A “green bank” to fund sustainable projects in Barbados and the Eastern Caribbean should be in place within a year, if all goes according to plan, said the Government economic advisor tasked by the Prime Minister to set it up.
Days ahead of attending the UN Climate Change summit, COP 26, in Glasgow, Prime Minister Mottley announced Wednesday that Professor Avinash Persaud will be in charge of setting up the fund. He told Barbados TODAY it will provide financing for energy projects across a range of sectors.
He said: “It is going to be financing the transition towards a sustainable future. Sustainability includes things like nutrition security, transport security and energy security. So it is not just about solar panels, but certainly, energy transition will be an important feature.
“It will have a developmental side. It is not like an ordinary retail bank where you take out a personal loan. It will really be for specific types of financing for things that will make our country and our region more sustainable. That includes many things. For example, it includes in some regards food security and supporting a ferry network in the islands so we are less dependent on the external world if we have supply chain bottlenecks and disruptions.”
He explained that while a heavy focus will be on funding large projects, it will also support individuals with smaller projects “because everyone has to be involved in the transition. It is not just a big infrastructure idea”.
“We have just started [the process]. It depends on how much capital we have and a host of other things,” said the economist. “It is early days yet but what we are doing here is showing a commitment by setting it up. We are committed to having this start in 12 months. But what it will look like depends on what happens between now and then.”
Having recently met with officials from the Green Climate Fund, Professor Persaud said he was hoping the facility would become an equity partner in the green bank, which is yet to be given an official name.
He also expressed the hope that other regional governments would become equity partners even as he echoed a common declaration of governments that they are short of cash, particularly for development projects, and prefer instead to seek backing from international donors.
“Some of the governments may also put in some equity, he said. “But we know that governments are cash-strapped at the moment, so the opportunity here is that people focused on climate are willing to put up the equity for this fund.
“Prime Minister Mia Mottley is very keen this is a bank that may be based in Barbados but is for the region. So we are looking at bringing in regional partners, perhaps starting first with our sub-regional colleagues in the Eastern Caribbean.”
Professor Persaud said while the preference was for Barbadians and other Caribbean nationals to borrow from the institution to invest in the green projects across the region, there will be room for partnerships with international investors.
“It is to transition the region, I think we may do some joint projects with people outside of the region, but it is really about transitioning the region,” he stressed.
“The challenge is less about funding these days. There is no shortage of money looking to support a green transition, what is rare is equity, as opposed to lenders – people prepared to take the risk.”
But the economist declared that “what is also short is good things to invest in”.
He also warned of the need for Barbados and other regional jurisdictions to get rid of the “bottlenecks” involved in the application and permission processes that often hinder projects from taking place.
He welcomed a new process for renewable energy projects which is being rolled out in Barbados, saying “we need that across the board to improve the availability of things to invest in”.
He said: “There was a time before that we had the things to invest in but we did not have the money, now there is money around as we transition but the question is, do we have good projects that are investment ready? That is what the bank may have to spend a fair amount of its time, in the beginning, doing – helping good ideas become investable projects.”
Indicating that more information about the bank would be forthcoming in the coming months, Persaud told Barbados TODAY: “We have had discussions and we had a real commitment by potential partners. Nothing yet signed. We have to do a lot more but we are showing the commitment.”
marlonmadden@barbadostoday.bb
