Download FINAL REPORT Compete Caribbean OECS Project Private Sector

Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
FINAL REPORT
Compete Caribbean OECS Project
Private Sector Assessment and Donor Matrix Report
for St. Vincent and the Grenadines
Prepared by:
The Special Studies Unit (SSU), Sir Arthur Lewis Institute of Social and Economic Studies
(SALISES), University of the West Indies, Cave Hill Campus, Barbados
August 2013
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
BENCHMARK/COMPARATOR COUNTRIES:
Benchmark countries used in this report include all 15 beneficiary countries of the Compete
Caribbean Program, as listed below, in addition to Malta, Mauritius, the Seychelles, and Palau.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Antigua and Barbuda
The Bahamas
Barbados
Belize
Dominican Republic
Dominica
Grenada
Guyana
Haiti
Jamaica
St. Lucia
St. Kitts and Nevis
St. Vincent and the Grenadines
Surinam
Trinidad and Tobago
PROJECT TEAM
Dr. Judy Whitehead, Dr. Winston Moore, Dr. Jonathan Lashley, Mr. Ryan Straughn, , Mr. Mitch
Hartman, Ms. Carol-Anne Blenman and Ms. Beverley Hinds.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
ACRONYMS AND ABBREVIATIONS
CARICOM
Caribbean Community
CDB
Caribbean Development Bank
CIDA
Canadian International Development Agency
CIDA
Canadian International Development Agency
CROSQ
CARICOM Regional Organisation for Standards and Quality
CSME
Caribbean Community Single Market and Economy
DfID
United Kingdom Department for International Development
ECCU
Eastern Caribbean Currency Union
EU
European Union
FDI
Foreign Direct Investment
GDP
Gross Domestic Product
HDI
Human Development Index
IADB
Inter-American Development Bank
ICT
Information and Communication Technology
IFC
International Financial Corporation
IMF
International Monetary Fund
MFI
Microfinance Institution
NBFI
Non-Bank Financial Institution
OECS
Organisation of Eastern Caribbean States
PRGF
Poverty Reduction and Growth Facility
PSA
Private Sector Assessment
PSD
Private Sector Development
RCA
Revealed Comparative Advantage
RCF
Rapid Credit Facility of the IMF
UN
United Nations
UNDP
United Nations Development Program
USAID
United States Agency for International Development
VAT
Value Added Tax
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Contents
Executive Summary.................................................................................................................................................. ix
1.
2.
Introduction...................................................................................................................................................... 2
1.1.
Background.............................................................................................................................................. 2
1.2.
Methodology........................................................................................................................................... 3
1.3.
Report Structure ..................................................................................................................................... 4
Country Overview ............................................................................................................................................ 5
2.1.
Governance ............................................................................................................................................. 5
2.2.
Environment............................................................................................................................................ 7
3.
St. Vincent and the Grenadines, the OECS and the ECCU............................................................................. 9
4.
Macro Context of Grenada and the OECS .................................................................................................... 12
4.1.
The International Economy .................................................................................................................. 12
4.1.1
Trade ................................................................................................................................................. 14
4.1.2
Foreign Direct Investments ............................................................................................................. 17
4.1.3
Analysis for the International Economy ......................................................................................... 17
4.2.
The Domestic Economy........................................................................................................................ 18
4.2.1
4.3.
5.
Analysis for Domestic Economy ...................................................................................................... 25
The Productive Sector .......................................................................................................................... 25
4.3.1
Industry and Agriculture.................................................................................................................. 25
4.3.2
Services ............................................................................................................................................. 27
4.3.3
Analysis for the Productive Sector .................................................................................................. 28
Characteristics, Issues, Challenges of Private Sector Development in St. Vincent and the Grenadines . 30
5.1.
Goal for Private Sector Development in St. Vincent and the Grenadines ........................................ 30
5.2.
State of the Private Sector ................................................................................................................... 31
5.2.1
Large and Fast Growing Sectors ...................................................................................................... 34
5.2.2
Business Supportive Institutions Structure .................................................................................... 38
5.2.3
Donors and Other International Entities ........................................................................................ 38
5.2.4
Access to Finance ............................................................................................................................. 52
5.2.5
Corporate Taxation .......................................................................................................................... 58
5.2.6
Business Environment...................................................................................................................... 61
5.2.7
Technology and Innovation ............................................................................................................. 64
5.2.8
Trade and FDI Policies ...................................................................................................................... 65
5.2.9
Labour Regulation............................................................................................................................ 69
5.2.10
Infrastructure, Communications and Energy............................................................................. 71
5.2.11
Gender .......................................................................................................................................... 73
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
5.2.12
6.
Ease of Doing Business ................................................................................................................ 74
5.3.
Summary................................................................................................................................................ 80
5.4.
Field Research Findings ........................................................................................................................ 81
5.4.1
Priority Action Areas ........................................................................................................................ 82
5.4.2
Summary.........................................................................................................................................100
Conclusions and Recommendations...........................................................................................................101
6.1.
A Long Term Action Plan for Private Sector Development..............................................................101
6.2.
Summary..............................................................................................................................................103
References .................................................................................................................................................................106
Appendices.................................................................................................................................................................108
Appendix 1: Structure of the OECS..........................................................................................................................109
Appendix 2: List of Key Stakeholders from Interviews and Consultations .........................................................111
Appendix 3: St. Vincent and the Grenadines Governance Framework...............................................................112
Appendix 4: Minimum Wage Levels in St. Vincent and the Grenadines .............................................................113
Appendix 5: Donor Matrix Report for St. Vincent and the Grenadines ..............................................................115
Description of the Donor Community .................................................................................................................117
Description of Local Stakeholders........................................................................................................................117
Public Sector Stakeholders ..............................................................................................................................117
Private Sector Stakeholders.............................................................................................................................117
Description of Information Available for the Analysis of Private Sector Characteristics, Dev elopment
Initiatives and Results ...........................................................................................................................................120
Identification of Opportunities to Increase Efficient Design and Execution of Programs ...............................120
Identification of Opportunities to Address Omitted Priority Problems ............................................................120
Recommendations ................................................................................................................................................120
DMX Annex 1: Analysis of Donor Projects and Programs in St. Vincent and the Grenadines .........................121
TABLES
Table 1: Unemployment Data for Comparator Countries (Various Years)......................................24
Table 2: Top 20 Exports for St. Vincent and the Grenadines for 1995 and 2010 .............................27
Table 3: Contribution to GDP by Sector in St. Vincent and the Grenadines (2012) ..........................31
Table 4: Condensed table showing Type of Enterprises and Labour structure in St. Vincent ............32
Table 5: Proposed Official Typology of Enterprises by Size – St. Vincent and the Grenadines (EC$) ...33
Table 6: Four Sectors Concentration and Share of St. Vincent’s Employment and Output ...............33
Table 7: Main Objectives and Sector Profiles of Donor Projects in St. Vincent and the Grenadines and
the OECS ............................................................................................................................39
Table 8: Business Support Institutions in St. Vincent and the Grenadines .....................................40
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Table 9: Institutional Analysis: Donors and International Organisations .......................................43
Table 10: Credit Unions in the Caribbean (Number and Penetration Ratio) ...................................52
Table 11: Revenue per Trader Permits Issued in St. Vincent and the Grenadines (2007-2008) .........58
Table 12: Technology Use by Manufacturing Firms in Selected Countries (% of firms) ....................65
Table 13: Employed Population by Main Industrial Groups (2008) ...............................................70
Table 14: Infrastructure and Electricity in St. Vincent and the Grenadines (2010) ..........................72
Table 15: Biggest Obstacles to Business in the OECS (Enterprise Survey, 2010) ..............................81
Table 16: Private Sector Growth and Development: SWOT Matrix for St. Vincent and the Grenadines
.........................................................................................................................................84
Table 17: Recommendations and Actions Matrix for St. Vincent and the Grenadines ................... 105
Table 18: Business Support Institutions and Other Relevant Bodies ........................................... 111
Table 19: The Government of St. Vincent and the Grenadines: Cabinet Members and Portfolios ... 112
Table 20: Overview of Key Stakeholders in St. Vincent and the Grenadines ................................ 118
Table 21: Main Objectives and Sector Profiles of Donor Projects in St. Vincent and the Grenadines
and the OECS .................................................................................................................... 122
Table 22: Overview of Main Donor Projects by Objective, Sector and Value................................ 122
Table 23: Main Objectives and Sector Profiles of Donor Projects in the OECS and Member States.. 124
FIGURES
Figure 1: Snapshot of St. Vincent and the Grenadines and Comparator Countries ........................... 6
Figure 2: Governance Effectiveness for St. Vincent and the Grenadines versus Comparators (2010) .. 7
Figure 3: Environmental Performance: CO2 Emissions for St. Vincent and the Grenadines versus
Comparators (2008) .............................................................................................................. 8
Figure 4: Current Account Balance for St. Vincent and the Grenadines (1980-2010) .......................12
Figure 5: External Accounts Analysis for St. Vincent and the Grenadines (1980-2010) ....................13
Figure 6: External Debt and Debt Service for St. Vincent and the Grenadines and the OECS 6 (20002010) .................................................................................................................................13
Figure 7: Real Effective Exchange Rate Index (2005=100) and Current Account Balance (%GDP) for St.
Vincent and the Grenadines (1980-2010) ................................................................................14
Figure 8: Trade Snapshot for St. Vincent and the Grenadines (2010)............................................15
Figure 9: Treemap of Imports, St. Vincent and the Grenadines 2010............................................16
Figure 10: Treemap of Exports, St. Vincent and the Grenadines 2010 ..........................................16
Figure 11: Inward FDI for St. Vincent and the Grenadines and Comparators (2011)........................17
Figure 12: GDP Dynamics for St. Vincent and the Grenadines .....................................................19
Figure 13: GDP Growth in St. Vincent and the Grenadines (1980-2010)........................................19
Figure 14: GDP Decomposition by Expenditure for St. Vincent and the Grenadines (1980-2010) ......20
Figure 15: GDP Decomposition by Industry for St. Vincent and the Grenadines (1980-2010) ...........21
Figure 16: Inflation Data for St. Vincent and the Grenadines (1980-2010).....................................22
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 17: Fiscal Deficit for St. Vincent and the Grenadines (2000-2010) ......................................23
Figure 18: Gross Government Debt for St. Vincent and the Grenadines versus Comparators (20002010) .................................................................................................................................24
Figure 19: Product Space Map (Exports) for St. Vincent and the Grenadines 1995 and 2010............26
Figure 20: Decomposition of Service Exports for St. Vincent and the Grenadines (1980-2010) .........28
Figure 21: Interest Rate Spreads for St. Vincent and the Grenadines (1980-2010) and Comparators
(2010) ................................................................................................................................53
Figure 22: Domestic Financial Variables for St. Vincent and the Grenadines versus Comparators
(2010) ................................................................................................................................53
Figure 23: Doing Business Rankings for St. Vincent and the Grenadines versus Comparators (2012)
for Selected Indicators..........................................................................................................54
Figure 24: Value of Collateral Required for Credit for St. Vincent and the Grenadines and
Comparators (2010) .............................................................................................................55
Figure 25: Firms with Access to Financial Services for St. Vincent and the Grenadines and
Comparators (2010) .............................................................................................................56
Figure 26: Sources of Finance for Investment for St. Vincent and the Grenadines and Comparators
(2010) ................................................................................................................................57
Figure 27: Sources of Finance for Working Capital for St. Vincent and the Grenadines and
Comparators (2010) .............................................................................................................58
Figure 28: Corporate Taxes for St. Vincent and the Grenadines and Comparators (2012) ................59
Figure 29: Tax Rates as a Constraint to Doing Business for Exporters and Non -Exporters (2010) ......60
Figure 30: Major Constraints to Doing Business- Licenses and Permits and Tax Administration (2010)
.........................................................................................................................................60
Figure 31: Business Licensing as a Major Constraint to Doing Business (2010) ...............................61
Figure 32: Corruption as a Major Constraint to Doing Business (2010) .........................................62
Figure 33: Crime, Theft and Disorder as a Major Constraint to Doing Business (2010) ....................63
Figure 34: Practices of Competitors in the Informal Sector as a Major Constraint to Doing Business
(2010) ................................................................................................................................63
Figure 35: Transportation as a Constraint to Doing Business (2010) .............................................64
Figure 36: Market Map Average Tariffs (2009)..........................................................................66
Figure 37: Senior Management Time Spent on Dealing with the Requirements of Government
Regulations- Comparison across Selected Countries (2010) ........................................................67
Figure 38: Major Constraints to Doing Business: Customs and Trade Regulations (2010) ................68
Figure 39: Major Constraints to Doing Business: Time to Clear Imports (days) ...............................68
Figure 40: Labour Market Issues in St. Vincent and the Grenadines and Comparators (2010) ..........70
Figure 41: Availability of Services to Firms for St. Vincent and the Grenadines versus Comparators
(2010) ................................................................................................................................71
Figure 42: Major Constraints to Doing Business: Electricity and Transportation (2010) ...................73
Figure 43: Female Participation in Establishments for St. Vincent and the Grenadines versus
Comparator (2010) ..............................................................................................................74
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 44: Percentage of Firms with Female Top Managers for St. Vincent and the Grenadines versus
Comparators (2010) .............................................................................................................74
Figure 45: Cost and Time to Start a Business: St. Vincent and the Grenadines versus Comparators
(2011) ................................................................................................................................76
Figure 46: Economic Freedom, Comparison for Selected Countries (2012) ....................................80
Figure 47: Electricity Rates in St. Vincent and Selected Caribbean Countries (2010) .......................96
Figure 48: Organisational Chart of the OECS Secretariat .......................................................... 110
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Executive Summary
The private sector assessment (PSA) for St. Vincent and the Grenadines draws on primary data
analysis from interviews with key stakeholders from the domestic private and public sectors as well
as interviews with regional and international agencies. In addition, secondary data was utilised to
describe the state of the country at both the micro and macro levels.
Threats to Private Sector Development in St. Vincent and the Grenadines
The main strengths of the private sector development framework in St. Vincent and the Grenadines
relate mainly to institutions where there is a clear presence of support (CED, Invest SVG, NDF) and
the provision of support to the productive sectors through fiscal policies. It is also commendable
that a public sector strengthening exercise is being undertaken. However, there are several
constraints to private sector development in the country.
Table B: Biggest Obstacles to Business in the OECS (Enterprise Survey, 2010)
Biggest Obstacle
Access to finance
Inadequately educated
workforce
Crime, theft and disorder
Tax rates
Electricity
Political instability
Customs and trade regulations
Practices of the informal
sector
Tax administration
Corruption
Transportation
Courts
Business licensing and permits
Access to land
Labour regulations
ANT
15.3
1.3
DOM
44.0
2.1
GREN
12.8
15.4
SKN
20.9
10.0
SLU
35.0
7.4
SVG
20.6
12.8
7.9
18.2
13.0
6.1
16.1
4.8
3.6
8.6
29.7
0.0
0.9
3.1
10.2
17.6
2.7
12.3
2.1
8.4
13.4
20.0
15.2
0.5
5.2
5.8
5.1
6.0
22.4
0.2
4.0
2.7
11.3
11.0
10.6
10.2
9.9
7.8
2.4
7.7
3.9
0.0
2.7
0.7
0.0
0.0
0.0
3.5
0.0
0.0
0.0
4.4
5.7
1.4
4.1
0.8
0.0
3.9
2.9
1.4
3.5
3.4
0.0
0.0
0.7
0.0
0.0
0.9
10.7
0.0
0.0
0.0
5.6
2.6
1.5
1.0
0.3
0.3
0.0
0.0
From the interviews conducted and additional secondary data gathered during in-country visits, the
main issues identified were mostly in keeping with the results of the background research. The main
critical issues identified were:



Costs and Stringency of conditions for finance
Customs and Trade Procedures
Market Access



Inadequately skilled labour force
Political and Governance Issues which related to ad hoc planning;
A ‘silo’ mindset in the public sector in relation to agencies and departments operating in
their own interest rather than to a specific strategic plan;
Lack of fiscal space and hence a lack of Government investment in public good investments
such as tourism marketing, business support mechanisms and addressing inefficiencies in
the public service;


Cost of energy and electricity;
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013

Lack of product differentiation and limited export market focus makes the country
vulnerable to shifts in the global business cycle.
