Feature Address Building the Resilience of Small States: A Strategic Vision for the Caribbean Deodat Maharaj, Deputy Secretary-General (Economic and Social Development), Commonwealth Secretariat Port of Spain, Trinidad and Tobago, 5 to 7 May 2015 Honourable Prime Ministers, Honourable Ministers, Excellencies, Distinguished Ladies and Gentlemen and Members of the Media. A pleasant good afternoon. It gives me great pleasure to be present at this forum today and to be able to have this conversation with you on this splendid Port of Spain afternoon. I wish to thank and congratulate the Government of Trinidad and Tobago, the University of the West Indies and the United Nations family in Trinidad and Tobago and other partners for hosting this much needed Forum and we in the Commonwealth are happy to be involved as well. I am especially happy to be here in the land of steelband, calypso and chutney, the land of the hummingbird, Minshall and Naipaul. This is the land of the great West Indian thinkers CLR James, Lloyd Best, Dr Eric Williams and the quintessential Caribbean man, William Demas. It is also my land and though I will not even dare contemplate being considered 1 in the same category of these giants, I can certainly state that like so many of you, my love for this region of ours is no less. I am grateful for the chance to share some thoughts on how we can possibly think a bit differently about the region and perhaps to suggest some ideas on the Caribbean we want by 2050. In terms of the session, I will speak for about 20 minutes followed by Dr. Moore and we will leave about one hour for what I hope will be a nice interactive dialogue. I am pleased to also recognise the consultancy team for this Caribbean Vision 2050 project who are: •Dr Winston Moore, a national of Barbados and senior lecturer in Economics at UWI Cavehill who specializes in economic modelling; •Sylvia Charles from Dominica is a consultant with expertise in economic development issues and she worked on Grenada’s Strategic Plan and currently she is President of the Women of the Americas ; •Ryan Peterson from Aruba is a professor in innovation economics at the University of Aruba; •Christine Clarke a national of Jamaica is a lecturer in Economics at UWI Mona; 2 • Marsha Atherley-Ikechi from Barbados works in the area of environmental engineering and utility regulation, and our other energy consultant who could not be present today is Tom Rogers who is a Barbadian resident and a lecturer in energy at UWI Cavehill; •Anthony Clayton resident of Jamaica is the Alcan Professor of sustainable development at UWI Mona and •Eleanor Joseph, a national of Saint Lucia, is a youth worker and community activist. The work has been led by Denny Lewis Bynoe who Heads our Small States team at the Commonwealth, a national of Barbados. As you can see, we have a team of consultants who will respond to some of the issues you will raise (A very Caribbean Team), I daresay, the gender balance is right. Similarly, to address the challenges, we need a collective Caribbean approach. Perhaps it will be useful to situate our discussions in an appropriate development context and it is best to start by noting that economic growth in the Caribbean has been slower than other regions. Since 2000, while the real per capita growth rates in developing countries averaged around 4.31 percent per annum, the comparable figure for CARICOM was just around 1.9 percent. And as I stand before you today, seismic shifts are also taking place in the global development landscape. We are 3 seeing the emergence of mega regional trading blocs such as the transatlantic and trans pacific trading partnerships. This will exclude 160 countries representing an estimated 80% of the world’s population. Our concern in the Commonwealth is that in this architecture, where is the place for the small islands and countries of the Caribbean- Barbados; Grenada; St Kitts and Nevis; St Vincent and the Grenadines; St Lucia; Dominica; and yes, Trinidad and Tobago? Quite simply, the answer is, there may not be a place. Let us look at the trade data for a moment. For this region, trends in trade show that its share of global trade has decreased from approximately 0.24% or just one quarter of one percent in 1990 to 0.16% in 2013. If we look at the CARICOM region excluding the oil and gas producer Trinidad and Tobago, the mere fraction becomes even smaller if this is possible to imagine. Without Trinidad and Tobago, the region accounted for 0.17% of World Trade in 1990, which has since decreased to 0.08% in 2013. When you look at the debt data, the news quite frankly as presented yesterday is discouraging. The natural beauty of the region masks the fact that it is one of the most heavily indebted regions on the planet. Nine of our member countries have gross debt to GDP ratios greater than 75% with 3 countries having public debt levels greater than 100%. This is unsustainable and development cannot take place with these crippling debt burdens with 4 loan financing and lack of access to concessional terms only exacerbating this troublesome reality. For good measure, I will add our susceptibility to natural disasters and economic shocks and we all know what happened with the tourism sector immediately after 9/11. We also know that Hurricane Ivan damaged 70% of the homes in Grenada, destroyed 30% of them; and the total damages stood at USD1 billion or equivalent to two years GDP! So in essence we can move from high income to middle income to zero income in a few