T&T has an important role to play in the Caribbean Development Bank (CDB) and has always been "generous" in its support of this regional bank, said its newly-elected president, Dr William Warren Smith. Smith, a Jamaican national, described T&T's role in the CDB as an indispensable one in the context of it being one of the bank's earliest members. T&T and Jamaica are the largest shareholders of the CDB, with each having 19,342 shares. "T&T has always been very generous with its resources in its support of the bank's objectives, so that T&T has always met its obligations to the CDB as far as the recapitalisation of the bank is concerned. T&T has also been important in the replenishment of the development fund and this country, especially in the early days, has provided resources to help the smaller countries of the Eastern Caribbean." He said that T&T plays a very active role in the halls of governance within the CDB. "Trinidad's directors have always been very good spokespersons on behalf of members of the board and they have helped to guide the bank in the decision making." Over the years, T&T has moved from being a large borrower from the CDB to being a large contributor. "T&T, at one point in time, was one of the three largest borrowers. That was primarily during the period when T&T was going through reforms and restructuring of the economy. When T&T went through the last oil boom, naturally, they borrowed very little, if any, from the CDB, but that's what you would expect," said
Smith, who was elected on May 1. Smith replaced Dr Compton Bourne, who was president of the CDB since 2001. Right now, the Barbados-headquartered CDB and T&T are in discussions about using some of T&T's experiences to develop other member states. "We also very excited about developments that are taking place here in Trinidad. We can learn and use this to inform activities in other Caribbean states. We are talking to T&T about innovation and entrepeneurship. Also, about important reforms that they are carrying out in the education sector. "These are just some areas we think we can learn from and we would like to work with the Government in helping them in pursuing those types objectives," said Smith, in an interview on Monday evening at a cocktail reception hosted in his honour at the Hyatt Regency Trinidad hotel, Port-of-Spain. Today is the final day of the CDB's four-day 41st annual meeting of the board of governors, which is being held at Hyatt Regency Trinidad hotel, Port-of-Spain.
Small islands' challenges
Smith, who obtained his first degree, masters and doctorate at Cornell University, wants the bank to "move with the times." "My contract is five years. I intend to focus on doing as much as I can to introduce the necessary reform into CDB because we are moving into different times, and the bank has to adjust its operations and modus operandi in accordance with the new challenges." One of CDB's main areas of focus is helping poorer Caribbean states with developmental issues. "I would like to help the countries to begin to address some of the issues that are making it difficult to move to that level and trajectory."
I think some of these problems have to deal with energy, the cost of electricity and, of course, I'm not speaking about T&T, but it's a big issue for the smaller islands and affects their ability to be internationally competitive."
Smith, who has been director of finance and corporate planning and vice-president of operations at the CDB, wants to see Caribbean states develop their people through education. "I would also like to work with them to help solidify their economic position and, I would also like to help them reform their education sector so that the creation of human capital will happen." Speaking about internal operations at the CDB, Smith said he wants to provide a role that would motivate staff. "Internally, I would like to galvanise the energy of the staff. We have talented and experienced staff and, to get the best out of them, I have to be able to provide leadership and show them their efforts are appreciated." Smith said the CDB is in a good position to carry out its function because no other institution of its nature understands the Caribbean as well. "We like to argue that competitive advantage is our unique knowledge and experience of working only in the Caribbean. We think we know this region better than other players in the development business and we bring that to the table and over 40 years of experience. It might sound like superficial stuff, but that really is part of our competitive advantage."
Poverty reduction
Speaking about the annual meeting in Trinidad, Smith said poverty reduction would be a main priority on the agenda. "We are here for the 41st annual meeting of the bank. It's the occasion where the board of directors and the board of governors meet. We take the opportunity to review the performance of the institution and to discuss the state of the bank, which is the pool of resources which we use for our poverty-focused projects. "We also take the opportunity to talk about the problems in the region and see how the bank could position itself to best address them with all the member countries." Smith said the bank has been able to provide strong support during the economic downturn in the Caribbean. "What the bank has tried to do during the crisis is to work very closely with the countries that have had the greatest difficulty to help them to position themselves to come out of the crisis stronger, So the focus has been on encouraging them to pursue important policy reforms primarily in the economic areas and in the social areas, so that the focus has been on economic sides and matters of fiscal reform, emphasis on debt management, reduction debt and also on trying to engage in what is referred to as cyclical economic activity. That is doing capital expenditures in areas that help stimulate economic growth so that decline in the economy is not as great," he said.