A Long Term Plan for Private Sector Growth
The analysis identified a number of pertinent issues affecting the development and growth of the
private sector in St. Vincent and the Grenadines. One of the most critical recommendations to
emerge is the need for the implementation of a forum for collaboration between key stakeholders
and representatives of labour, the private sector and Government.

Action 1: Establishment of a Tripartite Committee (government-employer-labour) to
identify the needs of all bodies and guide and oversee private sector development
strategies.
At present, attempts are being made to facilitate these discussions, however, there is no formal
forum available to discuss the issue of private sector development at the national level. Once
established, the Tripartite Committee should seek to also address the following:






Action 2: Rationalisation and streamlining of public sector’s business support
framework through the work of the Tripartite Committee to ensure a revised system
that addresses both the needs of the private sector (access to finance, technical
assistance and data) as well as wider obligations of Government.
Action 3: Development of a National Strategic Plan that mainstreams private sector
development in the country. Through the lobbying efforts of Government, the plans for
the development of the private sector should also be included in and regional strategic
plans at the level of the OECS/ECCU and CARICOM.
Action 4: Reduce the cost of finance through the reduction of transactional and
operational costs in financial institutions through the use of technology and monitoring
of efficiency levels; the reduction of risk and risk-averseness through the establishment
of a credit bureau and a collateral registry; and the introduction of alternative financial
products and greater networking in the financial sector.
Action 5: Increase the capacity of businesses to access finance through the provision of
support (technical assistance and training) for the adoption of accepted business
practices (recordkeeping) and the skills to develop business plans for funding and
strategic planning. These services exist in St. Vincent and the Grenadines and are
provided by Invest SVG and the Centre for Enterprise Development, however, the
utilisation of these services need to be expanded given the results to emerge from the
PSA.
Action 6: Provide incentives for energy conservation and frameworks for the
exploitation of renewable/alternative energy and reduce the cost of fossil fuels.
Incentives and support in this area will act as both a cost-reduction tool as well as an
opportunity for investment and enterprise development in the renewable/alternative
energy sector. Efforts to reduce the cost of fossil fuels would relate to periodic reviews
of the fuel clause tariff structure, a review of the distribution chain and exploration of
the possibility of privatisation of electricity supply.
Action 7: Education and training curriculum reform that addresses the long term
strategic direction of Government as well as the more immediate needs of the private
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
sector. The reforms undertaken should be informed from manpower surveys and
subsequently developed human resource development plans which should seek to
catalyse the utilisation of apprenticeships and on-the-job training. The long term
strategic direction of Government should be constructed on the basis of dialogue with
the private sector.
It should however be noted that in order for these actions to be effectively implemented, that the
private sector will need to show greater willingness to share information and that both the private
and public sectors will need to more effectively exploit technology in relation to data mining and
collation in the public sector, and to improve productivity in the private sector. An overview of the
recommendations and related action plans are shown in Table B.
While all of the Action Points relate to the establishment of a conducive environment for the
development of the private sector and are external to enterprises, that the private sector itself will
need to take a portion of responsibility and seek to adopt a more proactive approach to exploiting
opportunities available in the market. Given the perception that the private sector is not as
proactive as it can be, and as a caution in relation to interventions to spur private sector
development, it is imperative that all key stakeholders, from the international to the domestic level,
are fully aware of the current level of development of the private sector. In St. Vincent and the
Grenadines, and across the region, the private sector is relatively under-developed and limited in its
ability to cope with current neo-liberal developments given a long period of protection through such
mechanisms as preferential trade agreements which have recently been removed. Any
interventions should therefore seek to assist the private sector, with the assistance of the public
sector, to build domestic market opportunities as well as special and differential treatment for
export goods in the short- to medium-term, rather than fully expose it to the rigours of international
competition. Lessons should also be learnt in relation to drawing on the strengths of the region
rather than seeking, as in the past, to attract investment based on low-cost labour which
subsequently led to the attraction of footloose enterprises that relocate to competitors as cost levels
change or economic circumstances deteriorate in relative terms. In this vein, the Caribbean needs to
exploit those resources for which it has an advantage and a brand, suggesting a concentration on
alternative energy (geothermal, solar), specialist agricultural products (such as nutmeg in Grenada)
and agro-processing, eco-tourism, edu-tourism (drawing on human resources in the region), heritage
tourism, health and wellness (both product-specific and related to tourism), and financial services,
among others.
In addition to drawing on the locational advantages that exist in the region, attention should be paid
to the specific recommendations that have consistently emerged from research in the region which
speak to: niche market development; moving up the value chain; development of strategic alliances
and joint ventures for knowledge and technology transfer; and the development of clusters, both
vertical and horizontal. The current VINCYKLUS initiative in promoting clusters provides a basis for
growth in the area of clustering. While activities in these areas are not specifically mentioned in the
Action Plan due to their specificity, they should remain as options during the development of the
strategic plan for private sector development and growth in St. Vincent and the Grenadines.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Table B: Recommendations and Actions Matrix for St. Vincent and the Grenadines
Themes
General
Political
and
Governance
Issues
Critical Issues
Limited dialogue between
stakeholders representing
Government, labour and the
private sector
‘Silo-mindset’ in business
support organizations in the
public sector
Ad hoc development planning
Lack of information sharing by
the private sector
Lack of utilization of
technology.
High Transaction and Operating
Costs
Informational Asymmetries
Alternative Financing Options
Actions
1. Establishment
of
a
Tripartite Committee
2. Rationalisation
and
streamlining of public
sector’s
business
support framework
3. Development
of
a
National Strategic Plan
that
mainstreams
private
sector
development
Details
As noted by Fashoyin (2004) there is a need for:
Members to be independent and representative
Willing to consult and negotiate
Demonstrate mutual trust and respect
Need for communication at the Tripartite Committee level to determine the speci fic external
needs of enterprises in relation to the business environment (finance, technical assistance) while
meeting the wider obligations of Government.
Responsibility of…
Government
to
initiate
Tripartite
Committee
and
address other issues
in conjunction with
Tripartite Committee
4. Reduce the cost of
finance
5. Increase capacity of
business
to
access
finance
Eastern
Caribbean
Central Bank; Business
support organisations
Cost of
Doing
Business
Cost of electricity
Labour
Market
Issues
Trade
Issues
Limited availability and lack of
specialist skills in the labour
market:
Limited product and market
range with a domestic focus.
6. Provide incentives for
energy
conservation
and frameworks for the
exploitation
of
alternative
energy
options and reduce the
cost of fossil fuels.
7. Education and training
curriculum reform.
To address the issues of access to finance, several specific steps can be taken:
Introduction of technological advances ;
Monitoring of efficiency rate of financial institutions to identify areas for improvement ;
Establishment of credit bureaus and collateral registries ;
Introduction of alternative financing options such as equity financing,
Greater competition in the financial sector, particularly the strengthening of domestic institutions;
Provision of technical assistance and training to the private sector in relation to increasing
formality, the adoption of accepted business practices, and the skills to secure funding.
Provision of incentives and support to help reduce energy costs through conservation as well a s
for investing in the sector.
Periodic review of the fuel clause adjustment.
Assess the efficiency of the current distribution chain.
Explore the possibility of privatization of electricity supply.
Access to
Finance
Government
The specific content of any reform should be determined at the Tripartite level and informed from
Government
the strategic plan for private sector development. Agreement will need to be reached on the
immediate needs of the private and the longer terms development vision of Government.
The trade issues highlighted for St. Vincent and the Grenadines cannot be addressed directly by the Action Plan as the expans ion of product range and
markets will require the action of private sector entrepreneurs. The Action Plan seeks to provide a conducive environment in the provision of appropriate
labour and capital for the exploitation of market opportunities.
Issues that will need to be addressed during the execution of the Action Plans in relation to Trade include:

Increasing efficiency in customs
Strengthening of Bureau of Quality and Standards
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Compete Caribbean
Private Sector
Assessment Report for
St. Vincent and the
Grenadines
August 2013
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
1.
Introduction
1.1.
Background
Compete Caribbean is a private sector development program funded by the IDB, D fID and CIDA
which works with Governments and the private sector to promote economic growth and enhance
competitiveness across the Caribbean region. The Private Sector Assessment (PSA) and construction
of Donor Matrices for countries in the region is one element of the overall program.
The overall objectives of the Compete Caribbean program in the OECS include:
a) Building a more robust and sustainable private sector through the elimination of remaining
restrictions to the free flow of goods, services, capital and people within the countries of the
Caribbean Single Market and Economy;
b) Providing opportunities for forging closer private sector linkages across OECS member
countries;
c) Shifting from protection to adjustment support to help disadvantaged countries, regions and
sectors manage the process of intra-regional liberalisation; and
d) Facilitate private sector development within a more open trading environment.
The program is expected to be delivered within three components as follows:
1. Component 1 provides a review and diagnostic of the status of private sector development
in the OECS region. This component focuses on:
a. A review of existing studies and reports on private sector development and
competitiveness for the participating OECS member countries in the last 5 years, as
well as an evaluation of the recent performance of the private sector in each of the
six independent OECS member countries; and
b. The identification and evaluation of obstacles to effective private sector
development;
2. Component 2 focuses on the development of private sector development strategies and
action plans to include the development of a draft private sector development action plan
for each of the six independent OECS member countries, and for the OECS sub-region as a
whole, and the identification of possible opportunities for collaboration by CDB and IDB in
supporting the development of the private sector in the region.
3. Component 3 focuses on consensus building among key stakeholders on future actions
under the recommended private sector development strategy and facilitation of national
and regional workshops to present findings and action plans.
There are two main elements of the PSA project which are a Private Sector Assessment Report
(PSAR) and the construction of a Donor Matrix (DMX). The DMX is to provide an inventory of donor
projects related to private sector development and identify duplication and omissions. The main
aim of the PSAR element of the project is to identify market failures that are affecting the
development of the private sector at a national and at a regional/sub-regional level, and to identify
priority areas for intervention. There are two main elements of the PSA:
First, it compiles and analyzes information from different sources in order to provide a
snapshot of the state of the private sector in the country, and second, it brings the
2
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
information to relevant stakeholders- such as firms in the economy- to establish priorities on
all the identified issues affecting the future growth in the private sector.
The Caribbean Development Bank is the executing agency for the PSAs and DMXs for six of the OECS
countries which include: Antigua and Barbuda, Dominica, Grenada, St. Kitts, St. Lucia and St. Vincent
and the Grenadines.
In 2012, the research team conducted interviews across the OECS with key stakeholders including
government ministries and agencies concerned with private sector development, private sector
associations, civil society and individual business enterprises. These interviews were conducted with
a view to ascertaining the primary constraints to private sector development and potential solutions
to the issues identified.
The following report highlights the main results to emerge from the analysis of primary and
secondary data collected as well as the views expressed in national consultations organised by
SALISES in Grenada and Antigua and Barbuda, and by the Caribbean Growth Forum in Dominica, St.
Kitts and Nevis, St. Lucia and St. Vincent and the Grenadines. The details of the methodology
adopted for the research is shown below.
1.2.
Methodology
The private sector assessment (PSA) draws on primary data analysis from interviews with key
stakeholders from the domestic private and public sector as well as interviews with regional and
international agencies. In addition, secondary data was utilised to describe the state of the country
at both the micro and macro levels. The specific methodology for the PSARs had three (3) core
components:
1. Analysis of secondary data and documentation from the following sources:
a. Enterprise Surveys/Doing Business Surveys
b. Central Government Fiscal Accounts
c. World Development Indicators
d. CARICOM Secretariat/OECS Secretariat
e. Miscellaneous Country Surveys
2. Interviews/Consultations with key stakeholders:
a. International Donor Agencies
b. Regional/Sub-Regional Agencies
c. Country-Specific Agents including business associations, representatives of labour
and relevant public sector bodies. Specific businesses and finance providers were
also included.
3. Identification of Main Thematic Issues affecting PSD and Identifying Priorities from the
results of interviews and national consultations.
The interviews conducted in St. Vincent and the Grenadines included the main business support
organisations and sector associations in both the public and private sector (Ministry of Tourism;
Statistical Department; Invest SVG; St. Vincent Hotel and Tourism Association; the St. Vincent
Chamber of Commerce and Industry; the St. Vincent National Development Bank; and the National
Development Foundation), finance providers and representatives, and private enterprises. A listing
of key stakeholders from interviews and consultations is included in the Appendices.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
In addition to these specific elements of the research, the development of the PSA Reports was
assisted by the information to emanate from consultations organised under the Caribbean Growth
Forum banner.
The Caribbean Growth Forum (CGF) is a joint initiative by the Compete Caribbean Program,
the Inter-American Development Bank, the World Bank, and the Caribbean Development
Bank. It is supported by the Canadian International Development Agency, the United
Kingdom’s Department for International Development, CARICOM Secretariat, and the
University of the West Indies.
The CGF is a facilitative methodology for public-private dialogue around issues central to
private sector development and growth. It brings a non-traditional approach to the greatest
challenge currently faced by the region – creating sustainable and inclusive growth. The
Forum also aims to facilitate an action oriented dialogue around key policy reforms needed
across three thematic areas: Investment Climate, Skills and Productivity and Logistics and
Connectivity.
Many Caribbean territories have a very good starting point with draft or completed national
growth strategies. Therefore, the aim is to identify the priorities within the three pillars of the
CGF that can contribute to these national strategies. In this respect, the CGF’s methodology
has been designed to result in a consensual, concrete action plan with specific responsibilities
and timelines, and it has built in transparency and accountability mechanisms to make sure
that, over time, results are delivered.
The CGF is part of the donor agencies’ commitment to support the Caribbean and develop
and implement inclusive growth policies that generate jobs and opportunities for all. 1
The CGF’s consultations and subsequent working groups provided useful information to add to, and
corroborate, the findings of the current PSA.
1.3.
Report Structure
The rest of the Private Sector Assessment is structured as follows. Initially, Section 2 provides a
general overview of the country. This is followed by a description of its relationship with the OECS
and the ECCU in Section 3. Section 4 then presents the macroeconomic context of the country in
relation to domestic economic variables and the productive sectors, and the country’s position in the
international economy with respect to trade and foreign direct investment.
Section 5, the main section of the report, outlines the main characteristics, issues and challenges of
the private sector including the support for private sector development, the state of the private
sector, a review of primary and secondary data on the private sector and a summary of the main
issues affecting its development. This is followed by the development of an action plan for private
sector development in the country. Section 6 presents the main conclusions of the PSA and provides
some general recommendations.
The Appendices to the report include relevant details to complement the main report as well as the
Donor Matrix Report for the country. The Donor Matrix Report describes the relevant members of
the donor community, local stakeholders, information sources, opportunities for enhancing the
design and execution of programs and opportunities to address priority gaps.
1
http://caribgrowth.competecaribbean.org/about-the-cgf
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
2.