hours. Just briefly moving to citizen security with a quick overview of the data. In terms of crime and violence we are not doing to well as a region with some of our countries having amongst the highest per capita homicides rate in the world. The Bahamas stands at 29.8 per 100,000 citizens and Jamaica, 39.3 per 100,000 nationals. Just for your information, the homicide rate for the UK is 1 per 100,000. So the rate in Jamaica, for example, is about forty times higher than in the UK, while the rate in Barbados – a relatively low-crime society by Caribbean standards – is still over seven times higher than in the UK. Based on current trends, the modelling exercise we commissioned has indicated that it is possible by 2050, that the smaller states of the Eastern Caribbean can have rates of homicide similar to those currently being reported and experienced in Jamaica. If we do not make progress in 5 tackling crime, there will be countries in our region that could be amongst the most violent on this earth by 2050. As Caribbean people, we always think about bequeathing a legacy to our children and the next generation, our treasured assets. That is just our way. My view is that with 60% of the population considered as young people, they are not the future, but the present. Let us for the moment take an unscientific approach and I seek the forgiveness of Dr. Watson in this endeavour as we look at one variable to get a flavour of our legacy to the prized assets, the young people of the region. Let us see how they are doing in terms of employment where youth are at a much higher risk of being out of work with teenagers having the highest unemployment rates. In Barbados, individuals aged 15 to 19 years old face an unemployment rate 5 times higher than adults with their unemployment rate at 47% compared to 14% for those aged 20-44 years old. In St. Lucia, 40% of the unemployed were younger than 25 years old in 2011. If we only look at the initial data I presented and do not consider some advancements made, a reasonable person may conclude, that we in the Caribbean are in a race to the bottom… and we are winning. However, there are some positive signs as well. Having observed and been involved in the development of the region, I am pleased to note the advances that we have 6 achieved. We need to build on the progress made to launch the next steps towards a strengthened vision for the region of the Caribbean we want by 2050. Our experience has shown that we do indeed have a limited ability to withstand or bounce back from adverse shocks as we have done in the past be these external shocks or natural disasters. The Commonwealth’s research on assessing vulnerability and building resilience highlights key gaps in economic, social and environmental management across the region. Governance has also been identified as an important component to resilience building strategies and for this reason the Commonwealth is focusing its current efforts on better understanding and supporting the development of enhanced governance systems across its small states members starting with the Caribbean. We are also making progress in improving the efficiency of our economy. In the latest report by the World Bank’s “Doing Business 2015: Going beyond Efficiency”, 50 percent of economies in the Caribbean implemented at least one reform making it easier for local entrepreneurs to do business—12 reforms in total, a historical high for the region. Though one can also note that in the same report the highest ranked country was Jamaica which stood at 58. Most of our countries trailed behind whereas Mauritius had a ranking of 28. They are getting something right. The region is one with the youngest population in the Commonwealth sphere. I was in Antigua not too long ago addressing the region’s Youth Ministers Meeting, recognising our young people as an asset to the region. The Caribbean region is already producing outstanding young people, one of whom I had the privilege of meeting at a recent 7 Commonwealth Youth Ministers Meeting in Antigua and Barbuda. Due to her entrepreneurial achievement, Nolana Lynch from Trinidad and Tobago was awarded the Caribbean region winner of the 2015 Commonwealth Youth Awards. Compared to other regions, we have relatively matured regional institutions, we generally think about ourselves as West Indians and Caribbean people and have a generally good track record on collaboration as a region with cricket being a good example of how we once collectively expressed ourselves as a people. It was also good to see the result of the just concluded Kensington contest where we prevailed and tied the test series. Sir Hillary and Professor Sankat, our University of the West Indies, my Alma mater is another example. Notwithstanding these efforts, we still face many challenges as noted earlier, and we need to act to ensure that we have continued and sustained developmental progress. There is an imperative for change if the Caribbean is to fulfil its development aspirations or indeed survive as a viable entity. Based on what we have heard since yesterday, I am convinced that the development model for the region cannot be based on a business as usual scenario if we are to deliver on our development goals. It is said that one definition of madness is doing the same thing over and over expecting a different result. The challenges we face have serious ramifications for the future development and growth trajectories of the countries within the region and must be addressed. 