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The imperative of foreign direct investment for Caribbean countries

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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]

Caribbean

Supporting micro, small and medium enterprises, the backbone of Caribbean economies

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The United Nations commemorated Micro, Small and Medium-sized Enterprises (MSMEs) day on 27th June. This day dedicated to MSMEs is to recognise their contribution to the global economy.  There is indeed a clear reason for doing so. The United Nations Conference on Trade and Development reports that MSMEs account for more than 90% of all businesses and around 70% of jobs globally, writes Deodat Maharaj. 

Right here in the Caribbean, MSMEs form the backbone of many of our economies generating precious jobs and opportunities for our people. According to the Caribbean Development Bank, MSMEs represent between 70-85% of Caribbean businesses and contribute between 60-70% of Gross Domestic Product. Critically, they account for an estimated 50% of total employment. Importantly, 40% of Caribbean businesses are owned by women. The success of these enterprises reflects the ingenuity, industry, and innovative spirit of our entrepreneurs. Based on the data, to build a resilient Caribbean under normal circumstances where business must be a central partner, we would need to ramp up support to the entrepreneurs in micro, small and medium scale business enterprises.
 
However, given the fact that we are living in unprecedented times with small and vulnerable Caribbean countries reeling from the coronavirus pandemic, the emphasis must be on fast-tracking recovery and building resilience. To be successful, the private sector has a major part to play. Consequently, given the role of MSMEs in creating opportunity and jobs, it is logical that MSMEs must get priority attention. Policy measures excluding them or providing sub-optimal support will be counterproductive and only ensure a prolonged recovery phase or even worse, job loss and suboptimal growth. 

MSMEs require a range of support including finance on which I have previously written. However, it is not only about providing financial support and creating an enabling environment for business to flourish. There are other crucial areas where support is required to give our MSMEs the maximum chance of success. 

First and foremost, is the area of technology. COVID-19 has demonstrated quite clearly the imperative of embracing new ways of working and doing business. Support must be extended to our MSMEs to help them embrace this new era. We at the Caribbean Export Development Agency (Caribbean Export) have already scaled up our support in this area and have seen huge interest on the part of businesses across the Region. For example, at our last webinar on e-commerce “Build your e-Commerce Store from Scratch” in February 2021, we had over 400 participants from across the Caribbean. This shows the eagerness of our firms to take advantage of the opportunities presented by technology to help grow their businesses.

Technology also has a democratising effect helping firms regardless of size with an opportunity to grow their businesses and reach new customers at low cost. In this COVID-19 era, examples abound. Here in Barbados, small scale farmers have taken to the internet to sell their products. In Trinidad and Tobago, there is a Facebook group “Trini Farmers” with an estimated membership of 49,500 members which serves as a peer group where members support each other. These are two good examples where entrepreneurs have taken the initiative. At the same time, we need to be actively supporting those who need assistance.

In terms of leveraging technology to grow businesses, government has an important role to play in creating the right policy environment, providing incentives, and delivering concrete support to MSMEs. Simultaneously, it is not only about state assistance, but the larger corporate sector including financial institutions, have an important part to play as mentors and business partners for MSMEs. It is in everyone's interest for micro, small and medium scale enterprises to succeed.

Secondly, the cost of energy here in our Region is amongst the highest on the planet. This is not only a disincentive to foreign direct investors but also a constraint to our businesses right here in our Caribbean. High energy costs simply drive up the cost of production making it difficult for us to compete with imports at the national level and to export our products to regional and international markets. To address this matter, the push to renewables is important both at the national and regional levels. We at Caribbean Export are working closely with MSMEs across the Region to help them enhance energy efficiency and as a result make them more competitive. However, we need to do this on a scale that can have a transformational impact. The reality is that we are not there yet. Allocating the requisite resources to reduce energy costs with the twin advantage of taking climate action, must be a high priority at the national level.

Finally, our MSMEs need to focus on niche markets with premium products and commensurate prices to reflect their quality. We at the Caribbean Export have been helping regional businesses to penetrate the European market and take advantage of the Economic Partnership Agreement with the European Union. However, we also realise much more must be done. It is precisely for this reason that we have partnered with the International Trade Centre to establish a hub for trade in sustainable products. 

This Hub will help bolster the competitiveness of MSMEs by supporting the implementation of green business practices. There is already a well-established and growing market for products that meet sustainability criteria, and we are keen to help Caribbean businesses take advantage of this opportunity. Going forward, it is important to partner with business support organisations not only in Europe but also in other premium markets to get our products on the shelves to attract the expanding customer base for products that meet “sustainability “criteria. 

In summary, fast-tracking recovery and building resilience require a major programme of support and focus on our micro, small and medium sized businesses. They are key to creating much needed jobs and opportunity for our people. To achieve success, a broad-based partnership including with the larger regional business enterprises is required. The Caribbean Export Development Agency is committed to this agenda. We will continue to work with all to provide this much needed support and create options and opportunities for our people, as we seek to build a truly resilient Caribbean.

Deodat Maharaj is the executive director of the Caribbean Export Development Agency.

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.

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Citizenship by investment schemes – more than meets the eye?

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Re Mr Gurdip (Dev) Bath

We repeat our profuse apology to Mr Dev Bath and we have today settled libel proceedings with Mr Dev Bath and have paid an agreed sum in settlement of his claim and legal costs to his nominated Charity, St John Ambulance UK.

We completely accept that Mr Dev Bath was falsely and unjustly accused of being involved in the alleged kidnapping of Mehul Choksi, a fugitive from Indian justice, who alleged he was a victim of a state-sponsored kidnapping from Antigua and Barbuda by boat on or about 23 May 2021, on behalf of the Indian Government and handed over to the authorities of the Commonwealth of Dominica, where he is currently detained. The motive was said to be to circumvent ongoing extradition proceedings in Antigua where India is the requesting state.

We completely accept the documented findings of a team of experienced investigators directed by the International lawyer Mr Gary Summers of Counsel, of 9 Bedford Row International Chambers and led by Mr Tarique Ghaffur CBE QPM a former Assistant Commissioner of London’s Metropolitan Police Service who have interviewed all the subjects accused of being involved in the kidnapping and have completely exonerated Mr Gurdip (Dev) Bath along with 3 other subjects falsely and unjustly accused: Ms Barbara Jarabik; Mr Gurmit Singh & Mr Gurjit Singh Bhandal.

We completely accept that Mr Dev Bath has always been a very honourable man of complete integrity who would never associate himself with sleeze or criminal activity of whatever kind.

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Caribbean Export and Caribbean Development Bank join forces to provide grants to MSMEs

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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.

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