As numerous natural disasters threaten vulnerable communities in the Latin American and Caribbean region, the Commission has announced today new humanitarian funding of €18.5 million. This includes €15m to support preparedness of local communities and institutions for natural disasters throughout the region: Central and South America, the Caribbean and Haiti. A further €2.5m will support projects addressing violence, and €1m for food assistance in Central America.
“Investing in disaster preparedness today saves lives tomorrow. The European Union has assisted the Latin American and Caribbean region in all major recent natural disasters, be it hurricanes, forest fires, floods or volcanic eruptions. Our new funding is part of efforts to help communities adapt to the effects of climate change and better prepared for the next crisis," said Humanitarian Aid and Crisis Management Commissioner Christos Stylianides.
Funding will boost local capacities to respond to emergencies, implement Early Warning Systems, and increase access to water, sanitation and hygiene. Communities supported include vulnerable ethnic groups living in rural or urban areas and disaster management institutions. Additionally, this support will provide food assistance to populations stricken by natural disasters and severe drought, and provide protection and basic assistance to communities affected by violence in Central America.
Including the latest announcement for Colombia last June, the European Union has allocated a total of €79.5m in 2019 to support people in need in the region, of which €16m for Disaster Preparedness and Prevention. Since 1994, the EU has provided more than €1 billion in humanitarian assistance to Latin America and the Caribbean, focusing on the populations most affected by natural disasters and violence.
Latin America and the Caribbean are among the world's most disaster-prone areas, being highly exposed to natural hazards such as earthquakes, volcanic eruptions, floods, tsunamis, landslides and droughts. Haiti continues to be among the top three countries most affected by extreme events in the last two decades.
Approximately three-quarters of the population live in at-risk areas, and one-third live in areas highly exposed to disasters in the continent. The urban poor are particularly vulnerable to natural disasters with high human and economic costs, affecting societies that suffer from significant inequalities.
Additionally, the El Niño phenomenon regularly causes catastrophic weather events such as droughts and floods with large humanitarian consequences. Vulnerable communities affected by protracted drought are in need of food assistance, livelihood recovery and resilience-strengthening measures.
In Central America, at least 487,000 people are internally displaced (IDPs) as a consequence of organised violence in the three most violent countries in the region (Guatemala, Honduras and El Salvador). Affected communities require protection as first priority, with specific attention to women and children who are the most exposed to threats and gender based violence.
Caribbean Export and Caribbean Development Bank join forces to provide grants to MSMEs
The Caribbean Export Development Agency (Caribbean Export) and the Caribbean Development Bank (CDB) in collaboration with the European Union, have entered a partnership to support regional MSMEs with financial assistance to help businesses retool and preserve jobs. CDB will fund a US$600K grant facility via a Technical Assistance Programme (TAP) to mitigate the impact of COVID-19 and providing ongoing capacity building through e-learning.
“Caribbean Export is honoured to have been entrusted by CDB to implement such an important programme for our regional MSME’s. The funds are not only timely, but they are also necessary, if firms are to come back stronger, preserve jobs and create more,” said Damie Sinanan, manager of the Competitiveness and Export Promotion division responsible for the TAP at Caribbean Export. CDB Projects Department Director Daniel Best said the initiative responded to an “urgent need for technical assistance and capacity building programmes to help businesses survive, remain competitive and regain market share in export and domestic markets” in the wake of COVID-19.
He stated that it aligned with several other measures including loan support and capacity-building, which the Bank had supported in the past year to assist the business sector in its Borrowing Member Countries. The two organisations collaborated in 2020 with a regional survey to assess the impact of the COVID-19 pandemic on MSMEs operations; ascertain the level and areas of support that would be required to assist SMEs during the crisis; and better position firms to cope with the economic fallout.
The survey highlighted that almost 50% of respondents were forced to close physical locations, whilst approximately 45% ceased production of goods and services and 80 per cent had no continuity plan. In view of these findings, the TAP presents an opportunity for these MSME’s to gain the technical assistance needed to develop their businesses to rebuild and retool in a manner to withstand future shocks. MSME’s will be able to apply for grant’s of up to US$15,000 to be used on various technical assistance projects including, but not limited to Resource Efficiency and Renewable Energy; Digitisation of Business; Marketing & Promotions; Building Resilience; Purchase & Upgrade of Capital Goods; Certification; Capacity Building and Protection of Intellectual Property Rights.