Country Overview
St. Vincent and the Grenadines is an upper-middle income small microstate within the Eastern
Caribbean archipelago. The island is just 389 km 2 , or about one tenth (1/10) the size of Rhode
Island. The population is estimated at 110,000 persons, with a median age of 31 years and
population growth rate of about -0.313% per annum. St. Vincent and the Grenadines Human
Development Index (HDI) score in 2012 was 0.733; 83 rd out of 187 countries. The country’s score
was below that for the Latin America and Caribbean region, largely reflective of a relatively lower life
expectancy (72 years). St. Vincent and the Grenadines is a member of the Eastern Caribbean
Currency Union (ECCU), which is fixed to the US dollar at $1 (Eastern Caribbean Dollar) to $0.37 (US
Dollars).
Growth in St. Vincent and the Grenadines was quite volatile over this period. The downturn in the
global economy as well as several natural disasters, have derailed the economy on many occasions.
Between 1994 and 2010, the island has been affected by 5 tropical storms and 1 category 2
hurricane (Tomas, 2010) as well as a drought in 2010. As a result, following average growth of 5%
between 2002 and 2007, the economy contracted by 2.4% in 2009 and a further 1.8% in 2010. The
contraction in the economy largely reflected falling tourist arrivals as well as FDI-related
construction, which has had negative spillover effects on the rest of the economy. An overview of
the main indicators for the economy is shown in Figure 1.
2.1.
Governance
Freedom House (www.freedomhouse.org) ranks the country as ‘Free’ with a Freedom Rating of 1,
where a rating of 1 indicates the highest degree of freedom and 7 the lowest level of freedom. The
think tank notes that the last parliamentary elections were considered free and fair, despite threats
of legal challenges to the result of the 2010 General Elections. In addition, the right to free
expression and the free exercise of religious beliefs are generally respected. Workers have the right
to strike and organise and collectively bargain, the independence of the Judiciary is respected and
women are represented in Government. The Worldwide Governance Indicators Project of the World
Bank and the Brookings Institution suggests that the country performs moderately in the area of
‘Government Effectiveness’.
The indicator captures the perceptions of the quality and
independence of public services and civil service, the quality of policy formulation and
implementation and the credibility of the government’s commitment to these polities. In 2010, the
score for ‘Government Effectiveness’ in St. Vincent and the Grenadines was above the70 th percentile
for all countries evaluated and above the median for the group of comparator countries.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 1: Snapshot of St. Vincent and the Grenadines and Comparator Countries
Services Value Added (% of GDP)
Foreign Direct Investment, net inflows (%
of GDP)
Net FDI in the country has been relatively erratic,
but on a growth trend up to 2008 before a fall to
its present level of about 15% of GDP. Despite
the limited growth since 2009, as a share of GDP,
FDI is somewhat higher that comparator
countries.
30
20
10
0
Guyana
Jamaica
Surinam
Trinidad…
Bahamas,…
Dominica
Antigua and…
Grenada
Seychelles
Malta
St. Kitts and…
St. Lucia
St. Vincent…
0
Belize
5000
Dominican…
10000
Mauritus
15000
6
5
4
3
2
1
0
Government Debt as a percentage of GDP is
below the regional average and has not exceeded
70%, unlike other countries in the region
General Government Gross Debt (%
of GDP)
20000
However GDP growth over the last 30 years has
been marginally better than that for other
comparator countries
100
80
60
40
20
0
-10
Services are an extremely important part of the
St. Vincent and the Grenadines economy at
approximately 74% of GDP in 2011, some 6%
above the regional average
80
75
70
65
60
20002001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Travel services are the main component of
service exports . However, their share of service
exports has fallen marginally below the regional
average since 2010
Travel Services (% of service exports,
BOP)
GDP per capita, PPP (constant 2005
international $)
GDP per capita in St. Vincent and the Grenadines
has been consistently below the regional and
extra-regional average
Average GDP Growth 1980-2010 (%)
Small Caribbean States, St. Vincent and the Grenadines and Extra-Regional Comparators
38%
16%
9%
6%
10%
Edible Vegetables and
certain roots and tubers
Cereals
Beverages, Spirits and
Vinegar
Other
Interest Rate Spread (%)
21%
70
60
50
40
30
2005
2006
2007
2008
2009
2010
2011
One of the main issues for businesses in St.
Vincent and the Grenadines and the region was
access to finance, and like the rest of the region,
interest rate spreads are relatively high
St. Vincent and the Grenadines' main export
partners are located within CARICOM, while the
main export commodities (2010) were...
Mill ing Industry Products,
Malt etc.
Edible Frui t and Nuts etc.
80
10
8
6
4
2
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Small Caribbean States include: Antigua and Barbuda; The Bahamas; Barbados; Belize; Dominica; Grenada; Guyana; Jamaica;
St. Lucia; St. Kitts and Nevis; St. Vincent and the Grenadines; Surinam; Trinidad and To bago. Extra-regional comparators
include: Malta, Mauritius, the Seychelles, and Palau.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Percentile Rank (0-100)
Figure 2: Governance Effectiveness for St. Vincent and the Grenadines versus Comparators (2010)
100
90
80
70
60
50
40
30
20
10
0
Source: Woldwide Governance Indicators
In relation to the issue of gender, females are represented in the House of Assembly and the Senate
(3 from 21), but not to any significant degree. However, the issue of gender is given Ministerial
prominence and addressed with the establishment of a Gender Affairs section within the Ministry of
National Mobilisation, Social Development, Family, Gender Affairs, Persons with Disabilities and
Youth. The goal of the Gender Affairs section is to ‘Support the integration and advancement of a
gender perspective into national development so as to attain equality and equity’.
2.2.
Environment
St. Vincent and the Grenadines has a number of hazards that pose a threat to both the environment
and economic viability. The island is inherently vulnerable to hurricanes, volcanoes and other
climate change hazards and 70-90 % of the sloped terrain also poses risks of land slippage. The
Government, in 2006, passed a national emergency act, which identifies tasks and functions of
crucial stakeholders in an Emergency Committee. Examples of these tasks are:

Designation of Vulnerable Areas


Power to declare Disaster Alert
Power to close roads
The Government also passed an act to monitor and control precursor chemicals (defined as any
substance which can be used in any of the chemical processes involved in the production,
manufacture or preparation of narcotic drugs, psychotropic substances or substances having a
similar effect; or incorporates its molecular structure into the final product making it essential for
those processes).
Figure 3 shows CO2 emissions were second lowest versus other comparator countries.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 3: Environmental Performance: CO2 Emissions for St. Vincent and the Grenadines versus Comparators
(2008)
Metric Tons per Capita
12
10
8
6
4
2
0
Source: World Development Indicators
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
3.
St. Vincent and the Grenadines, the OECS and the ECCU
St. Vincent and the Grenadines is a member of the Organisation of Eastern Caribbean States (OECS)
and the Eastern Caribbean Currency Union (ECCU), the common currency framework for the OECS
countries; this is with the exception of the British Virgin Islands which does not use the Eastern
Caribbean Dollar. The Eastern Caribbean Dollar is issued by the Eastern Caribbean Central Bank
(ECCB), the monetary authority for the OECS. St. Vincent and the Grenadines represented 12% of
nominal GDP for the OECS, and ranked 7th in GDP per capita, in 2010.
The OECS was established in 1981 with the signing of the Treaty of Basseterre, named after the
venue of the signing of the treaty, the capital of St. Kitts and Nevis. The motivation for the formation
of the body was to provide a formal structure for cooperation to deal with development challenges
posed in the post-independence period. The OECS currently has nine members: Antigua and
Barbuda; Commonwealth of Dominica; Grenada; Montserrat; St. Kitts and Nevis; St. Lucia; St.
Vincent and the Grenadines; and Anguilla and the British Virgin Islands as associate members.
In June 2010, a Revised Treaty was signed, establishing the OECS Economic Union, a single economic
space for the free movement of goods, people and capital and a framework for the harmonization of
monetary and fiscal policies. The Revised Treaty allows for the adoption of ‘…a common approach to
trade, health, education and environment, as well as to the development of such critical sectors as
agriculture, tourism and energy’ 2 . The organs of the OECS are shown in Appendix 1. Of particular
relevance to the development of the private sector in the region are the units under the Economic
Affairs Division, specifically the Export Development Unit (EDU) and the Trade Policy Unit (TPU). The
EDU is responsible for export development in manufacturing and non-traditional agriculture and the
TPU provides assistance in formulation and implementation of trade policies and in the negotiation
of trade arrangements. The EDU is currently working directly with officers in business development
organisations across the region to facilitate interaction between them and actual enterprises in the
region. Such proactive outreach programs are integral to enabling these development agencies in
serving the needs of the private sector and act to allay the concerns expressed by international
agencies during the PSA that the organs of the OECS were not as proactive as they could be.
Although the Revised Treaty of 2010 spoke to fiscal coordination and free movement of persons,
these have not come to full fruition, while movement of capital has not obtained any significant
scale economies at the regional level.
In relation to fiscal coordination, Schipke, Cebotari and Thacker (2013:5) 3 note:
‘…faced with very high public debt, the region needs to put in place a mechanism to enforce
fiscal discipline because the success of the common currency depends on simultaneously
satisfying eight national budget constraints. As the experiences from the European Union
demonstrate, cross-border spillover- especially via the financial sector- from the weakest
member could undermine confidence and trigger a regionwide crisis.’
2
http://www.oecs.org/about-the-oecs/who-we-are/about-oecs
3
Schipke, A., Cebotari, A. and Thacker, N. (eds.) (2013). The Eastern Caribbean Economic and Currency Union:
Macroeconomics and Financial Systems. IMF: Washington D.C..
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
The undermining of confidence in these economies would indeed create a crisis, especially in
relation to these economies’ reliance on foreign investment and tourism.
In addition, the free movement of goods, labour and capital are the foundation of unions of this type
to enable, in the long term, the realization of the benefits of integration, namely benefits of scale
economies, rationalization of public services, and greater bargaining ability at international forums.
However, given that private sector enterprises in the region indicate inadequately trained labour as
a major constraint, it is questionable whether free movement of labour within the sub-region will
pay any dividends to the receiving country, or the union as a whole, given that the economies are
not structured in any significantly different ways, and therefore their labour force is likely to be
comprised of the same types of skills and abilities.
A similar situation to what exists for labour could be said to exist in relation to finance. While
Schipke, Cebotari and Thacker (2013) note that indicators at a macro level indicate that the financial
sector in the OECS is well developed, and on par with Latin America and the rest of the Caribbean,
Enterprise Surveys ‘tell a different story’(p.15). Enterprise Surveys and Doing Business indicators
across the region show that a significant amount of firms in the OECS view lack of access to finance
as a major obstacle to their business, while interviews conducted during the PSA for the region
indicate that this is due to the cost of finance, collateral requirements and application procedures,
issues ground in the lack of credit information as well as the capacity of enterprise owners in
supplying information to creditors. Given that this issue is pervasive across the OECS, while
theoretically regional integration should provide scale economies in financial provision, in reality the
movement of capital within the union would simply replicate the problems experienced at the
domestic level.
While these issues demonstrate that perhaps regional integration in the OECS/ECCU does not
facilitate private sector development to the degree it should, their actual existence provides for a
perception of stability at both the political and financial level, as well as pose the opportunity for
growth in the future; that is if issues related to skills in the labour force, fiscal coordination and scale
economies in financial provision can be addressed, if the private sector itself seeks to proactively
exploit available opportunities in the wider region.
However, these issues cannot be taken without due consideration to the external effect of the global
financial crisis. In seeking to address the downturn, the OECS/ECCU has implemented an eight point
program which includes the following elements and main components:
1. Suitably adapted Financial programmes for each country:
a. Aim: To identify the financing gaps of government and recommendations to close
gaps and address structural issues in relation to the Balance of Payments (external
sector), National Accounts (real sector), Fiscal Accounts (public sector) and
Monetary Accounts (financial sector).
2. Fiscal reform programmes:
a. Aim: To develop efficient revenue and expenditure systems, as well address the
management of governments’ cash flows, debt servicing and wages.
3. Debt management programmes:
a. Aim: To facilitate the adoption of a structured approach to debt management to
achieve optimal debt profiles and enhance sustainability. The debt target is 60% of
GDP by 2020.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
4. Public sector investment programmes (PSIP):
a. Aim: To provide short- to medium-term fiscal stimuli for the ECCU in relation to
‘Quick disbursing projects which will put people to work and stimulate economic
activity to restore growth; and …provision of critical infrastructure for medium and
long term development’ 4 .
5. Social safety net programmes:
a. Aim: To review the social safety nets in the ECCU countries and the development of
measures to achieve sustainable poverty reduction.
6. Financial safety net programmes:
a. Aim: Restructuring and recapitalisation of the banking and insurance sectors and
regulatory and supervisory strengthening.
7. Amalgamation of the indigenous commercial banks:
a. Aim: To create economies of scale and scope, operational efficiency in financial
services in the ECCU.
8. Rationalisation, development and regulation of the insurance sector:
a. Aim: To reduce the number of insurance companies in the region and strengthen the
regulatory framework.
A brief review of the eight point plan reveals limited direct relevance to the development of the
private sector with the exception of plans for public sector investment programs (PSIP) and the
amalgamation of banks which, it would be hoped, would provide easier access to finance. While the
points in the plan seek to provide an overall conducive environment for business in the long term,
there appears to be limited attention to the immediate needs of the private sector at the regional
and domestic level. This is not to say that the needs of the private sector are not being addressed,
simply that the focus of policy at the regional level is focussed more on the macroeconomic
environment rather than increasing productivity and private sector development.
4
http://www.eccb-centralbank.org/about/ann26_eight.asp
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
4.
Macro Context of Grenada and the OECS
4.1.
The International Economy
Since 2001, St. Vincent and the Grenadines’ external current account deficit has further
deteriorated. In 2001 the external current account balance was estimated at -6% of GDP falling to 16% of GDP in 2003 and to -33% of GDP in 2008. There was some improvement in the current
account balance in 2009 and 2010, but was still at unsustainable levels (see Figure 4). The
deterioration in the island’s external current account balance largely reflected falling exports of
traditional export commodities, rising food and petroleum prices as well as a contraction in earnings
from tourism. The net services balance in 2010 was EC$197 million compared to EC$263 million in
2006. The merchandise trade balance also contracted by over EC$100 million due to declining
exports of traditional export commodities (primarily bananas).
50
10
5
0
-5
-10
-15
-20
-25
-30
-35
Millions US$
0
-50
-100
-150
-200
-250
1980
1985
1990
Balance (US$M)
1995
2000
2005
% of GDP
Figure 4: Current Account Balance for St. Vincent and the Grenadines (1980-2010)
2010
% of GDP
Source: World Development Indicators
The deficit on the external current account has in recent years been financed by rising FDI inflows.
Prior to 1994, FDI inflows were less than US$15 per year. Since then, however, FDI inflows have
grown quite rapidly reaching US$89 million in 1998 and US$160 in 2008. FDI inflows in 2009 and
2010 declined somewhat to US$100 million. Most of the remainder of the deficit tends to be
financed via aid flows as well as a small amount of remittance flows. The external indebtedness of
the island was fairly steady for much of the period at around 50 per cent of GDP and about 10% of
exports of goods and services (see Figure 6).
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 5: External Accounts Analysis for St. Vincent and the Grenadines (1980-2010)
300
Millions US$
200
100
0
-100
-23-18-22-20-18-13-21-17-14-33-28-38-33-42 -37-37
-35-43-30
-58
-67
-68 -88
-84-100
-113 -126
-188 -193
-211
-237
-200
-300
1980
1985
1990
1995
Remittances
Net Financing
Balance of G&S Deficit + Reserves Accum.