8 Based on the modelling work we have done, the projections show that inaction or if left to business as usual, countries in the region will have debt to GDP ratios above 100 percent and in some cases, exceeding 200 percent. Interest expenditure is likely to become a major drain on public finances in the future, further reducing funds available for development. Therefore, we have to move away from decision-making based on expedience and convenience and where political imperatives trump everything else. In pursuit of an inclusive and sustainable development for our Caribbean member states, I propose that we aspire towards a new Vision for the Caribbean by 2050, a strategic framework that recognises the Caribbean as peaceful, prosperous and inclusive, its people creative, enterprising and resilient, fully engaged in, and benefiting from, development within the framework of effective institutions that guarantee human rights and social justice. Possible elements can include: 1.Goal 1 - A creative and enterprising economy in which innovation is the driver – aimed at supporting the region to effect a transition from low value added economic activities to ones that are driven by local creativity and enterprise, including the public sector. Business has to be the engine of growth and we must link ourselves to Global Value Chains. 2.Goal 2, youth fully integrated into national development – recognising our young people are valuable and creative assets, working with them as development partners towards 9 Vision 2050 and with every household having a university graduate by 2050; 3.Goal 3, with a stable society where people are safe, secure and prosperous. A goal that is premised on the development of networks, institutional links, community based interventions and monitoring, and knowledge sharing. We need to re-energise our regional approach to the social challenges that are faced in the Caribbean; 4.Goal 4, environmental sustainability mainstreamed in the development process – an important element considering that the natural environment including The Blue Economy is a major element of the attractiveness of the Caribbean; 5.Goal 5 - A region built on clean, resilient energy systems that make use of plentiful, local renewable resources and are capable of providing stable supplies of energy to all sectors of society – aimed at promoting energy security and resilience, minimizing the region’s carbon footprints. Indeed, we must be ambitious, a Caribbean that is powered by renewable energy by 2050. I am sure there are others related to Governance and institutions both at the national and regional levels but we wanted to look at a few as a basis to initiate a conversation and to support a long-term vision for the Caribbean we want by the middle of the century. When taken together, these elements could address some of the major challenges that are common to the region and that require regional efforts to solve. The framework offers strategies that will seek to: balance the concerns of 10 survivability today and sustainability tomorrow; recapture the potential of the young people across the Caribbean; renew and re-energise the focus on the need to secure the energy requirements of the region; and, the need for a truly transformational system of governance across the region whilst strengthening systems that safeguard against corruption and ineffectiveness. The consultancy team will have the chance to speak about their work so I will like to focus on just a few policy options starting with The Blue Economy. I was in Samoa last September attending the SIDS Global Conference and we in the Commonwealth fully support the SAMOA Pathways and the call made for great recognition of the vulnerabilities of small states, and support for SIDS in building their resilience. However, after listening to all the presentations and thinking about the notion of SIDS, I thought it might be useful to look at some data that can help us think through this issue and perhaps turn the standard assumption on its head. Let us walk through some data for a moment. As we know, Barbados has a land area of 430 sq. kms but we may not know that it has an ocean space of 200,000 sq. kms; St Lucia has a land area of 616 sq. kms but a maritime zone of 15,260 sq. kms; Grenada’s land area is 344 square kms and an ocean space of 27,500 square kms; When you look at Trinidad and Tobago, it has a land area of 5,198 sq. kms and an ocean space of 79,000 square kms. 11 In the case of the Bahamas, its land space is 13,900 square kms and an ocean space of 684,000 sq. kms. We are currently supporting Bahamas to extend their continental shelf which if successful will result in an additional 200,000 sq. km of ocean space giving it a total maritime zone covering approximately 884,000 sq. kms compared to its land space of 13,900 square kilometres. To my mind, we need to get out of the prism that imprisons us into thinking that we are small island states and sometimes miss, what is most obvious. We could also think that we are medium or big ocean states as is the case of The Bahamas. It is in this context, we in the Commonwealth will like to propose an emphasis on The “Blue Economy” – embracing the concept of an oceanbased economy as a mechanism to realise sustainable growth. The premise being that the oceans can play a pivotal role in tackling the longer-term socio-economic and environmental challenges. The Blue Economy is potentially of major value to all Caribbean countries – the opportunity to create more value out of existing and new resource streams cannot be overlooked. This must include both existing benefits and uses, such as fisheries and shipping. Among the opportunities identified as having potential in the Blue Economy are marine fish farming, renewable energy, seabed minerals and marine biotechnology. The Commonwealth Secretariat has been working with a number of countries in the region in this regard and will continue to do so. National Ocean Policies have been prepared for several countries including St Kitts and Nevis, St Vincent and the Grenadines and The Bahamas. 