The Caribbean Development Bank (CDB) wants regional governments to play a major facilitating role in properly positioning the private sector to drive a competitive and resilient economy in the Caribbean.
Addressing the 46th annual CDB Board of Governors meeting in Kingston, Jamaica on Wednesday, the bank’s President Dr William Warren-Smith declared that a strong private sector-driven economy can deliver a region that is stable and free of the kind of abject poverty which, even now plagues pockets of communities in the Caribbean.
Warren-Smith said, however, that a criteria for the realization of this goal would have to be the adoption of the requisite macro-economic and business friendly reforms and closer alignment of the education system to the needs of the productive sector, requirements that place challenges directly in the hands of regional governments. Warren-Smith further outliner the envisaged role for governments in supporting private sector-driven economies in the region by alluding to the importance of the creation of social and economic infrastructure against natural hazards and the diversification of the various economies through the development of new sectors including renewable energy and energy efficiency.
Significantly, the CDB President is also seeking the modernization of some traditional sectors, notably agriculture, a pursuit with which some countries in the region have been struggling for years, and the creation of targeted social safety nets for the most vulnerable people.
In his address Warren-Smith told the forum he was satisfied that “the success of other countries within our own hemisphere, … the efforts of small countries, like Grenada and St Kitts and Nevis” and “the green shoots now beginning to appear in Jamaica,” that the envisaged course of action can work for the region.
Warren-Smith noted that in the wake of Jamaica’s demanding experience with the International Monetary Fund “private investment is now beginning to increase… in the vital tourism and renewable energy sectors, but encouragingly also, in business process outsourcing and the local manufacturing sectors.” The Jamaica experience, he said, “can only serve as a symbol of hope and encouragement for the rest of our region that the vision …is anything but the impossible dream.”
Warren-Smith’s address also focused on the stunted growth and debt burden of the region noting that “as the global economy nose-dived into recession in 2008… Caribbean economies remained weak” and stayed in that condition “even after global recovery commenced… Today, our countries continue to be ranked amongst some of the world’s most highly indebted,” he said, noting that at the end of 2015 some of the region’s borrowing member countries (from the CDB) continued to be burdened with debt in excess of 100 per cent of gross domestic product.”
According to Warren-Smith comparisons with other CDB’s borrowing member countries suggest that non-Caribbean small island developing states fared much better during the global recession, averaging growth rates of 3.4 per cent compared to 1.5 per cent in the Caribbean. And while Warren-Smith said that “arguably, as a region, we have made progress,” he declared that the region had still “fallen substantially short of realizing our true potential.”
Warren-Smith told the forum that while countries’ having “a vision” is important, “a vision is not the same thing as reality,” The reality, he said was that the Caribbean’s economic growth had not been sustained for a long enough period. “Our overall five per cent growth performance has consistently lagged behind the rest of the world’s,.. Our region has grown by only 1.2 per cent per year since 2009 compared with the global average of 3.7 per cent,: Warren-Smith said, asserting that Caribbean countries, principally the larger ones need to shift gears from current paltry rates of growth of 1.2 per cent to transformational rates of at least 5 to 7 per cent per annum if they are to lay a foundation for poverty elimination by 2030.