2000
2005
2010
FDI
ODA
Source: World Development Indicators
Figure 6: External Debt and Debt Service for St. Vincent and the Grenadines and the OECS 6 (2000-2010)
80
%
60
40
20
0
2000
2005
St. Vincent and the Grenadines Debt Service
OECS 6 Average Debt Service
St. Vincent and the Grenadines External Debt (% GDP)
2010
Source: IMF Article IV Consultations (Various Years)
Note: Debt Service measured as % of Goods and Services Exports
In small open economies, the real effective exchange rate is not a good proxy for external
competitiveness. These economies tend to be very open to the rest of the world, given the lack of
natural resources and limited self-sufficiency in food production. As a result, domestic prices tend to
be largely driven by external factors beyond the control of the domestic authorities. In addition, as
these economies tend to largely focus on the supply of services to other economies (e.g. tourism and
international financial services), which are not very dependent on price, but on quality, the real
effective exchange rate is not a good proxy for competitiveness of the island to provide these
services. The limited utility of the real effective exchange rate to explain competitiveness changes is
shown by the lack of correlation between the index and the external current account balance (see
Figure 7). Essentially, as the exchange rate is fixed, domestic prices are largely driven by external
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
prices, not domestic market conditions. One would therefore not expect any relationship between
the RER and the current account balance in fixed exchange regimes such as in the OECS.
140
10
120
5
0
100
-5
80
-10
60
-15
%GDP
Index (2005=100)
Figure 7: Real Effective Exchange Rate Index (2005=100) and Current Account Balance (%GDP) for St. Vincent
and the Grenadines (1980-2010)
-20
40
-25
20
-30
0
-35
1980
1985
1990
Exchange Rate Index
1995
Year
2000
2005
2010
Current Account Balance (%GDP)
Source: World Development Indicators
4.1.1
Trade
Figure 8 provides a snapshot of the trade patterns for St. Vincent and the Grenadines. More than
half of all imports are for energy related imports. Fluctuations in international oil prices therefore
have a significant impact on the overall external current account for the island. Given the lack of a
large manufacturing base, most of the machinery and equipment required for the production of
goods and services are imported from abroad (Figure 9). The US is the largest trading partner,
accounting for 33% of all imported goods. Most of these items are non-durable and durable
consumer items. Trinidad and Tobago and the United Kingdom also show up as a major sources of
imports.
On the goods exports side, the island’s main commodity export remains agricultural commodities,
with alcoholic beverages also appearing in the top 5 export categories (Figure 10). More than one
third of these exports are for the St. Lucian market, with most of the remainder going to Trinidad
and Tobago, Barbados and the UK.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 8: Trade Snapshot for St. Vincent and the Grenadines (2010)
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 9: Treemap of Imports5, St. Vincent and the Grenadines 2010
Source: The Observatory of Economic Complexity
Figure 10: Treemap of Exports, St. Vincent and the Grenadines 2010
Source: The Observatory of Economic Complexity
5
A treemap of imports/exports show various products’ share of total imports/total expor ts. The product
classification is based on the Harmonised Commodity Description and Coding System (HS) at the 4 -digit level.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
4.1.2
Foreign Direct Investments
FDI in St. Vincent and the Grenadines is largely associated with tourism and commodity exports. In
2011, FDI was 19% of GDP, the third largest ratio among the group of comparator countries. St.
Vincent and the Grenadines face a number of challenges in regards to attracting FDI, many of which
are outside of the control of policymakers. Its small market size limits the amount of funds flowing
into the island for market-seeking opportunities. The size of the of the economy and lack of natural
resources, also results in higher input costs and limited opportunities for natural resource seeking
FDI. Given the profile of the island, it is likely that most FDI would be of the efficiency-seeking
variety (e.g. international financial services). This would utilise the surplus labour but would also
require some investment in the human resource capabilities of the island.
Figure 11: Inward FDI for St. Vincent and the Grenadines and Comparators (2011)
30.0
25.0
20.0
15.0
% GDP
10.0
5.0
0.0
-5.0
-10.0
-15.0
-20.0
Source: UNCTAD
The macroeconomic environment is quite stable, but there are some social and political
uncertainties that might impact on potential FDI flows. In relation to the macroeconomic
environment, inflation is relatively low, there are no restrictions on capital flows and limited
exchange rate uncertainty. There are also relatively few regulatory hurdles for potential investors;
only electricity, telecommunications and water require government licences, while financial
institutions must obtain permission from the International Financial Services Authority.
Invest St. Vincent and the Grenadines has been playing an important role in relation to investment
promotion on the island. The institution offers investment and trade information, investment
incentives, investment facilitation, industrial facilities and policy advice. Key sectors targeted include
manufacturing, tourism, international financial services, information and communication
technologies, the creative industries as well as agriculture and agro-processing.
4.1.3
Analysis for the International Economy
Given the openness of the St. Vincent and the Grenadines economy, international economic
developments have a significant impact on the domestic economy. There are three key potential
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
external threats to future developments: (1) growth in more developed economies; (2) commodity
prices; and (3) FDI flows. Given the small size of the domestic market, most growth opportunities in
small states are related to the international economy. Future prospects for tourism, for example,
are largely driven by economic developments in key source markets. If lack of growth in these
economies is protracted, the already weak tourism industry could be further affected. Remittance
flows, which are also an important component of the financing mix for the island, are also intimately
associated with economic developments in the above-mentioned larger economies.
Commodity prices have a significant impact on not only domestic prices but also external current
account sustainability. More than one third of the total value of imports in St. Vincent and the
Grenadines, for example, are for imports of petroleum-related products. Fluctuations in
international oil prices can therefore affect the success of any economic adjustment programme.
Commodity prices also impact on the demand for travel to the island and can also increase the price
of all imports as shipping costs rise.
The relatively large current account deficit that St. Vincent and the Grenadines has reported in
recent years has largely been financed by FDI inflows. Should these flows continue to decline, the
island will need to accumulate an even larger amounts of external debt, which is already just below
40% of GDP. FDI inflows also support growth in the construction industry. Any rebound in growth of
this industry is therefore dependent on a rebound in FDI inflows.
4.2.
The Domestic Economy
The size of the St. Vincent and the Grenadines economy has grown quite rapidly between 1980 and
2010. In 2010, real GDP was estimated at US$1.1 billion, over three times the size of the economy in
1980. On a per capita basis, GDP for the island was still, however, below that for most comparator
countries (US$11,077): just 8 countries (Dominican Republic, St. Lucia, Jamaica, Suriname, Belize,
Grenada, Guyana and Haiti) out of the 18 comparator countries considered had a lower level of per
capita GDP.
Growth in St. Vincent and the Grenadines was quite volatile over this period. The downturn in the
global economy, as well as several natural disasters, has derailed the economy on many occasions.
Between 1994 and 2010, the island has been affected by five tropical storms and one category 2
hurricane (Tomas, 2010), as well as a drought in 2010. As a result, following average growth of 5%
between 2002 and 2007, the economy contracted by 2.4% in 2009 and a further 1.8% in 2010. The
contraction in the economy largely reflected falling tourist arrivals as well as FDI -related
construction, which has had negative spillover effects on the rest of the economy, especially in
relation to employment.
18
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 12: GDP Dynamics for St. Vincent and the Grenadines
GDP Per Capita 2010, PPP (current
international $)
12000
1000
10000
800
8000
600
6000
400
4000
200
2000
Constant International $ mil
1200
0
Constant International $
GDP Dynamics 1980-2010
0
1980
1985
1990
1995
2000
2005
Bahamas, The
Malta
Trinidad and Tobago
Seychelles
Antigua and Barbuda
Barbados
St. Kitts and Nevis
Palau
Mauritius
Dominica
St. Vincent and the Grenadines
St. Lucia
Grenada
Dominican Republic
Jamaica
Suriname
Belize
Guyana
Haiti
2010
0
10000
20000
30000
current international $
GDP, PPP (constant international $)
GDP per capita, PPP (constant international $)
Source: World Development Indicators
In order to offset the negative effects of these shocks, the island made a request to the IMF for
access to the Rapid Credit Facility (RCF) to the tune of US$3.26 million. While the facility does not
have programme-based conditionality, countries are expected to put policies in place address the
balance of payments problem, as well as support macroeconomic stability and poverty reduction.
Figure 13: GDP Growth in St. Vincent and the Grenadines (1980-2010)
GDP Growth (Annual %) 1980-2010
Average GDP Growth 1980-2010
16
6.0
14
5.0
12
10
4.0
6
%
%
8
3.0
4
2.0
2
0
1.0
Surinam
Trinidad and…
St. Lucia
St. Vincent and…
Seychelles
Malta
St. Kitts and Nevis
Average for Comparators
Mauritus
St. Vincent and the Grenadines
2010
Guyana
2005
Jamaica
2000
Grenada
1995
Dominican…
1990
Belize
1985
Dominica
0.0
1980
Antigua and…
-4
Bahamas, The
-2
Source: World Development Indicators
Note: GDP Growth (Annual %) based on PPP (constant prices, international $)
19
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
The success of these stabilisation plans will hinge on the ability of the authorities to moderate the
growth in consumption. Expenditure on GDP is largely driven by trends in household consumption.
For most of the period the share of consumption in GDP has fluctuated around 90 per cent of GDP.
In recent years, however, the share of this category has fallen: in 2010 household consumption was
estimated at 79% due to falling household incomes. The islands net exports (or trade balance) has
also deteriorated significantly. In 2007, 2008 and 2009, the net exports were estimated at almost 30% of GDP. There was some improvement in the current account balance in 2010, but the deficit
still remained above 13% of GDP. Government expenditure and gross capital formation have both
increased in recent years as part of government efforts to stimulate the economy. Since 2007,
government expenditure has been about 2 percentage points higher when compared to the 20012006 period, while gross capital formation in 2010 was more than 11 percentage points higher than
in 2009.
Figure 14: GDP Decomposition by Expenditure for St. Vincent and the Grenadines (1980 -2010)
200
150
% of GDP
100
50
0
-50
-100
1980
1985
1990
1995
2000
Household Consumption
Government Expenditure
Gross Capital Formation
Net Exports
2005
2010
Source: UN National Accounts Database
Traditional, the St. Vincent and the Grenadines economy has been dependent on the export of
commodities (primarily bananas), as well as tourism. With the loss of preferential markets in
Europe, however, the banana industry on the island has declined significantly while Hurricane Tomas
(2010) and the Black Sigatoka disease have devastated most of the remaining banana crops. As a
result, the share of agriculture in GDP has gone from almost 21% of GDP in 1990 to just 6% by 2010,
while GDP has fallen and other sectors have failed to fill the gap. As a result of the decline of
agriculture, the services sector has become more important: tourism, wholesale and retail trade,
transport storage and communications, construction and real estate, renting & business activities;
these four industries together account for more than 50% of GDP. St. Vincent and the Grenadines
receives over 200,000 tourists every year, half of these were due to cruise ship passengers (110,954)
and most of the remainder was made up of long stay passenger arrivals (72,645) as well as yacht
passengers (43,115). More than 33% of long stay tourist arrivals came from the Caribbean, followed
by the USA (30%) and the UK (16%). Tourism activity has stimulated economic activity in most of the
20
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
other service industries such as construction, wholesale and retail trade and transportation.
Services share in GDP has gone from 60% in 1993 to 75% by 2010.
Figure 15: GDP Decomposition by Industry for St. Vincent and the Grenadines (1980 -2010)
100%
90%
80%
% of GDP
70%
60%
50%
40%
30%
20%
10%
0%
1980
1985
1990
Agriculture
1995
Industry
2000
2005
2010
Services
Source: UN National Accounts Database
Inflation in St. Vincent and the Grenadines tends to be relatively low. Since 1980, the average
annual rate of inflation was 2.9% compared to 8.5% in a group of its peers (see Figure 16). Between
2005 and 2008, prices in St. Vincent and the Grenadines were significantly above the historical
average, primarily due to higher prices for food, beverages and housing, as well as fuel and light.
While some of the increase can be attributed to higher international commodity prices, the increase
in prices can also be attributed to the implementation of the VAT in 2007. Since 2009, however, the
rate of price increases has been subdued: in 2009 inflation was 0.4% while in 2010 it was just 0.8%.
The slowdown was largely due to falling housing prices and subdued growth in prices of good as well
as transportation and communications.
21
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 16: Inflation Data for St. Vincent and the Grenadines (1980-2010)
Inflation Dynamics 1980-2010
Comparative Inflation (2010)
14
20
18
12
16
14
10
12
8
%
10
8
6
6
4
4
2
2
0
1980 1985 1990 1995 2000 2005 2010
St. Vincent and the…
0
-2
-4
Source: World Development Indicators
Since 2002, Government’s fiscal deficit has been widening. Deterioration largely reflected significant
growth in both current as well as capital expenditure. Between 2006 and 2010, wages and salaries
rose by almost 30%, while transfers and subsidies more than doubled over the same period. As a
result, government’s current account balance – current revenue less current expenditure – went
from a surplus of EC$58 million in 2008 to a deficit of almost EC$9 million in 2010. As a result,
government’s fiscal balance (excluding grants) was almost 6% of GDP in 2010.
With the introduction of the VAT in 2007, government revenue yields rose from 24% of GDP in 2006
to as much as 30% of GDP in 2009, and 27% in 2010. Since 2009, however, revenues have been
relatively flat. With incomes falling, taxes on income and profits were virtually unchanged between
2009 and 2010, while VAT on international trade and domestic transactions both fell by around
EC$10 million.
22
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 17: Fiscal Deficit for St. Vincent and the Grenadines (2000-2010)
600.00
500.00
EC$ Millions
400.00
300.00
200.00
100.00
-100.00
-200.00
2000
Current Revenue
2005
Current Expenditure
Capital Expenditure
2010
Deficit
Fiscal Current Account Balance
Source: Central Government Fiscal Accounts
As a result of the deterioration in Government’s fiscal position, gross government debt has been
rising since 2007 and is now 67% of GDP. Most of this debt is denominated in foreign currency:
external debt in 2010 was 42% of GDP (US$222 million6 ) compared to 30% of GDP in 2008 (US$167
million). External public sector debt service has also been rising quite rapidly and is now estimated
at 17% of GDP. Public sector debt is expected to rise even further in the future due to planned
International Airport project, however, debt ratios should be contained after the project is
completed.
6
Measured in constant 2000 US$
23
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 18: Gross Government Debt for St. Vincent and the Grenadines versus Comparators (2000-2010)
90
80
70
% GDP
60
50
40
30
20
10
0
2000
2005
Year
Gross Debt (%of GDP)
2010
Average for Comparators
Source: IMF WEO Database
Like most of the OECS, obtaining information on labour market developments in St. Vincent and the
Grenadines is quite difficult and often dated. Nevertheless, it is estimated that the unemployment
rate in 2008 was 19%, with about 17% of the labour force being unemployed for 12 or more months.
As a means of comparison, the table below demonstrates that the unemployment rate in St. Vincent
and the Grenadines is higher than for comparator countries, with the exception of Guyana, with a
higher burden on women and the youth.
