By Deodat Maharaj
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.
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 percent 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 in Latin America and the Caribbean which saw a decline of 38 percent in investment inflows from external sources. On the other hand, Asia and Africa witnessed declines of only 18 percent and 4 percent, 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 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.