1

IFC in the Caribbean

Presentation on Small States

December 11, 2008

2

Caribbean Profile – Region of Diversity

OECS – OECS – IFC MembersIFC Members• Antigua and

Barbuda• Bahamas• Barbados• Dominica• Grenada• St. Kitts & Nevis• St. Lucia

Belize Jamaica Haiti

DominicanRepublic

Trinidad &Tobago

GuyanaSuriname

Belize Jamaica Haiti

DominicanRepublic

Trinidad &Tobago

GuyanaSuriname

13 countries• o/w 5 IDA and 8 non-IDA, 8 small states

11 island economies 30% living under $2/day High unemployment Anemic growth since early 1990s

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Development Challenges of the CaribbeanDevelopment Challenges of the Caribbean

High unemployment, poverty and inequality• Rising crime

High HIV/AIDS incidence

Gap in education, skills and productivity • Brain drain • Labor cost is high relative to skills

High levels of public debt: i. 7 out of 10 (14 out of 30) most

indebted countries in world; ii. Average debt rose from 67% of GDP

(1997) to 96% (2003)iii. high tax rates

Small and fragmented market sizes• Economies vulnerable to disasters

and external shocks• Lagging growth and investments,

especially FDIs• Non-uniform regulatory climate

Increasing competition in tourism market• Few indigenous successes and little

linkages to local economy

Infrastructure constraints• Inefficient Ports and Customs • Costly Power and Water• Air/sea freight – Inadequate and

expensive route structure

Agriculture increasingly uncompetitive• Preferential access [US, EU]

removed

Public Private

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Challenges for IFC

What products?

What delivery model?- Decentralization and industry specialization- Investment and Advisory solutions- Leverage donor dollars for advisory work and first-loss products

Issue Goal IFC/WBG Response

Markets Regional common market ?Harmonized enabling regulations BEE/ Doing Business reforms

Sponsors Needs hand-holding AS + IS solutions

Fiscal constraints Private sector steps in PPP models, advisory

InfrastructureEnergy Diversification and independence WBG study and geothermalTransporation Free movement of goods & traffic IFC study and PPP

Access to Finance Growth of SMEs

Tourism Sustainable, better branding Linkages

MSME, trade finance, credit bureau, housing

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Strategy and Results

Funded US$1.3* billion in 48 investments, plus Funded US$1.3* billion in 48 investments, plus 14 Technical Assistance in the region14 Technical Assistance in the region

PRIORITY SECTORS:

- Access to Finance- Infrastructure- Healthcare & Education- ITC - Tourism

Focus Areas Results 2000-2008

* IFC’s own account + B-loan + co-funding

Financial Markets 302 23%

General Manufacturing 383 29%

Infrastructure 386 29%

Telecom 200 15%

OGM 56 4%

Health & Education 5

0%

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Results: Reversing a Declining Trend

2 3 37

13

62

5

4

5 1

6

0

2

4

6

8

10

12

14

16

18

20

2003 2004 2005 2006 2007 2008 2009E

# of

pro

ject

s

DR/Haiti

ESC

• In 2009, a doubling of business• More complex projects requiring industry and advisory focus

2003 2004 2005 2006 2007 2008 2009E

141.4 89 72.9 250Commitment

(US$ mm) 115 67.1 164.6

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Recent IFC Business Development Efforts 3 11 4 14 28 2 10 3 2 22 7 7 7

Business Enabling EnvironmentBusiness Edge, SME Toolkit

Credit bureau FM & MSME Banking Trade Housing

Infrastructure: PPP Advisory Investment

Tourism: Investment Linkages

Emerging Sectors: Health & Education Information Technology

Portfolio/mandated Pipeline deals

120 Business Development Trips

Trin

idad

& T

obag

o

Dom

inci

a

Gre

nada

Ant

igua

St. K

itts

St. L

ucia

Jam

aica

DR

Hai

ti

Bah

amas

Guy

ana

Financial Markets & Access to Finance:

Bar

bado

s

Bel

ize

BY SECTOR

BY COUNTRY

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Systemic Efforts

Infrastructure Energy Independence

• World Bank study on alternative energy

(March-June 2009)• Geothermal (current)

A2F Transportation

• Inter-island Ferry (OECS)• Low-cost airline (East Caribbean)

Small businesses• Microfinance, SME• Credit bureau• Direct small investments (< $5.0 mm)

Coordination between WBG, Govt, Donors and Private Sector Important

Sustainable Tourism• Linkages• Agribusiness• Vocational training