Table 1: Unemployment Data for Comparator Countries (Various Years)
Country Name
Data
Year
Total
Unemployment (%)
13.7
Female
Unemployment
(%)
13.7
Male
Unemployment
(%)
13.6
Youth
Unemployment
(%)
na
Bahamas, The
2011
Barbados
2011
11.2
12.5
9.8
na
Belize
2007
8.5
13.0
5.9
na
Dominican Republic
2010
12.4
16.4
9.34
na
Guyana
2011
21.0
25.74
17.24
46.0
Jamaica
2011
12.7
17.2
9.6
30.1
St. Lucia
2007
14.0
18.5
10.0
na
Trinidad and
Tobago
Malta
2008
4.6
6.2
3.5
10.5
2011
6.4
7.0
6.1
13.9
Mauritius
2011
7.9
12.3
5.2
21.7
Source: World Development Indicators
The majority of persons are employed in services/sales or elementary occupations. This largely
reflects the lack of skilled persons in the labour force. In 2008 more than 50% of labour force
participants had no formal qualification and only 24% had secondary school certification.
24
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
4.2.1
Analysis for Domestic Economy
The slowdown in world economic growth has had a negative effect on macroeconomic
fundamentals in St. Vincent and the Grenadines. Key industries, such as construction and wholesale
and retail trade as well as tourism, have reported double-digit rates of decline, resulting in a
significant deterioration in the employment profile for the island. Based on relatively poor
employment statistics, it is estimated that 1 in every 5 Vincentians was unemployed, with the
statistics for the youth and females expected to be somewhat higher.
As a result of the deterioration in economic conditions, gross government debt has begun to expand
again after falling during the early 2000s. The main policy challenge in the short- to medium-run will
therefore be the implementation of a credible fiscal strategy that does not impede recovery
prospects. The process of fiscal consolidation has already begun, with the implementation of the
expenditure reducing measures and various other initiatives aimed at enhancing the ease of doing
business on the island. Should growth not recover in the short- to medium-term, however,
Government debt could rise to unsustainable levels.
4.3.
The Productive Sector
St. Vincent and the Grenadines has traditionally depended on agriculture and tourism to spur growth
and development on the island. The island has been trying to expand its offering of international
financial services. At present the sector comprises International Business Companies, International
Trusts, International Banks, International Insurance Companies and Mutual Funds. Given the
traditional agricultural base on the island, there is also potential for agro-businesses in the area of
coconut processing, fruit processing, poultry production, cassava processing, dasheen and other root
crops as well as arrowroot processing.
4.3.1 Industry and Agriculture
St. Vincent and the Grenadines’ production structure has not changed much in recent years, and in
general, the island tends to export goods that are not unique/complex (Figure 197 ). The product
space maps show that there have been limited developments in the core with some expansion in the
periphery. In addition, most of the new industries are on the periphery, which could have
implications for coordination in the accumulation of capabilities.
7
‘The product space map is a view of the network of relatedness of products that countries trade. The layout
remains fixed for which the country’s export basket is overlayed with a thick black border on the products that
they were exporting in the given year’ http://atlas.media.mit.edu/about/. An interactive version of the Product
Space Maps for Exports is available from http://atlas.media.mit.edu/
25
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 19: Product Space Map (Exports) for St. Vincent and the Grenadines 1995 and 2010
1995
2010
Source: The Observatory of Economic Complexity
26
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
In reviewing the export data utilised to construct the maps, Frozen Fish (excluding fillets), Fish Fillet
or Meat, Women’s Suits, and Fishing Vessels have fallen from being in the top 10, to out of the top
20. Cruise ships and similar vessels fell from third (11% of exports) in 1995 to 19 th (0.4% of exports)
in 2010. These products have been replaced in the top 10 by Yachts, Waters (flavoured or
sweetened), Carton, Boxes and other packing containers made of paper, Flat rolled iron, and
Preparations of a kind used in animal feed. It should be noted that Bananas and Plantains fell from
23% of exports in 1995, to 4% in 2010. While the analysis reveals that there has been some
movement up the production chain with a reduction of exports of primary products and an
expansion of more processed products the percentage change has been limited over the period.
Table 2: Top 20 Exports for St. Vincent and the Grenadines for 1995 and 2010
1995 Top 20 Exports
Bananas and plantains
Tugs and pusher craft
Cruise ships and similar vessels for
the transport of persons
Frozen fish, excluding fillets
Wheat or meslin flour
Rice
Fish fillet or meat
Women's suits, not knit
Share
23.30%
11.57%
11.04%
2010 Top 20 Exports
Yachts
Wheat or meslin flour
Tugs and pusher craft
10.88%
7.73%
5.84%
3.41%
2.68%
Bananas and plantains
Manioc (cassava)
Rice
Waters flavored or sweetened
Cartons, boxes, cases, bags and other packing
containers of paper
Flat rolled iron or non-alloy steel, coated with tin,
w >600mm, t >0.5m
Preparations of a kind used in animal feeding
Floating or submersible drilling platforms
Antiques older than one hundred years
Manioc (cassava)
2.15%
Fishing vessels
Men's shirts
Preparations of a kind used in
animal feeding
Fish, excluding fillets
Flat rolled iron or non-alloy steel,
coated with tin, w >600mm, t
>0.5m
Yachts
Jewelry of precious metal
Cartons, boxes, cases, bags and
other packing containers of paper
Crustaceans
Packing of goods
1.89%
1.40%
1.28%
Waters flavored or sweetened
Share
55.32%
6.13%
6.11%
4.20%
2.82%
2.70%
1.58%
1.33%
1.27%
1.24%
1.12%
0.87%
1.24% Fork-lift trucks
1.17% Aluminum structures (bridges, towers etc)
0.76%
0.61%
1.02% Packing of goods
0.86% Scrap of precious metal
0.65% Automatic data processing machines
0.42%
0.41%
0.41%
0.51% Ferrous waste and scrap
0.49% Cruise ships and similar vessels for the transport
of persons
0.49% Crustaceans
0.38%
0.36%
0.30%
Source: The Observatory of Economic Complexity
4.3.2
Services
Tourism is the main driver of activity in the services sector of the economy. Figure 20 plots the
decomposition of the various components of the services industry for the period 1980 to 2010. On
average, tourism services accounted for just over four-fifths of service exports, with communications
services accounting for most of the remainder. Travel services are the only category of services
trade where the island has a trade surplus. For all the other segments of services trade payments
for these services far exceed earnings.
27
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
In specifically addressing tourism, the World Travel and Tourism Council (2013) 8 , estimates the direct
contribution9 of travel and tourism to the economy of St. Vincent and the Grenadines as 6.0% of GDP
in 2012, and 5.5% of employment, or approximately 2,500 jobs.
Figure 20: Decomposition of Service Exports for St. Vincent and the Grenadines (1980-2010)
100%
90%
% of Service Exports
80%
70%
60%
50%
40%
30%
20%
0%
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
10%
Communications, computer, etc.
Transport services
Insurance and financial services
Travel services
Source: World Development Indicators
4.3.3
Analysis for the Productive Sector
The agricultural sector in St. Vincent and the Grenadines, traditionally a key foreign-exchange
earning industry, has contracted significantly in recent years. In 1980, agriculture accounted for
almost one quarter of all production on the island. Since then, the size of the sector has shrunk
significantly and now only accounts for less than 7% of total domestic activity. The tourism industry
has also weakened in recent years as well due to the weak global environment.
In the 2012 budgetary address the authorities also unveiled a number of policies aimed at
stimulating private sector development. One of these initiatives was the production of 20,000
tonnes of bananas for regional and extra-regional export. Funds will be used to obtain GAP
certification for 900 banana farmers. The larger capital works project currently being undertaken is
a new international airport at Argyle. At present, to get to St. Vincent and the Grenadines one needs
to make connecting flights at other regional airports. The new international airport would reduce
the cost of travelling to St. Vincent and the Grenadines due to the elimination of intermediate flights
from other regional airports.
8
http://www.wttc.org/site_media/uploads/downloads/st_vincent_and_the_grenadines2013_2.pdf
9
The WTTC defines ‘direct contribution’ as spending in relation to travel and tourism by residents, businesses
and government, and visitor exports on tourism related commodities (accommodation, transportation,
entertainment and attractions) in relation to GDP, and for employment, jobs provided in these industries
(accommodation services, food and beverage services, retail trade, transportation services, and cultural, sports
and recreational services.
28
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Numerous measures were also announced to support traditional industries. From 2012, all
manufacturers (including agro-processors) will receive duty free concessions on all raw materials,
plant and equipment imported for use in their operations. To further assist businesses, electricity
tariffs for industrial uses were also reduced.
29
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
5.
Characteristics, Issues, Challenges of Private Sector Development in St. Vincent and the
Grenadines
5.1.
Goal for Private Sector Development in St. Vincent and the Grenadines
The Government of St. Vincent and the Grenadines’ main priority in the aftermath of the financial,
CLICO and BAICO crises, along with its ECCU counterparts, is to structure budgeting plans in
accordance to the eight-point stabilization program conceived by all ECCU members. The
Government, in its 2013 budget speech address10 stated:
‘The 2013 Budget is crafted, too, within the frame of the Draft National Economic and
Social Development Plan, the Eight Point Growth and Stabilisation Programme of the
ECCU, and the various developmental instruments and programmes of the OECS and
CARICOM to which our government has contributed’. (p. 6)
The eight-point program speaks to: Suitably Adapted Financial Programmes for each country; Fiscal
Reform Programmes; Debt Management Programmes; Public Sector Investment Programmes; Social
Safety Net Programmes; Financial Safety Net Programmes; Amalgamation of the Indigenous
Commercial Banks; and lastly, Rationalisation, Development and Regulation of the Insurance Sector.
Aside from this, job creation and poverty reduction were still overarching themes for St. Vincent and
the Grenadines. The Government is currently undertaking a population census to update
demographic and employment statistics and outlined that:
‘…a more robust public sector investment programme, an increase in domestic and foreign
direct investment, an enhanced flow of remittances, an uplift in tourism arrivals particularly
after the international airport opens in 2014, a revitalization of agriculture and fisheries, and
an improvement in the export of services (including entertainment), are likely to spur job
creation.’ 11 (p. 17)
The sentiment of increasing investment (foreign and domestic), agriculture and its by-products, and
the export of services are all echoed in the mandate of many business support institutions such as
Invest SVG, the National Development Foundation, the Centre for Enterprise Development, COMFI
(an alliance of three large credit unions) and indigenous banks, among others. In addition to this,
human resources are expected to be more competitive in tourism, as the Government seeks to
establish a hospitality and training institute, which is a pre-requisite for a more competitive tourism
services sector in St. Vincent and the Grenadines12 .
10
http://www.gov.vc/
11
http://www.gov.vc/
12
INVEST SVG priority sectors for investing were identified: Information and Communications Technology
(ICT), International Financial Services (IFS), Tourism, Agri -business, Light manufacturing and the Cultural
Industries. The government is seeking to attract investors in these sectors. Credit Union League stated from
interviews that their penetration rate was consistently at 8 percent. The NDF stated from interviews that a
sizeable proportion of their funds were going towards agriculture and fisheries and maintains that this sector
has potential. The Center for Enterprise Development’s specific objective is to increase the number of viable
enterprises in St. Vincent and the Grenadines. COMFI was established in 2013 by the three largest credit
unions in St. Vincent, it is a cooperative that makes small business loans. The Bank of St. Vincent and the
Grenadines mentioned in an interview that its output for the last year rivals most of the international banks.
30
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Government also places energy independence as another instrument to revolutionizing the structure
of its economy with hopes that production could become more competitive with cheaper input
costs. Though many ECCU governments are working on creating a more sustainable and renewable
energy, most electricity companies in the Eastern Caribbean are owned by governments and
contribute significantly to government revenues. Moreover, as highlighted the 2013 Budget Speech,
the funds from the PetroCaribe deal (traditional fossil fuel resources) are borrowed for major
Government projects i.e. the new international airport.
‘Government also approved funding to IADC (International Airport Development Company)
in the amount of 50 percent of the monies accumulated under the loan component of the
PetroCaribe (SVG) Ltd. fuel supply arrangements that the Government of Venezuela has
established with the Government of St. Vincent and the Grenadines. As at 31st October 2012,
IADC has been able to borrow EC$ 41.4 million from the PetroCaribe funds to be used for
airport construction’. (p. 35)
In general, it appears that the Government of St. Vincent and the Grenadines is seeking to ensure
sustainable growth in the private sector through a number of avenues in relation to enhancing
investment opportunities in a number of sectors through enhancing access to finance, reducing
energy cost and developing the human resources of the country. While it appears from the majority
of the rhetoric that private sector development is being pursued for its own sake, the Government
appears to recognise that the generation of employment is key for the sustainable reduction of
poverty, while also seeking to ensure fiscal security and foreign exchange earning capabilities to
allow the Government to undertake its other obligations to the citizenry of the country.
5.2.
State of the Private Sector
The industrial structure of St. Vincent and the Grenadines is dominated by services; real estate,
renting and business activities, wholesale and retail trade, and transport, storage and
communications account for 48.1% of GDP.
Table 3: Contribution to GDP by Sector in St. Vincent and the Grenadines (2012)
Sector
Real Estate, Renting and Business Activities
Wholesale & Retail Trade
Transport, Storage and Communications
Public Administration, Defence & Compulsory Social Security
Construction
Financial Intermediation
Agriculture, Livestock and Forestry
Manufacturing
Education
Electricity & Water
Health and Social Work
Other Community, Social & Personal Services
Hotels & Restaurants
Fishing
Mining & Quarrying
Source: ECCB (2013)
Share (%)
16.55
16.25
15.28
10.54
8.34
6.37
5.86
4.88
4.57
4.13
3.07
2.45
2.23
0.33
0.22
31
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
The structure of the private sector in St. Vincent and the Grenadines, in relation to the size of
enterprises and the distribution of the labour force, is illustrated in the table below. Statistics
indicate that out of approximately 110,000 persons in St. Vincent and the Grenadines, approximately
half the population is in the labour force and 49,000 persons account for the total employed labour
force. Approximately 69% of the employed, accounted for in NIS data, are employed in the private
sector; while 32% are employed in the public sector. Unemployment was estimated between 2325%. The gap between the NIS accounted workforce and the adjusted workforce is noticeably large,
and Vincentians still participate in informal type activities in Agriculture, Construction and Retail.
This evidence is validated by the classification of type of enterprise listed below; the table shows
80% of Vincentian businesses were informal, micro or small scale enterprises and 60% of total
employed persons were in Micro or Small enterprises (MSEs).
As seen across the sub-region, Government is the dominant employer in the country and also has a
number of stakes in primary production in the island (i.e. Government has a 20% stake in the largest
company on the island, Eastern Caribbean Group of Companies (ECGC), and the agro-processing
company WINFRESH is owned by OECS participating governments). Locally owned enterprises
remain in small to medium scale agro-processing, light manufacturing, consumer goods and smallscale tourism related business.
Table 4: Condensed table showing Type of Enterprises and Labour structure in St. Vincent
No. of
Employees
Type of
Enterprise
(1-5)
(6-20)
Micro
Small
Share of
Business by
Enterprise
Type
80%
Share of
Employment
by
Enterprise
Type
55-60%
Sector
Manufacturing
Agriculture and
related
(20-50)
Medium
18%
5%
Construction
>50
Large
2%
2-3%
Services
Tourism
Financial
Retail and
Wholesale
Government
Other Services
Total
Source: 2010 Labour Market Report, MSME (2009) and Enterprise survey
Workforce
(in the NIS)
Adjusted
Workforce
(not in NIS)
2,183
531
2,183
5,000
5,770
6,600
2,776
1,239
4,277
3,000
1,239
6,500
13,200
7,703
37,679
13,228
11,250
49,000
32
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
In relation to the definition of businesses by size in St. Vincent and the Grenadines, the table below
outlines the officially proposed typology (MSME Report, 2009).
