Bridgetown, Barbados, June 9, 2023 — Small Caribbean countries can accelerate private-sector development—a critical step to fostering sustainable and inclusive growth—by addressing key sources of vulnerability and improving the investment climate, according to a new report published today by IFC and the World Bank.
The Caribbean Regional Private Sector Diagnostic (RPSD) identifies ways to reduce cross-cutting constraints to private investment, such as gaps in connectivity and skills mismatches, and break the region's current low-growth, low-productivity trend. In addition, the study examines two key sectors—digital economy and renewable energy—in which greater private investment could contribute to export diversification and job creation, enhance productivity, and strengthen resilience to climate change and natural disasters.
"The RPSD provides a roadmap to advancing reforms that will unlock the full economic potential of the Caribbean and further enable the private sector to become an engine for inclusive growth and innovation, including strengthening the digital economy and transitioning to renewable energy," said Susan Lund, IFC's Vice President for Economics and Private Sector Development, during a hybrid event in Bridgetown jointly organized with the Caribbean Development Bank (CDB).
The regional diagnostic—the first of its kind—covers 12 small or micro-states (Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname, and Trinidad and Tobago) that, despite their marked differences, have a similar culture, language, and geography, and face comparable development challenges. This creates opportunities for collaboration and mutual learning.
"To realize the economic potential of the Caribbean, there is a need to bolster regional linkages and economic diversification and a move to greener and more inclusive growth", said Lilia Burunciuc, the World Bank's Country Director for the Caribbean countries.
CDB's Vice President of Operations, Isaac Solomon said the institution sees private enterprise as "an essential factor in the sustainable development equation", as a vibrant private sector can build new industries, increase competitiveness in global markets, as well as spur economic growth, and job creation. "We are gearing up to play a stronger catalytic role in generating private investment. We continue to position ourselves to be at the forefront of transforming the financing landscape, attracting more resources that will help to address many of the challenges facing our populations," he added.
As per the RPSD, leveraging digital services could be transformational in the region, repositioning itself in newer and more complex services, enhancing the productivity of traditional sectors, and the quality and inclusiveness of public services. Concurrently, transitioning to renewable energy can generate green growth, jobs, and diversified income, while mitigating the region's dependence on imported heavy fuels and reducing energy costs for key sectors such as tourism.
The private sector in the 12 countries analyzed faces major, cross-cutting constraints—notably, gaps in trade policy, trade facilitation, and connectivity; skills mismatches; limited access to finance, especially for SMEs, and vulnerability to climate change—addressing which would foster an environment more conducive to trade, investment, and growth. Examples of policy recommendations to strengthen the role of the private sector include harmonizing investment regimes, reducing skills mismatches in partnership with the private sector, fostering credit products for SMEs, and developing new financial instruments.
About the Regional Private Sector Diagnostic (RPSD)
The World Bank Group's Country/Regional Private Sector Diagnostics aim to identify sectors where private sector solutions can create or expand markets and make substantial contributions to development impact. The diagnostics use a structured approach to analyze key sectors with unrealized private sector potential in each country, select several sectors for deeper analysis, and make recommendations for policy action. The sector analyses, conducted with significant input from teams across the World Bank Group and from external partners including governments, provide valuable information on the challenges and opportunities to better leverage the private sector to achieve developmental objectives. The RPSD aligns with the World Bank Group's Maximizing Finance for Development (MFD) approach, which looks to private sector solutions to reach the 2030 Sustainable Development Goals.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
About the World Bank
The World Bank provides financing, global knowledge, and long-term commitment to help low- and middle-income countries end poverty, achieve sustainable growth, and invest in opportunity for all. We comprise the International Bank for Reconstruction and Development (IBRD), the world's largest development bank, and the International Development Association (IDA), one of the largest sources of funding for the world's poorest countries. With the other World Bank Group institutions as well as partners across the public and private sectors, we are helping build solutions to the global challenges of the 21st century in all major sectors of development. A world where no one lives in poverty and everyone has the opportunity for a better life is within our reach. For more information visit: www.worldbank.org.
About the Caribbean Development Bank
The Caribbean Development Bank is a regional financial institution established in 1970 for the purpose of contributing to the harmonious economic growth and development of its Borrowing Member Countries (BMCs). In addition to the 19 BMCs, CDB's membership includes four regional, non-borrowing members (Brazil, Colombia, Mexico, and Venezuela) and five non-regional, non-borrowing members (Canada, China, Germany, Italy, and the United Kingdom). CDB's total assets as at December 31, 2021, stood at US$3.71 billion (bn). These include US$2.21 bn of Ordinary Capital Resources and US$1.50 bn of Special Funds Resources. The Bank is rated Aa1 Stable by Moody's, AA+ Stable by Standard & Poor's and AA+ Stable by Fitch Ratings. Read more at caribank.org.
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