Market Challenges
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- Infrastructure challenges: Electricity rates are four times higher than in the United States, making energy one of the biggest cost factors for businesses. Public sector medical infrastructure has gaps, and smaller islands face limited internet connectivity, though this has improved recently with the rollout of Starlink and other satellite services. Several of the 29 inhabited islands and cays lack basic infrastructure. Hurricanes in recent years severely damaged Grand Bahama and Abaco, the country’s second and third largest economic centers, although much of the infrastructure has since been restored.
- Cumbersome approval process for foreign investment: Decision-making is highly centralized. The approval process can be opaque, often protracted, and vulnerable to political influence. American companies have cited delays in securing approvals for projects. Although the government announced plans to create an independent investment facilitation agency, Bahamas Invest, this initiative has not yet been realized.
- High shipping costs: Shipping to the less populated Family Islands are costly due to lower volumes of trade and transportation challenges. However, many of these islands benefit from tax incentives and exemptions on certain business inputs, helping offset the higher costs.
- High crime rate: Crime levels in The Bahamas have notably improved in 2025, according to mid-year statistics released by the Royal Bahamas Police Force. Major crime dropped by 14%, with decreases of 15% in New Providence, 11% in Grand Bahama, and 6% in the Family Islands. Homicides fell substantially, with 44 murders recorded in the first half of 2025 versus 60 in the same period in 2024, a 27% decline. Meanwhile, overall crime for 2024 was down about 10% compared to 2023. However, concerns remain; for example, murders in Grand Bahama and the Family Islands did see an uptick, with 12 and 3 respectively, compared to fewer incidents in 2023. Travelers should remain vigilant. The U.S. State Department continues to issue a Level 2 (Exercise Increased Caution) travel advisory, particularly for areas like Nassau (“Over the Hill”) and Grand Bahama due to risks such as armed robberies, burglaries, and sexual assaults, especially in unregulated vacation rentals and near popular tourist zones.
- Relatively high customs tariffs: The Bahamas has the highest average duty rate in the Western Hemisphere at roughly 30 percent. Tariffs on some consumer goods run as high as 65 percent and reach 100 percent on imported items that compete directly with locally produced goods. Value-Added-Tax on both domestically produced and imported goods and services generates 45 percent of government revenue. The government has lowered or eliminated some duties to spur economic activity in the construction, agriculture, fisheries, and renewable energy sectors. Despite the high customs duties, U.S. goods remain in high demand.
- Non-tariff barriers: The government reserves investment in 15 sectors for Bahamians, including wholesale and retail operations, real estate and property management services, small-scale construction projects, commercial fishing, and many small business activities. Foreign investment in these areas requires special government approval. Seasonal import bans are also placed on some agricultural items that compete directly with domestic output. While these policies restrict entry in certain areas, U.S. market access has not been significantly affected, and health, safety, and quality standards are generally applied fairly.