Table 5: Proposed Official Typology of Enterprises by Size – St. Vincent and the Grenadines (EC$)
INDICATORS
No. of employees
Net asset value
LARGE
Over 50
Over 1 million
MEDIUM
20 to 50
Up to $1 million
Annual sales/turnover
Over 2 million
Needing to borrow
Over $500,000
Less than $2
million
Up to $500,000
Legal Structure
From
100% Minimum 75%
foreign to 00% local
local
Source: Secretariat (2009) MSME report
SMALL
6 to 20
Less
$500,000
Less
$500,000
Less
250,000
Minimum
local
than
than
than
75%
MICRO
1 to 5
Less
than
$100,000
Less
than
$100,000
Less
than
$50,000
100% locally
owne
Non-Domestic ownership is most prevalent in large-scale telecommunications firms, hotels,
manufacturing, and commercial banking. These enterprises capitalize on knowledge of export
markets, marketing techniques, distribution networks, among others, and reap a substantial
percentage of the country’s output. Though most of the income generated may be repatriated
overseas, the value creation through large scale employment and inclusive employment of
professional staff is equally important. For example, ECGC is 40 percent owned by Canadians, CEO is
Vincentian; telecommunications companies KARIB cable, DIGICEL and LIME are non-resident owned
enterprises and much of their management are nationals. In addition, Government may offer
citizenship to large investors (i.e. owner of the recent Buccament Resorts was recently awarded
citizenship).
Table 6: Four Sectors Concentration and Share of St. Vincent’s Employment and Output
Sector
Telecommunication
Manufacturing
Company
LIME, DIGICEL, KARIB
East Caribbean Metals, ECGC,
Packaging, Hairoun Beer,
Kendra’s Windows , Mountain
Top Water , Container Corp
Tourism
Buccament Bay resort, Palm
Island Resort
Electricity/Utilities
VINLEC
Source: Survey Results and Annual Reports
No of
Companies
3
7
Share of Sector
Employment
≥75%
≥45%
Revenue (% of
GDP)
8-9%
7%
2
≥24%
..
1
≥35%
8%
The table above illustrates the concentration and share of the country’s employment and revenue
by the main enterprises hold in each sector. The non-domestic owned companies represented for
the telecommunications sector employs an estimated 75% in the sector and contributes an
estimated 9% to the economy’s total output. The seven companies representing the manufacturing
sector, half being foreign-owned, contributes 6-7% to the total economy, and employs an estimated
50% of the manufacturing sector.
The recently opened Buccament Bay and the Palm Island Resorts are some of the major players in
the tourism industry and currently employ more than 24% of total persons employed in the tourism
33
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
sector. These non-resident owned enterprises continues to add value to the tourism product of St.
Vincent and the Grenadines.
The private sector in St. Vincent and the Grenadines is characterised by a large number of informal,
micro or small enterprises, with larger enterprises mostly being foreign- or Government-owned, and
with a heavy concentration in the services sector.
Notable shock events such as the elimination of trade preferences to the EU market in the early
2000s, the recession of 2008, liquidation and receivership of BAICO and CLICO insurance in
2009/2010, and damage from Hurricane Tomas in 2010 has jolted the already vulnerable private
sector, especially in relation to enterprises in tourism and subsistence agriculture. Private capital
flows and overall demand have also suffered as a consequence.
To cushion the adverse effects of the various shocks to the country’s economy, Government has put
in place short-term measures to address duties and electricity costs in sectors such as tourism. In
addition, STABEX/SFA funds was created to provide assistance in the transitory period to the
displaced subsistence agricultural labour force and to assist the country in their efforts to diversify
and enhance private sector competitiveness. Notwithstanding, it is imperative that issues related to
enterprise development which lead to significant structural changes be investigated, so that the
country could benefit from sustain growth in factors of production to transform its large informal
and indigent labour force.
5.2.1
Large and Fast Growing Sectors
The largest sectors in St. Vincent and the Grenadines as a percentage of gross value added, outside
of public administration, are: Real Estate, Renting and Business Activities (17%), Wholesale and
Retail Trade (16%), Transport (15%), Construction (8%) and Financial Intermediation (6%) (ECCB,
2013). For employment, the largest sectors are Other Services, which supplies 23.0% of
employment, Construction (13.5%), and Wholesale and Retail Trade (13.3%) (CARICOM Statistics,
2012). In relation to the largest companies in the country, these are as indicated in the previous
section and comprise several foreign-owned enterprises in the communications and tourism sectors.
As indicated in ECCB (2012)13 , there was an expectation of marginal improvement in the economy in
2012 due to developments in construction (Argyle International Airport, upgrades to Buccament Bay
Resort, Government’s capital works program), tourism (heightened marketing), manufacturing
(strong demand for flour, feeds and beer) and agriculture (recovery from Black Sigatoka disease).
With regards to gender segmentation in the labour market of the largest sectors in St. Vincent and
the Grenadines, estimates suggest that of the approximately 11,000 persons in the informal
economy, 5000 are in agriculture comprised mostly of women. In tourism services, most of the
administrative and elementary services are dominated by women. As indicated in the Survey of
Living Conditions (2008): "There is evidence of gender segmentation of the labour market, men in
construction, women in hotels and tourism”. These characteristics of the labour market suggests
that women are somewhat marginalised from the largest sectors, and when they are included, they
are in mostly elementary positions.
13
http://www.eccb-centralbank.org/PDF/efr_june2012(1).pdf
34
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
While the foregoing speaks to the largest sectors in the economy, any discussion in the context of
growth is difficult given the current economic crisis. However, in relation to the results from
interviews conducted during the Private Sector Assessment, potential for growth was identified in
the following sub-sectors:
1.
2.
3.
4.
5.
6.
7.
8.
Eco-Tourism
Construction
Knowledge-based industries (ICT)
Creative Industries
Light Manufacturing
Agro-processing in cocoa (chocolate) and meat
Pharmaceutical and Medical manufacturing
Finance
Eco-Tourism
The Government of St. Vincent and the Grenadines sees tourism as its comparative advantage in
overall production and currently directly employs an estimated 3,000 persons in the private sector.
To this extent, there have been many incentives and initiatives directed towards tourism related
businesses and its support organisations. For example, the Hotel and Tourism Association of St.
Vincent stated that they have been able to negotiate the tax rates of hotels and villas along with
concessions on electricity and import duties. Moreover, this association mentioned that hoteliers,
and the sector as a whole, are looking at developing the sub-sector of eco-tourism. Recently, St.
Vincent and the Grenadines has been lauded for being among the top 50 countries with the best
dives and the Government has received help on restoring sites such as Fort Duvernette which is
expected to “add to the ecotourism heritage product of St. Vincent and the Grenadines”. 14
Construction
The construction sector in St. Vincent and the Grenadines employs close to 5000 persons and, with
the value-added in this supply chain, along with physical investments in infrastructure, this sector
should not be overlooked as a potential driver of private sector development. This non-productive
sector is one of the most direct ways a government or any organization can impact private sector job
creation, and the multiplier effect from infrastructural work spans through every sector. It is
recommended that elements such as training on high-tech equipment use, public-private
stakeholder participation on planning for infrastructure and the facilitative environment, among
other factors, be noted as high priority areas for private sector assistance in this sector. This should
help firms involved in construction understand what is required of them, and how they fit into the
country’s development plan. In addition, the development of a cadre of skills in this area could also
assist in developing service exports to the region, as undertaken by large construction firms in
Barbados.
14
Statement
by
the
tourism
authority
on
the
World
wide
Web
http://www.discoversvg.com/index.php/de/component/acajoom/mailing/view/listid-1/mailingid-16/Itemid271
35
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Information and Communication Technology
Part of most growth strategies by governments around CARICOM is to capitalize on the advantages
of information, communication and technology. St. Vincent and the Grenadines is no different. It is
believed that ICT, particularly telecommunications, employs over 1000 people and could play an
even greater role in adding value to the service product of the country. A telecommunication
executive maintained that they were proud to be a partner in the country’s ICT growth strategy as it
would be win-win effort for everyone involved. In its strategic ICT plan for 2010-2015, the
Government lists e-government, training human resources, business development and effective
regulatory environment as the four main initiatives for St. Vincent and the Grenadines’ ICT
development. Investments in telecommunications have dramatically increased in the last 5 years
through the ICT Investment Act (2007) and the e-government plan is currently being undertaken
with the help of the Taiwanese government.
Creative Industries: Film, Music and Culture
The creative industries present great opportunities for private sector development, especially with
the enhanced EPA (Economic Partnership Agreement) benefits allowed to Caribbean industry
stakeholders. Employment in this sector is not quantifiable due to the considerable amount of
informality in the industry, however, it is part of the growing interest among a sizeable young and
inexperienced demographic in St. Vincent and the Grenadines. To quote, “… creative industries offer
many opportunities for livelihood/employment, but face several labour market related challenges
which are all manageable”. 15 INVEST SVG stated that they have been working extensively by lending
technical assistance and international promotion to designers and creative-based industries and
have seen a high success rate. It is therefore important that, not only financing be available for much
of those individuals without collateral, but assistance for overall business development be put in
place, i.e. encouraging foreign capital investments, formalizing the business, informational tools to
understand the benefits of EPA, and training as part of the training curricula.
Light Manufacturing
The manufacturing sector has often been overlooked in many small island’s strategic growth plans,
and because of this, countries like St. Vincent and the Grenadines struggle to diversify their
production, become highly vulnerable to external shocks, and experience serious macro-economic
implications. St. Vincent and the Grenadines, in the late 1980s, had a robust manufacturing plan
that gave incentives, zoning, and promotions, and as a result brought a substantial amount of
foreign capital and employment and changed the paradigm on how to develop a mechanism for that
sector in the early 1990s. One manufacturer disclosed that the sector used to be thriving with the
production of tennis rackets and other related business, but presently he thinks the sector is too low
on Government’s agenda. The sector today employs over 2000 persons and minimally impacts
foreign exchange. It must be highlighted that the country’s inherited physical landscape, high input
costs of electricity and other factors contribute to a disadvantage in scale economies and price
competitiveness. However, there are some strong points that should be mentioned about the
opportunity that this sector holds. Firstly, free zones has been already been facilitated and more
zones are likely to be implemented by government. Secondly, the government is working on an
energy efficiency plan to reduce energy costs. Thirdly, because of the country’s location in the
15
InvestSVG (2010)
36
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Western Hemisphere, businesses could further capitalize on trade agreements. Finally, there is now
greater emphasis on the development of technical skills and retaining human capital, especially after
CGF and in-country consultations. Building on this groundswell of action, the Government will be
well served by implementing appropriate incentives to assist this sector to grow.
Agro-Processing
Agro business is one of the main sub-sectors identified as an opportunity by key industry players
such as the Centre for Enterprise Development and the National Development Foundation. Part of
the over 4000 persons employed in the agricultural sector, agro-producers are increasing
exponentially as small and backyard farmers learn about the techniques to make by-products from
the raw material. There are some questions about the efficiency of this type of production, as it is
labour intensive and production is on a small physical scale, yet there are some key points to show
the opportunity which could be reaped from this sector. Firstly, because St. Vincent and the
Grenadines has relied predominantly on agricultural production and its processes, skills for the
processes of its by-products can be easily transferred. Secondly, by being a part of an alliance,
cooperative or cluster development organization, i.e. VINCYKLUS, small agro producers can benefit
from reduction in overall costs. Additionally, they are a number of successful small agro businesses
who have sustained their businesses via linkages to the tourism sector. Some of the value added
products that stakeholders are interesting in exploiting in the area include chocolate from cocoa and
meat production. On a related note, opportunities in the pharmaceutical and medical
manufacturing sector may also be available. Most of our interviews conducted in the agroprocessing industry showed the need for micro-biologist and more bio-technological research,
especially in regards to verifying products through standards and testing. In the same vein, microbiologists and those in bio-technology could exploit the by-products offered from raw
agriculture/crops. For example, aspirin is a by-product from the willow bark plant Digoxin, used to
treat heart conditions, are derived from foxglove; and Quinine, used to treat malaria and is
synthesized from cinchona bark. There is great potential in St. Vincent to research and develop the
possible drugs and pharmaceutics that could be derived from its large agricultural lands. Institutions
such as CARDI, medical research labs, Multinational Companies, Multilateral organizations and
government should be the prime stakeholders to participate in the development of this sub-sector.
Alternative Financing and Offshore Financing
Alternative finance and offshore finance are also noted as sub-sectors that present opportunities
and could change the financial landscape in St. Vincent. The financial sector currently employs over
1,000 persons and the industry is growing, especially in the sector of credit unions, which has seen a
strong consistent 6.8 percent growth rate for the last 5 years. Much of the alternative financing
success can be attributed to the stringent conditions foreign banks place on Vincentians and viceversa, treatment faced in alternative financial institutions or cooperatives. An alternative financial
option facilitates more financial inclusion in a country, and if managed right, is proven to be much
more profitable than formal banks. For example, the top three credit unions amalgamated to form a
micro-finance program, COMFI, dedicated to facilitate the small business community. Invest SVG
also list offshore banking as a sector area with investment opportunities, though, because of
restrictive secrecy laws, have come under international review.
In terms of the largest sectors in the economy and their potential for future growth, the most viable
areas appear to be in tourism and manufacturing. Through heightened tourism marketing and the
37
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
development of a niche in eco-tourism, the country may be able to provide a sustainable growth
path for the sector. In manufacturing, a focus on the sectors with greatest potential, agroprocessing and pharmaceutical and medical manufacturing, would allow for the development of
indigenous sub-sectors that can provide employment opportunities and obtain valuable foreign
exchange. In relation to one of the largest sectors, construction, the dominant projects in the
country should be commended for their revenue generation ability (Argyle International Airport and
upgrades to Buccament Bay Resort). These projects not only provide for employment in the short
term, they also provide for further development of the tourism product and enhance airlift to the
country.
5.2.2
Business Supportive Institutions Structure
St. Vincent and the Grenadines private sector has a number of supportive institutions. Table 8
below illustrates the role each Business Support Institution plays as well as information on their
mission and the political influence of the organisation. Support in St. Vincent and the Grenadines
includes both public and private sector entities with a similar structure to other OECS member
states. Institutions include Invest SVG, an investment promotion agency, the Centre for Enterprise
Development, Chamber of Commerce, Tourism Association, and the National Development
Foundation. As seen in other OECS member states, there is limited formal coordination between
representatives, although there are informal networks in place.
5.2.3
Donors and Other International Entities
Main donors to St. Vincent and the Grenadines include: The Caribbean Development Bank (CDB),
The European Union’s European Development Funding (EDF) program, The Department for
International Development (DFID), The International Bank for Reconstruction and Development
(IBRD), the European Investment Bank (EIB), and the International Finance Corporation (IFC). Major
bilateral assistance came from the Canadian International Development Agency (CIDA), USAID, and
the Government of Taiwan. In addition, multi-donor support is provided through Compete
Caribbean. An overview of some of the key entities at the regional level is shown below, while a full
exposition is located in the Donor Matrix (DMX) file covering both national and regionally relevant
programs and projects.
The activities of donors are driven from both internal and external sources. While some agencies
base the identification of priority areas from an internal analysis of country or region-specific data,
others base the allocation of funds on the strategic/political objectives of the source country or
region. Other donors indicated that priority areas are based on country demands, and not on any
covert strategic or political objective. While donors indicate for the most part that the needs of the
receiving country are paramount, they do note that there are several main areas tha t greater
support is needed, including support for regional integration, trade facilitation and logistics, access
to finance and greater public sector dialogue. It should also be noted that the issue of gender is
taken into consideration in all projects, sometimes implicitly, but for the most part the issue of
gender is explicitly included.