To bring a holistic approach to supporting regional MSMEs impacted by the COVID-19 the provision of a suite of capacity building tools to complement the technical assistance are also to be developed. These tools will be made available to MSMEs online via an e-learning portal hosted by Caribbean Export. E-learning and its inherent accessibility advantages are even more important during this time when travel restrictions are still in place.
Clean and green – The new economy set to transform the Caribbean
|Seismic shifts are taking place in the global economic architecture as countries accelerate efforts to transition clean and green economies. In 2015, at the United Nations Climate Change Conference known as COP21, world leaders signed the landmark Paris Agreement. This pact signalled the collective ambition of 196 countries to contribute to the goal of limiting global warming and effectively addressing climate change. The implication for the global economy was immense given the need to transition away from fossil fuels, writes Deodat Maharaj.|
To achieve this reduction, countries have developed targets to bring down emissions associated with fossil fuels known as the nationally determined contributions (NDCs). The United States, one of the major hold outs in this transition has taken a welcome about turn with the Biden Administration which has already established ambitious targets. The decision of the United States to fully embrace a cleaner and greener economy would only hasten the transition.
It should be noted that those who have embraced the shift to renewables also recognise the massive economic opportunities it presents in what will be a new economy. Given our own climate vulnerability and economic challenges as small island developing states, we have no option but to do the same. There is also a strong economic case for doing so given our own economic performance and the need for new options.
According to the World Bank, over the period 2009 – 2019, the economies of small states in the Caribbean grew by less than half of one percent or at an average rate of 0.38%, to be more precise. By comparison, the average growth rate of all small states globally over the period was 3.08%. The COVID-19 pandemic has only served to exacerbate our challenges, with double-digit economic contractions projected for most countries in our Region. In essence, we are underperforming compared to others even though we are all confronting common challenges.
On the positive side, we have recognised the need to make this change. In fact, since 2013 CARICOM countries have agreed on a regional energy policy which aims at achieving set targets for decarbonisation and energy efficiency while enhancing energy security. In addition, Caribbean countries, like many others, developed NDCs and became party to the Paris Agreement. Caribbean countries have also largely recognised that it is strategically advantageous to embrace the new economy offered by low carbon industries and sectors.
What impact will the new economy have?
First and foremost, the new economy offers tremendous potential in job creation. The transition will present opportunities for higher paying jobs and the reduction of poverty. In a joint report published in 2020 by the International Labour Organization and the Inter-American Development Bank, it was estimated that decarbonisation will lead to the net increase of jobs in the Caribbean by 3.1%, that is, the creation of approximately 400,000 jobs. Jobs are a precious commodity and, on that basis, alone we have a strong case.
There is also the accompanying advantage of growth. The International Renewable Energy Agency estimates that for every US dollar invested in energy transition, an additional US 93 cents of GDP growth will occur above the business-as-usual scenario. Within the renewable energy industry, firms are emerging who can execute engineering, procurement, construction, operation, and maintenance services. Energy services companies are developing that can provide demand-side management services and jobs.
Outside of the core activities of the renewable energy industry, engineering, construction, legal, financial, logistics and transportation services will all be needed to support the development of renewable energy projects. In fact, no economic sector will be left untouched by energy transition. The electrification of the transport sector will call for the roll out of charging infrastructure powered by renewables. A movement to a green economy will spur much needed innovation. Most important, it will help lower production costs in a Region where energy costs are amongst the highest on the planet and a deterrent to new investments.
Recognizing the enormous potential for this new economy Caribbean Export has been contributing to this transition through both technical and financial assistance. More specifically, we have implemented energy management capacity building interventions at the firm level. Since 2017, 26% of our grant funding with support from the European Union has gone to renewable energy and energy efficiency projects. We are also leveraging our connections with partners and firms, to help develop networks of financiers, technology producers and services providers. We view this as an important step in supporting the greening of businesses.
Investments in Renewable Energy
Caribbean Export as the lead regional institution with the remit for attracting foreign direct investment to our Region, we are acutely aware of the scale of investment which will be required to effectively support energy transition. Consequently, we have teamed up with the Caribbean Association of Investment Promotion Agencies to make the steering of investments in this sector as a high priority. This will include a focus on solar photovoltaics (PV) and wind, two of the most relevant technologies for our Region. In this regard we have been steadily building up a network of partners with a view to fostering investment in our region. It should be stated that the regulatory bottlenecks must be addressed as a priority to achieve success on the scale required.
In summary, transition to the new economy opens a world of opportunity for us especially in creating precious jobs and generating much needed growth. We recognize that success will be hinged on building a broad-based partnership to deliver results for Caribbean people. We at Caribbean Export are determined to play our part and remain committed to this agenda.