Member states are generally pleased with the bank's performance. "They feel as if we have been supportive. We have helped them to solve some of their problems, but as they now come of this recession, and, in some instances, we have seen pretty good signs of recovery," said Smith, who's a former chief executive officer of regional airline, Liat. He emphasised that not all the Caribbean states are the same size or at the same level of development. "We obviously think it's a mixed picture. The problems in the countries are not the same. Different countries are at different levels of development and also different countries have different resource endowment. That is the challenge that varies across the different countries. We have to work with that reality."
He used the example of Guyana which, he said, has had to take serious reforms, but emerged with a stronger economy. "Guyana has always been very heavily endowed with natural resources, but Guyana has experienced a heavily protracted period of real economic and social difficulty. "The good news is that Guyana has taken the pain, they have suffered through the reforms and now they are well positioned to be able to come out of the crisis with a good story. "So we are now seeing a lot of interests in Guyana from foreign direct investment, especially in the mining sector. We in the CDB want to be part of that good news in Guyana." Smith said it is important for Caribbean states to have strong economic growth if they are develop. "If you don't have good economic growth rate, you won't be able to generate the revenues to transfer to poverty reduction type activities and to the investments that are necessary for achieving sustained growth. So that's what we are trying to do now, which is to work with the countries and help to make certain reforms, certainly in relation to the investment climate of their countries, such that foreign direct investment will be increased," Smith said.
About Dr William Warren Smith: Dr William Warren Smith assumed the post of CDB president on May 1, having been elected by the CDB board of governors at a special meeting in October 2010, on the nomination of his home country. Smith, who's fluent in Spanish and French, was educated at Cornell University in the United States. He graduated magna cum laude in 1974 with a degree in economics (honours). He went on to read for a masters in agricultural economics and a doctorate in resource economics and public policy, all at Cornell. Before becoming bank president, Smith served as the CDB's director of finance and corporate planning. Smith conceptualised and developed the financial instrument which was eventually called, The Finsac Paper, which was used by the government of Jamaica as its principal mechanism for intervening in the failed banks and insurance companies during the country's financial crisis in the latter part of the 1990s.
He has also championed the need for far-reaching internal reforms at the CDB in an effort to improve efficiency, reduce administrative expenses and enhance special delivery. He managed to galvanise support within the CDB and helped to design a financial rescue package for the regional airline Liat, which provided Caribbean shareholder governments with a viable alternative to the Allen Stanford-led bid to acquire the airline. Smith has also served as chief executive officer of Prudential Stockbrokers Ltd as well as CEO of Liat. He first joined CDB in 1985, and was seconded by the bank in 1987 to set up the regional planning function at Liat (1974) Ltd, but returned to the CDB in 1998. During the 1980s, he was the director of economics and planning at the Petroleum Corporation of Jamaica. In the 1990s, Smith was vice-president of investments at the insurance company, Life of Jamaica. Since 2008, Smith, a former lecturer in economics at Ithaca College, Ithaca, New York, has been a director of the Caribbean Catastrophe Risk Insurance Facility.
Facts about the CDB
The CDB's authorised share capital is US$713 million, of which US$555.5 million is callable capital and US$157.4 million is paid up capital. In its operations for the 2010 financial year, the CDB approved 14 loans totalling US$270.5 million and grants totalling US$30 million. In 2004, the bank successfully floated a US$150 million note on the international capital markets. Of that sum, US$96 million was used to finance the operations of the Caribbean Court of Justice. In October 2009, the CDB successfully concluded an international capital market borrowing of US$120 million.