One of the main issues of concern in recent times was lack of donor coordination, however,
duplication of donor efforts is being addressed, as seen with the Compete Caribbean program and
the Caribbean Growth Forum (CGF). However, there was some concern in relation to duplication
with the CGF and the Private Sector Assessments (PSAs) of Compete Caribbean. In addition, most
38
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
agencies interviewed indicated that there is formal coordination with other donor agencies, while
informal coordination is seen with country-specific agencies and NGOs in receiving countries. Some
donors however noted that there was the need for greater collaboration with the CARICOM
Secretariat and the OECS Secretariat.
In relation to the nature of projects funded, the majority of active projects are focussed on the
Business Support, Finance (access to finance), the Business Environment in general or a combination
of these objectives. For projects focussed on these objectives, there are 42 active or recently
completed donor funded projects in St. Vincent and the Grenadines specifically, and 12 operating at
the OECS level. Of these projects, at the country level, the majority of projects are focussed on the
Business Environment (38%) and Business Support/Access to Finance (38%). The largest area in
terms of funding is Business Support/Access to Finance with US$41 million. It should however be
noted that although Access to Finance by itself only accounts for 5% of projects, it accounts for 31%
of funding (US$38 million). In terms of the sector focus, 52% of these main objectives are targeted
at the service sector.
OECS
St. Vincent and
the Grenadines
Location
Table 7: Main Objectives and Sector Profiles of Donor Projects in St. Vincent and the Grenadines and the
OECS
Objective
Business
Support/Institutional
Structure
Access to finance
Business Environment
Business Support/Finance
TOTAL
Business
Support/Institutional
Structure
Access to finance
Business Environment
Business Support/Finance
TOTAL OECS
Share
(%)
Agriculture
(%)
Industry
(%)
Services
(%)
Value of Active
Projects (US $’000)
19.0
4.8
7.1
9.5
$
13,803
4.8
38.1
38.1
100.0
41.7
2.4
19.0
11.9
38.1
8.3
2.4
11.9
11.9
33.3
8.3
2.4
28.6
11.9
52.4
8.3
$
$
$
$
$
37,503
29,647
41,608
122,561
31,140
16.7
25.0
16.7
100.0
8.3
8.3
8.3
33.3
8.3
8.3
8.3
33.3
16.7
8.3
8.3
41.7
$
$
$
$
1,940
14,190
2,060
49,330
At the OECS level, for projects in these areas which are operating at the sub regional level, the
service sector is also the focus, accounting for 42% of projects. In terms of the number of projects
and value, the Business Support/Institutional Structure objectives dominate with 42% of projects
and funding in excess of US$31 million.
In terms of gaps in support, although access to finance has been noted as a major obstacle to
business development in the region, projects specifically targeting this area at the sub regional level
only account for 17% of projects, and less than US$2 million in funding. However, at the domestic
level in St. Vincent and the Grenadines, while only accounting for 5% of projects, support for access
to finance accounts for 31% of total funding in these areas.
39
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Technical
Assistance
The St Vincent and the Grenadines
Chamber of Industry and Commerce is
a
non-profit,
non-governmental,
membership based organisation.
Established in 1926, the SVGCIC is the
oldest and largest private sector
Members
Partner
Organisations
The St. Vincent
and
the
Grenadines
Chamber
of
Commerce
VisionTo be the focal point for the
delivery of technical support, advisory and
information services to the private sector
for the facilitation of an enabling
environment which will encourage the
growth and development of an
entrepreneurial spirit in St. Vincent and the
Grenadines. Mission- A people-centered
organisation with the professional
competence and commitment to business
resulting in increased competitiveness,
higher levels of business success and
sustainability in the local private sector.
General Objectives of CED:
Increased economic growth and
employment;
Increased diversification of the economic
activity;
Poverty reduction.
The specific objectives of the CED are:
To increase the number of viable
enterprises in St. Vincent and the
Grenadines.
To strengthen the institutional support
base for private sector development in St.
Vincent and the Grenadines.
To build organizational commitment and
capacity to deliver sustainable
developmental and innovative solutions to
all business partners and stakeholders.
Political
Influence
The Minister
responsible
for Industry
Person in
Charge and
Title
Vision,
Mission and
Goals
(assessment)
The CED is a State-owned corporation
reporting to the Minister responsible
for Industry, and is mandated to
promote development of the private
sector in St. Vincent and the
Grenadines. Its
work includes
marketing and promotional support,
research and data, education,
incubator services, and other activities
Private
Sector
Mr
Felix
Lewis
Mediu
m
None
Private
Sector
Mr Michael
Nanton
Mediu
m
None
Sector of
Affiliation
Report to…
Technical
Assistance
Type
The Centre for
Enterprise
Development
Name
Brief History
Table 8: Business Support Institutions in St. Vincent and the Grenadines
40
Invest SVG
Technical
assistance/
Investment
Promotion
The National
Development
Foundation
Technical
Assistance/
MicroFinancing
The National
Commercial
MicroFinancing
organization, representing the interest
of approximately 120 businesses across
SVG.
The report concluded that in order for
the Government to achieve its ideals of
self-sustainable
and
balanced
economic growth it was necessary to
create a separate entity which would
be responsible for the island’s
Investment Promotions and Foreign
Direct
Investment
functions.
Consequently the National Investment
Promotions Incorporated was founded
by decree in October 2003.
NIPI
was rebranded Invest SVG in a move to
bolster the company’s image and
identity
regionally
and
internationally. The Invest SVG brand
was launched on August 24th 2009.
NDFSVG was incorporated on 26th
October, 1983 as a private non-profit
development organization. Its main
purpose is to promote self-help
development among the less privileged
sectors. The main purpose of the
Foundation is to promote self-help
development among the less privileged
sectors primarily through the provision
of credit, technical assistance and
training in the initiation and/or
development of owner managed
enterprises.
The Bank of Saint Vincent & the
Grenadines, formerly the National
Partner
Organisations
Political
Influence
Person in
Charge and
Title
Sector of
Affiliation
Vision,
Mission and
Goals
(assessment)
Report to…
Brief History
Type
Name
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Government
of St. Vincent
Mission-To attract FDI, act as policy
advocate to create a more facilitative
environment. Invest SVG provides
aftercare services, trade shows, technical
support
Private
Sector
Mr Curtis
Denny
High
None
Government
of St. Vincent
To promote and support entrepreneurial
development in the small and micro
business sector by providing credit,
technical and training to improve the social
well being and economic prosperity of its
clients and to make a positive contribution
to national development
Private
Sector
Ms Hermia
Neehall
Mediu
m
None
ECFH and the
Government
To be the preferred provider of superior
financial products and services through
Private
Sector
Derry
Williams
Mediu
m
None
41
Shareholders
The league came out to unify the system,
train and develop services in Credit union,
Compliance, monitor their performance,
discuss cooperative issues
Micro to
Small
Enterprise
Ms Angela
Patrick
Low
Partner
Organisations
caring, professional staff and appropriate
technology. To be customer-focused,
innovative, and efficient. To exceed
shareholder expectations and be a catalyst
for development.
Political
Influence
of St. Vincent
Person in
Charge and
Title
Commercial Bank (SVG) Ltd. was
founded in June 1977 by The
Honorable Robert Milton Cato the then
Premier of Saint Vincent with 11 staff
members at a single Branch. The
current staff complement is 159 and
the Bank operates from 2 locations in
Kingstown which includes its Head
Office, and five branches. The branches
are located in Georgetown on the
Windward side of St. Vincent,
Barrouallie on the Leeward side, and
on the Grenadine Islands of Bequia,
Canouan and Union Island.
Formed in 1962, registered in 1964
Sector of
Affiliation
MicroFinancing
Vision,
Mission and
Goals
(assessment)
Credit Unions
(Credit Union
League)
Report to…
Bank
Brief History
Type
Name
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
None
42
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Name
Budget
Identifying Priorities
(DFID) Department For International
Development
Table 9: Institutional Analysis: Donors and International Organisations
DFID’s projects
run under
cycles. They are
currently in the
2nd year of
(2011-2015)
cycle, where
75m pounds
are allotted to
the Caribbean.
The program
runs under
thematic areas
i.e. Economic
Growth (27.5m
pounds),
Climate
Change,
Governance
and Security.
DFID’s team identifies
problems i.e.
development issues,
debt burden,
competitiveness,
regional integration
then bid for funds
from government for
4 year cycle.
Potential
Collaborators
Some
coordination
with OECS
Secretariat.
Gaps in
Support
Need for
more work on
trade
facilitation
and freight
and trade
logistics in
OECS.
Regional
Integration,
Non-Tariff
Barriers,
Clearer
Political
Targeting.
Gender and
PSD
Integration
Gender is
involved in
each project
implicitly
Formal
Coordination
Informal
Coordination
Country
Partnerships
Projects Under
Consideration
Views of
Donor
Duplication
Monitoring
and Evaluation
Efforts
There is an
aid
coordination
structure
(Private
Sector Donor
Working
group) which
CIDA heads.
Everything is
undertaken
through
cooperation
with others
i.e. IDB,
CARTAC and
CART fund
(CDB)
A lot of
projects and
work done
with local
stakeholders
done via
CART fund
(CDB)
DFID has 5.6m
pounds
unallocated
currently.
Would like to
focus on
strengthening
financial sector,
regulation and
competitivenes
s in poorer
countries in
Caribbean
including
Guyana and
Belize.
The level of
duplication is
moderate
and varies
somewhat by
sector, what
helps mainly
is that not
many donors
are in the
Caribbean;
they also
have Donor
coordination
structures in
placed.
DFID uses a
program called
LOGFRAMES to
gauge projects
and determine
outputs i.e.
jobs created,
outcome of
project,
workshops,
activities
carried out,
average
Caribbean
business
indexes etc.
43
Caribbean Development Bank
Name
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Budget
Identifying Priorities
CDB allocated Current
priorities US$22.5 million include:
to 11 financial  Enhancing
intermediaries
Disaster Risk
(development
Management and
banks) in 2012.
Safeguards/Streng
thening
Environmental
Sustainability
 Economic Growth,
Inclusive Social
Development
 Support for
Education and
Training
 Improving the
environment for
private sector
development
 Improving
Productivity and
Competitiveness
in Agriculture
Potential
Collaborators
Gaps in
Support
-
Gender and
PSD
Integration
Gender
Equality
Policy
adopted in
2009
and
related
Operational
Strategy.
Seeking to
ensure that
policies,
programmes
(including
PSD)
and
practices are
responsive
to
gender
equality
issues.
Formal
Coordination
Informal
Coordination
CDB works closely with
all
the
bilateral and
multilateral
partners in
the region;
IADB, DFID,
European
Union, World
Bank,
IMF,
CARTAC and
other
bilateral and
multilateral
partners.
Country
Partnerships
Projects Under
Consideration
The CDB
works to
serve the
needs of its
BMCs. The
OECS
member
states are
also BMCs.
-
Views of
Donor
Duplication
-
Monitoring
and Evaluation
Efforts
Results matrix.
44
Compete Caribbean Program
Name
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Budget
Identifying Priorities
US$40 for the
Caribbean in
areas such as
Knowledge
Management,
Business
Climate.
Compete
operates in a
competitive
process where
businesses can
submit
proposals.
Background reports
and analysis
(information from
World Reports,
Country Budgets
from governments &
investment agencies.
Compete is demand
driven
Potential
Collaborators
Gaps in
Support
Competitiven
ess Council,
Public Sector
Dialogue and
Reform of the
Business
Climate is
currently on
the agenda
but can only
take place if
the country
has an
appetite for
such reforms
Gender and
PSD
Integration
Every single
project must
have gender
consideratio
n involved.
However,
certain
gender
specific
indices are
hard to
obtain from
OECS.
Formal
Coordination
Informal
Coordination
Formal
coordination
and special
initiatives
with most
donors i.e.
CDB, DFID,
CIDA
Informal
coordination
with World
Bank,
CARICOM,
other NGOs
like Branson
Center
Foundation,
U.S State
Dept
Country
Partnerships
Projects Under
Consideration
Antigua
Customs
Reform &
Investment
Attraction. One
of the projects
in Dominica
was to do a
growth strategy
in partnership
with EU.
Updated
Strategies
presented with
local
stakeholders.
Views of
Donor
Duplication
Monitoring
and Evaluation
Efforts
Donor
coordination
group and
the outcome
of donor
matrix helps
with
Compete
Caribbean's
objective to
minimize
duplication
Results Matrix
and Mid-term
evaluation to
determine
outcomes and
impact
45
CARICOM Regional Organisation for
Standards and Quality (CROSQ)
Name
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Budget
Identifying Priorities
Funds come
from 2 sources:
1.Gov'mts of 15
members 2.
Donors who
support most
of CROSQ
programs.
Budget based
on a formula
CARICOM uses
(i.e. per capita
GDP). No
specif. budget
allotted on a
country basis,
more regional.
Political (key trade
issue that affect
member states &
these guide standards
for production (i.e.
flour, honey, furn.) in
the region).
Important research
needed include
Demand Surveys in
the private sector to
understand what
equipment needed
and calibration
services needed from
CROSQ to facilitate
trade.
Potential
Collaborators
There is
potential to
work with
UNIDO
Gaps in
Support
The 10th EDF
is going to be
the core for
what they
want to do.
The main
thing is to
evolve from
not just
standards
institution,
but to put
together
committees
to help with
Accreditation
and
Metrology.
Gender and
PSD
Integration
Most
projects
under the
CARTfund
(CDB)
maintains
that gender
be included,
however
most efforts
are in
building up
standard
bureaus and
gender still
needs to be
properly
defined for
CROSQ
projects.
Formal
Coordination
Informal
Coordination
Country
Partnerships
Projects Under
Consideration
CDB
CARIB Export,
CARTfund
CIDA, CTO.
and own
funds,
Germany and
IDB funds
helped with
RQI1 (quality,
infrastructure
and
awareness).
Now working
with PAHO
and CDC
working with
accreditation.
UNDP as
well.
Regional
program,
works with
governments
where local
stakeholders
benefit.
Rather than
focus just on
standards,
trying to
establish
accreditation
and metrology.
With the
accreditation
project
currently in
house (funded
by CARTfund
CDB) it is the
first time using
resources in the
private sector
(starting with
labs)
Views of
Donor
Duplication
Monitoring
and Evaluation
Efforts
There are
areas for
better
synergy and
this is
improving.
Need to
cooperate
more within
the CARICOM
Secretariat.
CROSQ has
been
functioning
under a
strategic plan
from 3 years
ago, where it
was
determined
that they had
met those
objectives.
Different
CROSQ
projects use
different
evaluations,
mostly done
through
LOGFRAME.
46
Caribbean Export
Name
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Budget
Identifying Priorities
Funding mostly
from the EU
with
counterpart
member states,
DFID, German
Development
Agency, CIDA,
also
contributing.
Sectors with
opportunities for
growth are focus in
relation to
professional services,
investment in
distributive services,
creative industries,
agro-processing,
energy, specialist
tourism, among
others.
Potential
Collaborators
Currently work with a range of
international,
regional and
domestic
agencies.
Gaps in
Support
Gender and
PSD
Integration
-
Formal
Coordination
Informal
Coordination
Governments , Business
Support
Organisations
, CARICOM,
OECS, EU,
DFID
Country
Partnerships
Projects Under
Consideration
Governments All projects
and local
which meet
stakeholders remit:
enhancing
competition via
investment
promotion
agencies, direct
assistance to
firms, small
grants to key
sectors; trade
and export
development;
trade and
investment
relations etc..
Views of
Donor
Duplication
Monitoring
and Evaluation
Efforts
Utilise both
internal and
external
evaluators.
