A regional technology industry expert is suggesting that Barbados’ dwindling foreign exchange reserves could receive a much needed boost if the island were to increase its use of blockchain technology.
Roland Haggins, the Caribbean Community (CARICOM) director for the digital infrastructure development company Nuco Global Inc, pointed out that financial technology (Fintech) use was rapidly growing worldwide, while suggesting that it could be “an additional sector to our economy, providing much-needed diversification”.
Pointing to links between Fintech systems and other sectors such as manufacturing, agriculture and small business, Haggins argued that the use of blockchain technology – which he described as “a secure version of the Internet in which value can be communicated” – would enhance the island’s overall level of economic activity.
In fact, Haggins said this was already evident in the millions of dollars being invested in the rapidly expanding Bitt and other blockchain firms with offices in Barbados and the rest of the region.
“To give some numbers, Bitt.com raised US$4 million in 2016 and a further US$3 million this year through foreign direct investment. Currently there are around 50 people at Bitt and they would likely expand to over 100 people within the next year.
“Barbados has its first blockchain protocol called the Aion platform [built by Nuco Global Inc],” Haggins noted, adding that the company had raised US$28 million last year, while Polymath – a security token company – raised another $60 million last year.
“So all in all the blockchain companies in Barbados have raised well over US$100 million over the past year or so, and these businesses are worth hundreds of millions and will be employing hundreds of people by year end.
“In fact we would like to see all the major global tech companies have offices in Barbados employing Barbadians. We would like to see Barbadians with access to the latest technology advances that can improve our well-being, improve the ease of doing business and improve our Government systems. We have the potential to strengthen foreign reserves by attracting foreign investment as a stimulus,” he stressed.
The island’s foreign exchange reserves plunged to a low of 6.6 weeks of import cover or just $410 million at the end of December last year, with economists and other pundits forecasting that they could fall even further by the middle of this year, as the island continues to service its debts.
Haggins said in order for the economy to benefit from blockchain technology, greater emphasis would have to be placed on three key areas – an effective information communication technology infrastructure; a highly skilled work force and the right regulatory environment – all of which he said were already in place in Barbados.
“So now as a country we face the challenge of developing a regulatory environment and policy that will not stifle innovation but allow it to flourish,” he told the Barbados International Business Association’s Fintech seminar Barbados Blockchain Beach, at the Lloyd Erskine Sandiford Centre last Friday.
During the one-day event officials and policymakers explored a range of possibilities for blockchain technology use in Barbados, its advantages and best practices.
Minister of Industry, International Business, Commerce and Small Business Development Donville Inniss said he was pleased with the evolution of blockchain technology over the years.
However, Inniss said he was eager to see Barbadians making greater use of the “phenomenal opportunities” and “allow us in this little island to be bold enough to develop solutions for global issues”.
For the past several years now, noted economist Jeremy Stephen has been a proponent of the use of digital currency as a mix in the Central Bank’s portfolio.
In a paper entitled, Should Cryptocurrencies be included in the Portfolio of International Reserves Held by the Central Bank of Barbados? Stephen and fellow University of the West Indies lecturer and economist Dr Winston Moore had suggested several years ago that the Central Bank should include some form of digital currency in its reserve assets.
This, they argued, would help to safeguard the Barbados currency, which is pegged BD$2 to US$1, against speculative attacks. (MM)