COVID-19 continues to wreak havoc in 2021. The BBC has reported that as of 1 February 2021, more than 100 million people have been infected with the virus, 2.2 million people have died across nearly 200 countries. There are still over 382,000 new cases every day. Although both rich and poor countries have faced the full wrath of the pandemic, the difference is, the developed countries are buffered by their wealth enabling them to recover faster than anyone else, writes Deodat Maharaj.
On the other hand, we in the Caribbean continue to take a battering, much like our shorelines during a hurricane. But, unlike a Hurricane Irma or Maria, which created unprecedented destruction in a matter of hours in 2017, with Covid-19, soon it will be almost one year that this pandemic has been inflicting continuous hardship on the lives and livelihoods of our people.
Caribbean countries have largely managed well from a public health perspective. However, on the economic side, notwithstanding best efforts, the impact has been harsh. Tourism as the mainstay of the region’s economy had seen record tourist arrivals in 2019 of 31.5 million stayover visitors. It is now a mere trickle. Given that tourism accounts for between 34 and 48 percent of total GDP in countries such as The Bahamas, Barbados, and Jamaica , the effect has been massive.
Looking ahead, it is not all doom and gloom. We have a unique opportunity to press the reset button on our development agenda with business becoming a key partner on the path to recovery and resilience. To achieve this, Caribbean countries firstly require a sustained and forensic focus to create the enabling environment for business to flourish. The World Bank’s Ease of Doing Business Report 2020 ranks most Caribbean countries in the bottom half of countries globally. The exceptions are Jamaica and St Lucia which are ranked at 71 and 93 respectively.
Caribbean countries can and must do better. There is no prize for second place in this increasingly competitive world. We must accelerate efforts to improve the ease of doing business, including the establishment of special purpose units with the exclusive responsibility for breaking down of barriers to doing business and fast-tracking implementation of high priority policies. We also need to look at other experiences. Mauritius is a small island faced with similar challenges like the ones we have. Nonetheless, they have consistently improved in their ease of doing business ranking and in the same 2020 World Bank Report was ranked 13 in the world. This is higher than Australia, Canada and Germany. We can certainly learn from Mauritius.
Secondly and closely connected to the ease of doing business is the imperative of attracting foreign direct investment to generate jobs, growth and prosperity. Though Caribbean countries have been making concerted efforts to attract foreign direct investment, the results have been mixed. There are individual success stories including in the natural resource rich countries like Trinidad and Tobago and Guyana as well as in the tourism sector. However, we are not attracting foreign direct investment on the scale required to achieve the creation of much needed jobs and generate inclusive growth.
Like everywhere else, Covid-19 has accentuated the challenge of attracting investment. The Economic Commission for Latin America and the Caribbean had projected a decline in foreign direct investment to Latin America and the Caribbean in 2020 by about 50%. With many economies across the Region in a state of prolonged shutdown, the downward investment trend for 2021 is expected to be even more precipitous.
New strategies and approaches are required to bring investment to our shores. These include proposing projects that are regional, where more than one country can be packaged to an investor. There is strength in numbers. Caribbean Export has already started working to strengthen and improve the Region’s capacities to attract foreign direct investment. It supports the Caribbean Association of Investment Promotion Agencies (CAIPA) to increase collaboration among national investment promotion agencies. Also, Caribbean Export in concert with CAIPA has identified strategic sectors for targeting such as agrotechnology; business process outsourcing; renewable energy; and biotechnology.
Thirdly, we need to ramp up support to micro, small and medium sized businesses. These businesses are the lifeblood of local economies. They need to be innovative, agile and leverage the opportunities provided by digitalization. Going forward, a package of support is required combining know-how, access to finance and innovation.
Caribbean Export provides financial support to firms through its Direct Assistance Grants Scheme and Direct Support Grants Programme with funding from the European Union. These grants assist regional firms to meet the financial challenges brought on by the pandemic, help build their competitiveness and export capacity. Caribbean Export is also providing direct technical assistance to firms. Much more needs to be done.
Finally, regional integration is indispensable. Simply put, as individual states, our populations and markets are too small in this vast global marketplace. Therefore, acting independently or singularly is no longer an option. Working collectively is the only way. Building trade, investment and overall business relationships outside the English-speaking Caribbean is also critical. The work of Caribbean Export in bringing the CARICOM countries and the Dominican Republic together is a good example which must be supported.
