Bahamas - Country Commercial Guide
Investment Climate Statement (ICS) 
Last published date:

The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world.  They analyze a variety of economies that are or could be markets for U.S. businesses.  The Investment Climate Statements are also references for working with partner governments to create business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption.  The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

Executive Summary

The Commonwealth of The Bahamas is an archipelago of 700 islands stretching from Florida to Haiti. While most of the population lives in the cities of Nassau and Freeport, sixteen islands have significant economic activity. The country boasts a stable investment climate, democratic tradition, respect for the rule of law, and a well-developed legal system. The World Bank classifies The Bahamas as a developed country with a 2021 per capita GDP of $33,187, the second highest in the English-speaking Caribbean. The Bahamas relies on imports from the United States to satisfy its fuel and food needs and conducts more than 85 percent of its international trade with the United States. Bahamians’ use of English and frequent travel to the U.S. contribute to their preference for U.S. goods and services. U.S. exports to The Bahamas were valued at $5.6 billion in 2022, resulting in a $3.9 billion U.S. trade surplus.

The Bahamas’ tourism-dependent economy has recovered from the COVID-19 pandemic and is on track to welcome over seven million, mostly American, tourists this year. However, the country remains vulnerable to natural disasters and external shocks. The World Bank (WB) estimates real GDP growth of 4.3 percent in 2023 and two percent in 2024. The WB lauded The Bahamas’ resiliency in the face of increased debt, global inflation, and geopolitical uncertainty arising from the Russian invasion of Ukraine. The WB classifies The Bahamas as a high-income country, belying the country’s extreme income inequality.

Tourism and related services account for 70 percent of the country’s GDP and employ just over half the workforce. A survey of the labor force has not been completed since December 2019, yet government and international agencies estimate unemployment rates have levelled off to near pre-pandemic levels of 10 to 15 percent as of late 2022. Financial services are the second most important sector of the economy, accounting for 15 percent of GDP. Grand Bahama, the northern-most Bahamian island, has the most diversified economic activity in the country. Its capital, Freeport, is a free trade zone that hosts many U.S.-owned businesses.

To diversify the economy, the government has promoted investment in niche tourism, renewable energy, light manufacturing, digital assets and fintech, technology, agriculture, fisheries, and extractive industries. The government has also committed to digitizing business services and jumpstarting domestic productivity through small and medium enterprises (SMEs), especially those operating in non-traditional sectors.

Throughout 2022, The Bahamas positioned itself as a hub for new financial technologies, promoting its central bank-backed digital currency and highlighting its regulatory environment supported by the Digital Assets and Registered Exchanges (DARE) Act. These efforts attracted several fintech-related businesses and events. Despite the December 2022 collapse of Bahamas-based FTX, the world’s second largest cryptocurrency exchange, companies utilizing fintech and blockchain technology continue to show interest in The Bahamas.

The Bahamas has leaned on international financial institutions for loans and has rejected offers from foreign governments to prop up its economy. Although the country has lowered its debt service obligations over the last two years, International Financial Institutions (IFIs) have voiced concern about The Bahamas’ reluctance to impose more progressive taxes to address its 80 percent debt-to-GDP ratio and to support economic development and social initiatives. The country does not levy corporate, personal, inheritance or capital gains taxes. The government faces international pressure to improve aspects of its anti-money laundering policies.

The Bahamas is not a member of the World Trade Organization (WTO) and does not offer export subsidies, engage in trade-distorting practices, or maintain a local content requirement. The country has a strict $500,000 dollar minimum on foreign capital investments. The country attracts FDI and over the past decade has benefitted from significant investments in the tourism sector by PRC-based and backed companies. Since taking office in September 2021, the Progressive Liberal Party (PLP) has embraced public-private partnerships (PPPs) to raise capital and engaged investors from non-traditional markets such as the Middle East and Africa. U.S. investors have focused primarily on the tourism sector and range from general services contracts to billion-dollar developments. U.S. companies have also shown interest in emerging sectors, such as non-oil and renewable energy, niche tourism, extractive industries, and digital technology.

Positive aspects of The Bahamas’ investment climate include political stability, a parliamentary democracy, an English-speaking labor force, a profitable financial services infrastructure, established rule of law, general respect for contracts, an independent judiciary, and strong consumer purchasing power. Negative aspects include a lack of transparency in government procurement, labor shortages in certain sectors, high labor costs, a bureaucratic and inefficient investment approvals process, a lengthy legal disputes resolution process, internet connectivity issues on smaller islands, and energy costs four times higher than in the United States. The high cost of electricity is driven by antiquated generation systems and inefficient diesel power plants. The government has prioritized airport redevelopment and non-oil energy projects, including a transition from diesel to liquified natural gas (LNG) on its most populated island of New Providence. The government is also promoting solar-powered microgrids on smaller islands.

Foreign investment in fifteen sectors of the economy require prior approval from the National Economic Council (NEC). These sectors include commercial fishing, public transport, advertising, retail operations, security services, real estate agencies, and others. Finalizing accession to the WTO would require opening some of these protected areas to foreign investment.

The absence of transparent investment procedures and legislation is problematic. U.S. and Bahamian companies report business dispute resolution often takes years and debt collection can be difficult, even with a court judgment. Companies describe the approval process for FDI, and work permits as cumbersome and time-consuming, although the government has voiced plans to streamline the process. Companies also complain that the tender process for public contracts is inconsistent, and allege it is difficult to obtain information on the status of bids. To improve transparency and efficiency, the government passed an updated Public Procurement Act, refreshed its eProcurement and Suppliers Registry System, and launched a new eProcurement platform in March 2023.

The Bahamas scored 64 out of 100 in Transparency International’s Corruption Perception Index in 2022 (where zero is perceived as highly corrupt and 100 is very transparent). This means The Bahamas is perceived as notably transparent when compared to the 180 ranked countries. However, the country’s score has dropped seven points since 2012. The PLP administration confirmed its intention to amend several good governance laws. While efforts have been made in some areas, the government has stalled full implementation of anticorruption legislation that would accelerate efforts to enhance transparency and accountability. The Bahamas lacks an Office of the Ombudsman and has not fully enacted its Freedom of Information Act (2017). Legislation to support an Integrity Commission and campaign reform have also been delayed. An independent Information Commissioner, supported by technical and administrative staff, was appointed in mid-2021, but the office is not fully operational.

To access the ICS for The Bahamas, visit the U.S. Department of State’s Investment Climate Statement.