Deodat Maharaj (pictured) is the executive director of the Caribbean Export Development Agency and can be reached at: [email protected]
The imperative of foreign direct investment for Caribbean countries
|Citizens of the Caribbean are fully aware of the challenges we face. They know that governments across the Region are financially stretched which has been further accentuated by the COVID-19 pandemic. Our citizens also know that we have limited access to either Overseas Development Assistance or concessional financing from global financial institutions and that our options are limited in accessing finance for business development. Our people are clear on what they want - a brighter future for themselves and their children. More specifically, those with whom I speak have an overwhelming interest in either getting jobs or preserving the ones they have so they can take care of themselves and their families, writes Deodat Maharaj.|
We, at the Caribbean Export Development Agency (Caribbean Export) also recognize these constraints and hear the voices of our Caribbean people. The question is how as a Region, can we emerge from this stranglehold. For us, the solution is obvious – attracting increased levels of local investment and foreign direct investment (FDI). Governments and other stakeholders across the Caribbean must have a singular focus on steering investment our way. To achieve resilience and economic transformation we need to significantly ramp-up and draw investment to our shores.
But first, we must understand the trends and challenges so we can position ourselves accordingly. Globally, there has been a decline in FDI flows, with the United Nations Conference on Trade and Development reporting a 42% decline in global foreign direct investment in 2020 in its January 2021 Report. The same report went on to note that one of the most affected Regions is Latin America and the Caribbean which saw a decline of 38% in investment inflows from external sources. On the other hand, Asia and Africa witnessed declines of only 18% and 4%, respectively. Further weakness in FDI flows is expected for the rest of the year and for our countries, if we continue with business as usual, the future will be a dim one.
The outlook for the tourism sector continues to be pessimistic. The World Tourism Organization reports that travel experts surveyed are expecting a return to pre-pandemic levels only by about 2023 (Jan. 2021 report). Therefore, sitting and waiting for tourists to return in the numbers of yesteryear or for global prospects to drive up our export earnings cannot and will not lift us out of this economic quagmire. This is why, increasing local investment and getting foreign direct investment to our shores is most critical.
For the Caribbean to be successful in attracting investment, new thinking in these unprecedented new times is required.
Firstly, we cannot continue to compete with each other as individual investment destinations, given our limited resources and populations. This approach cannot achieve the scale required to attract serious money our way. In view of this, we at Caribbean Export are working closely with the Caribbean Association of Investment Promotion Agencies (CAIPA) to support our countries in preparing investment projects that can be packaged and promoted as ‘regional’ proposals with more than one country being promoted as an investment destination for a specific venture. This gives much needed scale, and the pooling of resources helps a wider group of countries.
Secondly, we need to focus on investment that can help propel a new economy, driven by climate-friendly business and digitalization. The world is going green and embracing digitalization and so must we. Therefore, we need to make a concerted effort to bring companies to our shores that are at the forefront of green technologies in areas such as solar and wind. This means an investment approach that is targeted and forensic in focus.
Linked to the emphasis on the ‘new economy’, is the leveraging of technology in key sectors such as agriculture. The Caribbean is one of the most food insecure regions on the planet, and this has been more eloquently demonstrated by COVID-19. A new emphasis on agriculture is required. However, this time around, it has to be about using technology to take Caribbean agriculture forward into the 21st century where our young people also see it as a viable business opportunity. This is precisely why Caribbean Export, in partnership with the CAIPA has identified Agrotech or Agriculture Technology as a priority sector for us in the Region. It connects all the dots in helping us to become more food secure; treats agriculture as an entrepreneurial activity; and as one Region we can offer the scale required for larger investors.
We at Caribbean Export recognize that innovation is imperative for our survival and must be central to our regional investment promotion strategy. As a matter of fact, we have already engaged the services of an alternative finance adviser with experience in raising capital across emerging and frontier markets for entrepreneurs and SMEs with high growth potential. We intend to fast-track support to the packaging and promotion of regional investment projects and focus on steering investment to sectors that are vital to what will be the new economy whether by focusing on Agrotech, digitalization or the climate-friendly investments.
We are acutely conscious that the future of our Region and the prosperity of our people ride on the actions we take now for business to be a driver and central player in advancing a transformational agenda for our Region. At Caribbean Export, we intend to do just that, with the attraction of local and foreign investment being a central pillar of our work in the years ahead.
Deodat Maharaj is the executive director of the Caribbean Export Development Agency and can be reached at: [email protected]
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