In summary, creating an enabling environment for business to flourish, adopting new approaches to attracting foreign direct investment and supporting enterprises at the local level are all vital to fast track Covid-19 recovery. Caribbean Export as the lead agency for private sector development in the Region is committed to this agenda to help create jobs, growth and prosperity for our people.
Deodat Maharaj is the executive director of the Caribbean Export Development Agency. Deodat 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]
Export of Services – The next frontier for Caribbean business
Caribbean economies have largely been primary producers with a focus on commodities for much of our history. Diversification has been a constant in our regional and national discourse with limited progress, notwithstanding our best efforts. Globalization has had a massive impact on our small economies, exacerbated by shocks such as the current coronavirus pandemic, not to mention the effects of climate change and financial crises. What each crisis including the current one has taught us is that we must continue to innovate with our existing exports and identify alternative avenues to create jobs and generate foreign exchange.
The commoditizing and export of services represent a viable option. Whilst tourism remains important, the reality is, in terms of services we must think beyond tourists. The evidence says we must. According to the Caribbean Tourism Organization, last year countries took a massive hit. For example, Grenada experienced a decline of tourist arrivals by an estimated 73%. The decline was 69.2%, and 71.4% for St. Lucia and Belize respectively. Due to Covid-19, tourism continues to endure a sustained depression.
While we accept that in the post-Covid world, we will continue to need tourism, the vulnerability of this sector tells us that we must revisit our traditional assumptions of what we can sell globally. This is with reference to services in addition to tourism.
According to the World Trade Organization, trade in services through all modes of supply is worth US $13.3 trillion. In the Caribbean, services account for approximately 65% of our Gross Domestic Product but this is largely driven by tourism. There is room for services to grow and become a greater generator of jobs and foreign exchange in areas such as music, fashion, animation and film, and outsourcing. For this transition to take place, we need to start where we have strength. Let’s look at commoditizing the creativity and talent of our people into viable commercial opportunities.
Taking music as an example, according to Goldman Sachs the global music industry is estimated to reach $131 billion by 2030. For our artistes to gain a piece of this, they not only need the creativity but the underlying business infrastructure to support them. Caribbean Export with support of the European Union has provided a suite of services in this regard. This includes a Business of Music programme and music writing and production bootcamps. Initiatives such as these enhance technical capacity and provides the tools needed, in addition to talent, to capitalise from the digital music space. Coupled with helping link to international music executives through live and virtual showcases, the opportunity for our music creatives has been unprecedented. However, to have sustained impact, efforts at the regional and national levels have to be complementary and we need to do much more.
Another area that offers potential is animation and film. These sectors saw a steady boost in global revenue over the past year, particularly during the COVID-19 lockdowns. The global animation industry in 2020 was worth approximately US $270 billion. Streaming services continue to grow, providing a great opportunity for Caribbean content creators to showcase our unique Caribbean culture in amination, games and films. Caribbean Export is committed to providing the right support, that builds the capacity of our content creators to harness opportunities available to them in the global market.
Another area has to do with training, education and edutourism which can be help earn foreign exchange and create jobs. There is an opportunity to establish centres of excellence in the Caribbean, to address such as the technical skills required for the creative industries. In terms of languages, almost every Spanish-speaking country in this Latin America and Caribbean region has a mini-industry with Spanish immersion programmes. We need to replicate this model for English-language training in our English speaking countries. We have seen the positive impact of the presence of medical institutions and branches of extra-regional universities in places like Grenada can have in creating jobs.
To diversify our services sector as well as giving a better chance to our businesses to compete, digitalisation is key. The COVID-19 pandemic underscores the need for a digital pivot. The very nature of providing a service necessitates a robust digital infrastructure, from marketing your service online, delivery of your service and of course receiving payment. To support the diversification of the services sector in the Caribbean and to really unleash their profit potential these fundamentals must be in place.
Looking ahead, Caribbean Export is committed to working with our partners to help realize the full potential of the services sector. It can be a vital pillar for our region’s economic revival and create jobs for our people.
About Caribbean Export
Caribbean Export is the only regional trade and investment promotion agency in the African, Caribbean and Pacific (ACP) group. Established in 1996 by an Inter-Governmental Agreement as the regional trade and investment promotion agency, it serves the 15 states of the Caribbean Forum (CARIFORUM), namely: Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Dominican Republic, Haiti, Grenada, Guyana, Jamaica, Saint Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago.
