract business.  In fact it is so standard it’s almost passé.  Here’s a website listing development agencies in the USA (and this list is just the ones for the State-level, there are more for counties and cities).  There are more than 60.

In addition, as with any sales team, providing feedback to “management” – in this case government – is another key part of an independent development agency’s role.  Imagine if Toyota brought out a car that was years in development but customers just hated it.  Who in the company is going to be the first and loudest to speak out about changing the car?  The sales team of course.  They are the ones on the front lines, speaking to customers, dealing with criticism and hearing how the product compares to that of the competition.  Likewise a development agency.  If a country is continually losing business to a competitor, the role of the development agency is to help government craft a strategy that allows them to better compete.

Most regions with a development agency consider the small investment worthwhile in comparison to the potential economic benefit received in return.  In fact it is one of the few areas government can be involved in that has a very clear ROI in terms of economic payback.  Each company successfully attracted is an economic annuity, creating jobs and economic activity, quite possibly for decades to come.  A single large company could be worth hundreds of millions of dollars to an economy over its life.  The few million dollars invested to start the development agency is small beer in comparison.  Some development agencies are entirely self funded and many are part-funded by the private sector.

As I pointed out in my Journal piece, the Cayman Islands at the time was spending $20 million a year to attract tourists, a positively Sisyphean endeavor.  At the same time it was spending nothing to attract business.  No wonder the country has an unemployment problem.

Anyway, to get around to the point of this blog, one of the first acts of Bermuda’s new business-minded government was to create a development agency, fund it with $4 million and hire someone with a great deal of experience and a successful track record – Stephen Lund, the former CEO of Nova Scotia Business Inc – to run it.

As reported by the Gazette, Lund recently gave a blunt speech to the Association of Bermuda International Companies, stating that Bermuda had not been in front of the decision makers for the last ten years and imploring them to “get in the game”.

To appreciate the significance of Lund’s opprobrium for the Cayman Islands, simply read the Gazette article* and replace the word “Bermuda” with “Cayman” throughout.

If Bermuda, with it’s new $4m development agency needs to “get in the game”, Cayman is still fumbling its way to a seat in the nose-bleeds just in time for the second half to kick off.

PHOTO: Stephen Lund, CEO of Bermuda Business Development Agency

For more on this story go to:

http://www.cmlor.com/blog/does-cayman-need-to-get-in-the-game/

*To read the story “Bermuda needs to ‘get in the game’” go to: http://www.royalgazette.com/article/20131122/BUSINESS02/131129913