Grenada introduced 15 per cent VAT in 2010 to increase revenue. The Windward Islands have seen a decrease in banana production. And T&T is still in recovery mode over the bailout of some CL Financial subsidiaries. These are just some of the examples that show economies of the Caribbean are either stagnant or in a state of decline, says Cecil Ryan, regional consultant, Caribbean Youth Business Trust. “That is a fact. There has been negative growth in the Caribbean in terms of the economy and this has largely been in terms of the productive sector. Banana production in the Windwards has declined to very low levels. Many of the islands of the Windwards have been attacked by disease so there is clearly a decline there. There has also been a decline in the region of foreign direct investment and also remittances from the metropoles. So the economies are stressed, he said.
He said Caribbean countries are coming up with different strategies to generate revenue. “St Lucians just introduced VAT about two or three years ago. Grenada did it recently. That is part of the recognition that they need to come up with a different revenue base. Of course, there is the troubled financial system, like Clico and with British American Insurance (BAICO). Those two cases are a result of the crisis internationally, particularly US and Europe. We have seen reduced consumer spending and all this has led to tightened financial regulatory framework in place,” Ryan said. This has resulted in high unemployment.
“The social situation is not encouraging as unemployment is high and higher rates of poverty. We are also seeing increased polarisation of income and wealth,” he said. Ryan was speaking recently at the Caribbean Conference on Financial Inclusion hosted by the Commonwealth secretariat and Central Bank at the Central Bank, Eric Williams Financial Complex, Port-of-Spain.
Ryan said the region needs to build strong Caribbean-based financial institutions. “There is the Caribbean Development Bank (CDB) and we need to use it. Caricom also has a framework and we need to use it. There is also the Caribbean Confederation of Credit Unions in which all credit unions in the Caribbean belong. There is the Caribbean Policy Development Centre (CPDC). There is the Eastern Caribbean Central Bank. These institutions play a significant role in mobilising resources. At the national level, there are the central banks. There are also the chambers of commerce and these are ideal places to be part of the mechanism to mobilise resources for people and the region,” Ryan said. He said the region needs to identify institutions that already exist and this is important as both Jamaica and T&T are celebrating 50 years of independence. “We have the indigenous financial institutions, such as credit unions formed in the Caribbean. There are the credit societies, the building societies. In the Organisation of Eastern Caribbean States (OECS), there are 122 school-based saving societies. Former T&T Central Bank Governor Ewart Williams was speaking yesterday at this conference on the need for us to assert ourselves more,” Ryan said.
He said economic integration is moving along with political unity. “We also have in the region a greater state role of the economies. In the political sphere, there is the increasing recognition of the movement towards greater integration, there is the Caricom Single Market and Economy (CSME) framework. In the Windwards, there is the dramatic move towards OECS integration. On August 10, the OECS parliament was launched in Antigua. That is a move towards greater unification. “Quite recently, the political leaders of Caricom were able to reach an agreement on the establishment of a fund to compensate investors who had losses from Clico. In another instance, they were able to use the Eastern Caribbean Central Bank to cushion the collapse of the Stanford financial empire. So there is precedence for coming together and mobilising resources in the interest of our peoples.”
Diversification through sport, culture
Despite the poor performance of Caribbean economies, Ryan said sports and culture have strong investment potential. “Over the last ten or 15 years, these areas have emerged as great potential for national development and investment, especially for young people. Policymakers, the private sector and civil society actors, we all need to recognise this. We have to determine how we will use these areas to position young people to make better economic lives,” Ryan said. He encouraged the Caribbean region to diversify trading partners. “I would like to see a review and assessment of microeconomic policy and planning and foreign policy platforms to shape and address the needs of people. We have to move beyond the way we do things now. The world had changed and the landscape and we cannot anymore depend on the traditional partners like the United States and Canada and others. We have to diversify our foreign policy links. There is Brazil, Venezuela all the other countries in the Latin American region. If we do not do that, we will be leaving ourselves behind,” he said.
Ryan made recommendations for micro enterprises.
“There should be tax incentives from the government agencies for private sector enterprise organisations. There should be a strategic partnering with critical stakeholders in the mobilisation of our resources for successful programmes. We need to integrate national entrepreneurship programmes with the national education systems,” he said. Ryan called for more poverty reduction programmes. “We need to have programmes to specifically target young people in rural areas and, in special circumstances, with HIV/Aids and pay special attention to the needs of women.”