The agency carries out numerous programme based activities designed to enhance the competitiveness of regional small and medium sized enterprises, promote trade and development amongst CARIFORUM states, promote stronger trade and investment between the Caribbean Community (CARICOM) and the Dominican Republic, CARIFORUM states and the French Caribbean Outermost Regions (FCORs) and the EU Overseas Countries and Territories (OCTs) in the Caribbean.
Europe’s appetite for Caribbean food highlights growing trend
The Caribbean food market is now worth almost £100 million. Sauces and condiments in particular are worth £1.12 billion and grew by 16.8% in the last year. The gluten free flour market grew 19.9% in 2019 in the UK and in Germany is worth £174m. Caribbean Export releases a report - Unlocking the profit potential of the Caribbean ahead of it’s virtual expo Absolutely Caribbean. Caribbean firms given the opportunity to showcase their products to European buyers.
A growing taste for Caribbean food in Europe could be lucrative for regional manufacturers, according to research from The Caribbean Export Development Agency (Caribbean Export). The trend for exotic food sauces and condiments and natural, plant-based ingredients is highlighted in a new report commissioned ahead of Caribbean Export’s Absolutely Caribbean virtual expo on 17 and 18 November.
“We are seeing great potential for Caribbean food products across Europe at the moment,” said Caribbean Export Competitiveness and Export Promotion Manager Dr. Damie Sinanan. “It seems that consumers are looking for different flavours and playing more with spices but there is much promise amongst natural foods such a chocolate, teas and gluten-free flours. We are really excited about the range of quality, artisanal producers that we have at our expo this year which will help to support trade between the Caribbean and Europe.”
In the UK, the Caribbean food market is now worth almost £100m and foodservice wholesale giant Bidfood singled out Caribbean food as a Top 10 cuisine trend. In 2019, UK retailer Tesco also highlighted Caribbean fare as an ‘emerging trend’. Sauces and condiments in particular are worth £1.12bn and grew by 16.8% in the last year. Craig & Shaun McAnuff at Caribbean food & lifestyle platform ‘Original Flava’, state: “We’ve seen a huge rise in the popularity of Caribbean foods in the UK in recent years which is really exciting. The likes of Ainsley Harriott and Levi Roots paving the way for Caribbean food; seeing staple Caribbean ingredients more widely available; but also seeing our cookbook as a bestseller on numerous charts and receiving TV & media recognition nationally. There is such a variety and so many flavours in Caribbean cooking which the British public are loving.”
In Spain, the ‘foods from other countries’ category has grown by 105.9% since 2012. Spicy tastes have seen strong growth with Caribbean flavours named as an emerging trend in sauces and spices, increasing around 55% to three million kilograms and over 29% in value to nearly €19m. Almost a third (32%) of German consumers have said they like Caribbean food which has led to an increase in heat and spice on the table during family dinners. People in the Netherlands are also increasingly open to incorporating greater variation into their cooking, including flavour combinations and the use of fresh and natural ingredients, with the value of chilli sauces climbing 125% in value since 2016.
Europe’s love for wholesome plant-based ingredients, combined with the region’s efforts to promote sustainability, have also led to an increased interest in natural and organic products such as chocolate, tea and gluten-free flour. In the UK, chocolate is a £4.3bn category and according to Kantar, plain and dark chocolate is growing by 14.5% year-on-year. In Spain, it is worth €1.5bn, and increased by 3.6% in 2019. Meanwhile, the Netherlands was the largest importer of cocoa beans in 2018 and is home to the largest cocoa grinding industry in the world. The tea category in the UK is worth £561.3m which is not surprising given the nation’s love of the hot beverage.
In Germany, 129 million cups of tea are consumed every day and in the Netherlands 71% of consumers drink tea at least once a week. The UK’s gluten-free flour food category grew by 19.9% in 2019 compared to the year before and in Germany the market is worth £174m. Caribbean food suppliers will be given the chance to showcase their unique food products to European buyers at Caribbean Export’s first virtual expo event: Absolutely Caribbean - unlocking the profit potential of the Caribbean on 17 and 18 November. For more information about the event and to register, click here.
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