12 A few countries have recognised the potential of the Blue Economy and are moving ahead at a fast pace. The recently elected Government in Mauritius has established a Ministry dedicated to the Oceans. Mauritius’ neighbour, Seychelles just recently established a new Ministry, The Ministry of Finance, Trade and the Blue Economy. We need to act quickly before, yet another opportunity is lost. Secondly, we will like to suggest a stronger focus on the diaspora from two standpoints, firstly that of the diasporic economy on which some studies have already been done and secondly from the perspective of remittances. On remittances, when we think about the issue, we do not ordinarily reflect on the cost of remittances. We have been advocating and Turkey as the President of the G20 on 14th April at the Commonwealth La Francophonie/G20 Development Dialogue made a renewed commitment to bring down the cost of remittances from 10% to 5%. This may seem nominal or unimportant. However, in 2014 the region received an estimated $5 billion in remittances. Assuming the figure is constant for the next ten years, a reduction in the cost from 10% to 5% could result in an additional $2.5 billion injected into Caribbean economies. For this to happen, sustained advocacy is required in ensuring that this G20 commitment is met. This is another concrete and specific area where additional financing can be injected into economies of the region without resorting to a cap-in-hand policy. Again on the issue of remittances and this is linked to the diasporic economy, when you look at the data for Bangladesh which received an estimated $15 billion in 13 remittances in 2014, 40% of those resources went into investment and not consumption. We need to reflect on this and imagine, or reimagine how our remittances can be structured accordingly and more effectively leverage our diaspora as investors and networks. There are some good signs in this area with Antigua and Barbuda recently establishing a Diaspora village. Again on the theme of innovative financing, we will like to table two specific initiatives on which we are working that can benefit the Caribbean. The first is a Small States Trade Financing Facility to help our entrepreneurs access trade financing through a system of guarantees. We are also aware that there is indeed funding for Climate Finance. However, oftentimes our jurisdictions do not have the capacities to unlock the financing. Consequently, we are tabling a proposal to establish a Climate Finance Skills Hub which is intended to help countries unlock Climate Finance in the Caribbean, Pacific and Africa. Work is underway on these two initiatives and support will be required from member states to get both approved at our forthcoming Heads of Government meeting in Malta in November 2015. We also recognise the need for financing to deal with shocks. On energy, less than five percent of energy generated is currently renewable, and less than 20 percent of the private sector is energy efficient in the region. This has to change and we need to have a towering vision to be 100% reliant on renewables by 2050. There is no other option. For young people, entrepreneurship is a key driver of human capital, unleashing the economic potential of youth 14 and promoting sustainable growth and development. 18 percent of new and emerging businesses are owned by young people in Latin America and the Caribbean—some distance behind Africa with 30 percent youth-owned businesses. The consultancy team will speak to this issue during the dialogue. The evidence collated by the team indicate strong prospects for the region – with the appropriate policy intervention, and commitment, we can have a better trajectory. However, only with the right institutional arrangements and leadership. The time for the politics of expedience and convenience has come to an end. Too much is at stake. To make this a reality, our efforts leading to 2050 must be underpinned by enhanced levels of support from the international community. For small states, international support is required in: accessing resources, on favourable terms to fund critical infrastructure projects; and filling capacity gaps that hamper their ability to cope with emerging economic, social and environmental issues. This is where organisations like the Commonwealth can play a role in global advocacy. However, this should not take away from the fact that this is our region and we have to accept both responsibility and ownership in addressing the challenges and finding solutions. I therefore hope that we will use this session to deliberate on these issues, and to identify concrete next steps towards implementing targeted solutions. As a Commonwealth, we are committed to supporting the region in the planning for, 15 and realising a Vision for the Caribbean we want by 2050 built on resilience. I thank you!!! Allow me to welcome Dr Moore to make his presentation. 16
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