A new report has identified several cross-cutting constraints to private sector growth in Barbados and 11 other Caribbean countries and made recommendations to help boost private sector investment and address key sources of vulnerability over the next three to five years.
On Friday, the World Bank Group, in association with the Caribbean Development Bank (CDB), officially launched the Regional Private Sector Diagnostic (RPSD) report, the first of its kind for the Caribbean.
The report, Promoting Private Sector-led Growth to Foster Recovery and Resilience in the Caribbean, covers 12 states – Barbados, The Bahamas, Antigua and Barbuda, Belize, Dominica, Grenada, Guyana, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Suriname, and Trinidad and Tobago.
The World Bank report said the countries identified “face major cross-cutting constraints and addressing them would foster an environment more conducive to trade, investment and growth”.
“These constraints are gaps in trade policy, trade facilitation, and connectivity; skills mismatches; limited access to finance, especially for small and medium enterprises; and vulnerability to climate change,” it said.
The 145-page document pointed to the need to reduce trade costs and logistics frictions in an effort to spur trade-led growth in the Caribbean.
“Tariff and nontariff measures, weak trade facilitation, and poor transport connectivity make trade expensive and depress export volumes,” it stated.
In relation to the skills gap, the researchers pointed out that this was compromising productivity in the labour force and, as a result, the competitiveness of firms.
It added that a structural shift from agriculture to services has altered the mix of skills needed across the 12 Caribbean countries, “but the region’s educational system has not adjusted quickly enough”.
“As a result, there is increasing but unmet demand in the 12 Caribbean states for workers with both technical and soft skills such as critical thinking, problem-solving, and socio-emotional skills. High rates of migration among the most educated people have exacerbated the skills gap in several countries, especially Guyana,” it said.
The report also pointed to the fact that the Caribbean was vulnerable to climatic events and governments continued to struggle with high debt levels, limiting their ability to develop adequate infrastructure and build resilience to economic and climate shocks.
The study examined two key sectors – digital economy and renewable energy – in which greater private sector investment could contribute to export diversification and job creation, enhanced productivity and strengthened resilience to climate change and natural disasters.
“Governments and the private sector could do more to promote digital skills. Digitising public services would, by itself, incentivise citizens to improve their digital skills,” it said.
During the hybrid forum, World Bank Country Director for the Caribbean Lilia Burunciuc said there was a need to bolster regional linkages and economic diversification and a move to greener and more inclusive growth.
CDB’s Vice President of Operations Isaac Solomon agreed that fundamental and structural changes were required in order to spur economic growth and development.
Agreeing that there was a need for greater unity across the region in tackling some of the issues, Solomon said the CDB was “pushing to incentivise private finance and facilitate access to attract the funding sources and wider concessional and grant resources”.
Minister in the Ministry of Finance Ryan Straughn admitted that there was still a lot of work to be done in Barbados in order to close the skills gap.
“There is that skills deficit and we recognise that we need to improve within some of our critical departments, the understanding as to what is required in a very dynamic private sector,” he said.
Among its many recommendations, the RPSD calls for harmonised investment regimes for the promotion and facilitation of investments in the region, a reduction in common external tariffs to decrease the cost of importing capital and intermediate goods to enhance competitiveness and to streamline and harmonise non-tariff measures, in an effort to reduce trade and investment frictions and enhance connectivity.
It also calls for the establishment of national and regional trade facilitation committees, digitisation and simplification of trade procedures, increase of supply and efficiency of air and marine cargo shipping.
In an effort to bridge the skills gap and make the educational system more relevant, the RPSD recommends expanded access to tertiary education, improvement in the quality of secondary education, reduction in mismatch between skills in demand and those produced through the educational system.
It further points to the need for greater facilitation of access to finance for small and medium-sized enterprises; the development of high quality, affordable and widely accessible digital infrastructure; standardisation and implementation of transaction models that are country specific; and improvement in the system planning and grid infrastructure to better integrate renewable energy and climate resilience. (MM)