47
Canadian International Development Agency (CIDA)
Name
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Budget
Identifying Priorities
CIDA handles
approximately
80% of financial
assistance
provided by the
Government of
Canada. Funds
are provided
via grants and
contributions
rather than
loans.
CIDA’s priorities are
determined by the
Canadian
Government and
currently focus on:
Sustainable Economic
Growth; and
Entrepreneurship and
Connecting Markets.
Potential
Collaborators
Gaps in
Support
Already
collaborating
with main
stakeholders.
Due to
differences in
laws and
requirements
in each
country,
regional
integration is
a challenge.
Gender and
PSD
Integration
Gender is
core to all of
CIDA’s
efforts
(crosscutting
issue).
Formal
Coordination
Informal
Coordination
Formal
coordination
is seen with
the Compete
Caribbean
Program
which
involves IDB,
and DFID.
Country
Partnerships
Projects Under
Consideration
-
CIDA as an
entity is
currently being
subsumed
within the
Ministry of
Foreign Affairs.
Current
projects
however
include:
Eastern
Caribbean
Leadership
Program;
Entrepreneursh
ip for
Innovation;
CanadaCaribbean
Leadership;
Regional
Integration and
Trade; and
Caribbean Local
Economic
Development.
Views of
Donor
Duplication
Monitoring
and Evaluation
Efforts
Can be
reduced
through
better
planning and
coordination
and through
better
reporting on
project
results to
inform the
development
of future
projects.
A log frame
methodology is
utilized in the
planning and
execution
phase of
projects in
order to
specify
indicators to
track project
progress.
48
European Union Delegation to Barbados and the
Eastern Caribbean
Name
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Budget
Identifying Priorities
EU Delegation
operates under
EDF cycles
every 5 years.
Under the
current cycle
(2008-2013),
funds are
alotted both
Regionally and
Nationally. EU
delegation
determines the
national
allocation via
the country
strategy paper
(CSP), located
on EU's
website.
Joint process
between country
development
priorities & E.U. It has
to be linked globally
& with national
initiatives. C.P.M.
(Country Protfolio
Meetings) held
annually where
project officers look
at social and
economic status from
governments
Potential
Collaborators
Gaps in
Support
EU works with
DOMex in
Dominica, St.
Lucia, St. Kitts,
OECS
Secratariat
[OECS Export
Development]
Caribbean
Export also.
All projects fit
for EPA, EU
not in a
position to
provide loan
financing but
is looking to
assist banking
sector. There
is need for
more loans
and funding
to private
sector in
Caribbean.
Banks are too
risk averse;
need for
Guarantee
fund and
Credit
Bureaus
Gender and
PSD
Integration
The Country
Strategy
Paper
identifies
allocation,
and each
project has a
Financial
Agreement.
This
implicitly
targets
women
through
developmen
t of Micro
and Small
Businesses
Formal
Coordination
Informal
Coordination
Country
Partnerships
Projects Under
Consideration
Donor groups
meet each
other at
Donor
presentation
level. There
are
framework
agreements
with UNDP,
World Bank,
FAO.
Fluid,
transparent
among
agencies
Deal with
Investment
Agencies,
Chambers of
Commerce,
mostly quasigovernment
Institutions
EU has
financing
agreement for;
Integration
&Trade in OECS
(8.6m Euros),
Harmonisation,
Tourism sector,
agriculture &
health food
safety systems,
exprort
capacity
development,
28.3m Euros to
Carib Export for
Regional
Private Sector
Development
Program 3.1m
of CARIFORUM
47.1m EPA
funds for
services.
Views of
Donor
Duplication
Monitoring
and Evaluation
Efforts
Some
challenges;
take for e.g.
Compete
Caribbean is
conducting
national
initiatives &
ITC
conducting
export
interventions
; results are
almost the
same & some
projects need
to be run
sequentially.
Private
Sector Donor
Group
coordination
helps.
Each project in
financial
agreement has
provision for
mid-term
evaluation &
EU contracts
evaluators. EU
also uses ROM
[Results
Oriented
Monitoring] to
evaluate
project design,
effectiveness,
relevance and
sustain. Court
of Auditors
come for large
EU projects
49
IFC
Name
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Budget
Identifying Priorities
No budget for
OECS, but have
strategic
priorities and
needs to
address, and
modify
approach and
find money to
meet those
needs. Most
services in
OECS are
Advisory
Services and
Trade
Facilitation,
Logistics, Credit
Bureaus
Because the majority
of projects in the
OECS are Advisory
services, work with
clients (government
institutions, financial
institutions) to
provide services that
are needed i.e. Trade
Logistics, Credit
Portfolio
Management
Potential
Collaborators
Gaps in
Support
IFC is flexible,
and works
with clients to
meet their
needs.
Gender and
PSD
Integration
Formal
Coordination
Informal
Coordination
No specific Most Donor CIDA
outline for
organisations
explicit
.
gender
efforts in
projects,
however
gender is
implied in
projects and
gender
impact and
outcomes i.e
females jobs
provided
Country
Partnerships
Projects Under
Consideration
Ministries of Trade logistics
Finance,
and Tax
Grenada
implementation
Investment
Office of
Investment
Climate
Reform, St.
Lucia Min. of
Commerce,
Antigua ABIA,
St. Kitts Min
of Finance
Views of
Donor
Duplication
Monitoring
and Evaluation
Efforts
Proportionall
y to what IFC
have seen
there is an
importance
in looking to
fill the gaps
where no
one is
providing
assistance.
IFC looks at
gaps and
tries to fill
them.
For Investment
Services IFC
uses the
Development
Outcome
Tracking
System (DOTS)
to assess
financial
performance,
Economic &
Environmental
performance,
Private Sector
Impact. For
Advisory
Services they
use Strategic
Relevance,
Efficiency &
Effectiveness
50
Name
Budget
Identifying Priorities
World Bank
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
For the OECS,
the bank
operates under
a Regional
Partnership
Strategy for the
region. 120 m
US approved
May 2010 for 4
years.
Depending on
country's
income level
they may get
IBRD funds
(middle income
loans) or IDA
assistance
(lower income
concessional
loans & grants)
The Bank act only on
the basis of
government
requests. The Bank
aligns program and
projects with
government,
however may suggest
some areas
government could
look at.
Potential
Collaborators
Gaps in
Support
To strengthen
coordination
with Donors in
Barbados is a
good area
where World
Bank could
work. The Bank
is one of the
only Donors
that does not
have a regional
office in
Barbados.
The Bank is
open to
whatever
provided 1) it
comes from
government
2) the Bank
has resources
and makes
sure that
project is
sustainable
(bank may
not have
enough for
certain
initiatives)
Gender and
PSD
Integration
Gender is
explicitly
defined in
World Bank's
Regional
Strategic
Objectives
and the Bank
thinks that
this is also
crucial to
developmen
t in the
region
Formal
Coordination
Informal
Coordination
Country
Partnerships
Projects Under
Consideration
CIDA, E.U.,
DFID, UNDP,
CDB (one
main
partner). WB
view CDB as a
crucial a
partner for
projects, as
they are very
prevalent in
the region
and together
can be more
effective in
helping
countries
The informal
platform is
sometimes
considered
better.
Sometimes
setting up
meetings with
all Donors is
difficult
because of
Donors
availability.
WB trys to
keep constant
dialogue with
Donors.
There are
some clear
policies on
where the
Bank have to
operate with
governments
and other
stakeholders.
Depending
on nature of
project, WB
always takes
into account
the
implication to
private
sector.
One of the
main priorities
is improving
business
competitivenes
s. The bank
tries to assist
countries with
broadband
access(Telecom
m.) and energy,
and tries to
adopt regional
initiatives.
Views of
Donor
Duplication
Monitoring
and Evaluation
Efforts
There are a
number of
interactions
with Donors
(DFID, CIDA,
UNDP E.U
Delegation,
CDB to avoid
duplication.
UNDP sets up
periodic
meeting with
donors
(every 34months)
Monitoring
and evaluation
is done every 6
months for
each project.
Task team
leader has
dialogue with
the country
and conducts
an
Implementatio
n Status Report
51
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
5.2.4
Access to Finance
Access to finance is one of the foremost pre-requisites for facilitating entrepreneurs and helps bring
conception into real gains. Sharma et al. (2012) noted, that access to finance strongly influences
private sector and economic growth, and it is pivotal to the finance-growth link. The World Bank
maintained that when financial institutions and markets work well:
…they provide opportunities for all market participants to take advantage of the best investment by
channelling funds to their most productive uses, hence improving income distribution and reducing
poverty (World Bank 2008).
The issue of easy or cheap access to financing and working capital is specifically important to Small
Island Developing States (SIDS) like St. Vincent and the Grenadines due to the fact that the financial
sector (i.e. commercial banking) is not as competitive and efficient as major economies.
The financial sector in St. Vincent and the Grenadines is dominated by three large foreign
commercial banks (Canadian and Trinidadian owned), the Bank of St. Vincent and the Grenadines, a
Co-operative Bank and nine credit unions representing nearly 57,000 members (81% penetration
rate in 2011). While this penetration rate is the second highest in the OECS and the wider region, it
should be noted that lending to enterprises is limited across the region. The National Development
Foundation also provides credit facilities for microenterprises.
Table 10: Credit Unions in the Caribbean (Number and Penetration Ratio)
Country
Number of Credit Unions Members Penetration Ratio
Antigua & Barbuda
6
25892
0.44
Bahamas
10
39070
0.18
Barbados
35
157198
0.77
Belize
13
121889
0.64
Dominica
10
62683
0.88*
Dominican Republic
15
417862
0.07
Grenada
11
43849
0.62
Guyana
25
33499
0.07
Haiti
69
400379
0.07
Jamaica
42
920408
0.52
St. Kitts & Nevis
4
18523
0.53
St. Lucia
15
81022
0.74
St. Vincent & the Grenadines
9
56741
0.81
Suriname
25
24628
0.07
Trinidad & Tobago
130
499528
0.56
Source: World Council of Credit Unions (2013)
*Penetration ratio not available from WCCU. Ratio estimated from population estimates for 2011.
Compared to the other Caribbean countries, St. Vincent and the Grenadines’ credit market is
relatively more efficient when measured by the spread between lending and deposit rates. At
roughly 6 percentage points, the country has one of the lower interest rate spreads among
comparator countries; the only Caribbean countries with lower spreads were The Bahamas, St. Kitts
and Nevis, Suriname, Barbados, Belize and Dominica. Since the early 1990s, the interest rate
spreads on the island fluctuated between 6 and 8%. These spreads have remained quite constant in
the 6 to 7% range since 2005.
52
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 21: Interest Rate Spreads for St. Vincent and the Grenadines (1980-2010) and Comparators (2010)
Interest Rates 1980-2010
Interest Rate Spread 2010
14.00
18
16
12.00
14
10.00
12
8.00
%
%
10
8
6.00
6
4.00
4
2.00
0.00
0
1980
1985
1990
1995
Interest Rate Spread
2000
2005
2010
Deposit Rate
Lending Rate
Mauritius
Bahamas, The
Canada
St. Kitts and Nevis
Suriname
Barbados
Belize
Dominica
St. Vincent and the…
St. Lucia
Dominican Republic
Grenada
Antigua and…
Trinidad and Tobago
Seychelles
Guyana
Jamaica
Haiti
2
Source: World Development Indicators
Domestic savings play a key role in relation to the availability of credit. At the end 2010, deposits
were over 64% of GDP, one of the lowest ratios among the group of comparator countries and the
lowest in the OECS. In relation to bank credit as a ratio of bank deposits, this was 78%, about the
average for the region. This suggests that a large proportion of savings in St. Vincent and the
Grenadines is utilised to finance credit.
Figure 22: Domestic Financial Variables for St. Vincent and the Grenadines versus Comparators (2010)
Bank Credit/Bank Deposits (%)
Malta
St. Lucia
St. Kitts and Nevis
The Bahamas
Mauritus
Grenada
Antigua and Barbuda
Mauritus
Grenada
Malta
St. Lucia
Belize
Dominica
St. Vincent and the Grenadines
The Bahamas
Antigua and Barbuda
Belize
Dominican Republic
St. Vincent and the Grenadines
Dominica
Guyana
Guyana
Seychelles
St. Kitts and Nevis
Jamaica
Jamaica
Haiti
Seychelles
Dominican Republic
Haiti
20
40
60
80 100 120 140 160
%
0
0
20
40
60
80
100 120 140
%
Deposits (% of GDP)
Source: World Development Indicators
53
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Despite the proportion of savings used to finance loans, the country was still ranked one of the
lowest in the region for getting credit. This suggests that business finance (or the lack thereof) is
both a supply and demand problem. On the supply-side there is the perceived risk associated with
supplying loans to the small business sector, while on the demand-side entrepreneurs and small
businesses may lack the ability (e.g. record keeping) to access available lending facilities. It should
however be noted that with the savings deposit rate (SDR) and the reserve requirement rate (RRR)
set by the ECCB, that the funds available for lending are restricted and may therefore account in part
for the high cost of finance in St. Vincent and the Grenadines and the wider region.
This low ranking is demonstrated by Doing Business (2012) which currently ranks St. Vincent the
Grenadines as the fourth lowest-ranking country in the region to obtain credit, next to countries
such as Guyana, Suriname and Jamaica.
200
10
180
9
160
8
140
7
120
6
100
5
80
4
60
3
40
2
20
1
0
0
Getting Credit- Rank
Strength of Legal Rights Index (0-10)
RANK
Figure 23: Doing Business Rankings for St. Vincent and the Grenadines versus Comparators (2012) for
Selected Indicators
Getting Credit- Strength of Legal Rights Index
Source: Doing Business 2012
Some enterprises and business support institutions interviewed stated that if finance was available,
the cost of finance was burdensome to their already costly operations. Invest SVG representatives
stated that their clients, mostly small agro-processing and cultural businesses, are unable to meet
the stringent collateral demands of private sector financing. Collateral complaints are validated in
Figure 24, which showed St. Vincent and the Grenadines with the third highest collateral
requirements in CARICOM, in excess of 210% of the value of commercial bank loans. These
relatively high collateral requirements exist despite the relatively high level of penetration of
banking services on the island: virtually every business in St. Vincent and the Grenadines has a
checking account and over half utilise either loan or line of credit services (Figure 25).
54
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
In exploring these issues during interviews, a CEO in a manufacturing company stated that his
operations are mostly funded by German and American overseas banks, which offer working capital
for manufacturing in Asia (overseas banking offer less than 8 % on financing, whilst domestically the
rates are in excess of 10%). The CEO stated that savings from the cost of financing facilitates
expansion of the company’s marketing budget, plant and staff, providing an indicator of the knockon effects of the efficient provision of finance.
VINCYFRESH, a government owned agro-processor, suffers from the inability to access private sector
credit due to the inherent structure of their ownership (public sector owned). The VINCYFRESH
representative stated that while a strategic plan of action and location for plant expansion was
identified, access to finance is almost close to nil due to the fact that private sector financial
institutions cater to privately-owned enterprises, and international funding agencies are structured
for policy-based type loans. This subsequently leaves the government-owned agro-processor unable
to access funding from either agency.
Figure 24: Value of Collateral Required for Credit for St. Vincent and the Grenadines and Comparators (2010)
Percentage of Loan
250.0
200.0
150.0
100.0
50.0
0.0
Source: Enterprise Survey
55
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 25: Firms with Access to Financial Services for St. Vincent and the Grenadines and Comparators (2010)
120.0
Percentage
100.0
80.0
60.0
40.0
20.0
0.0
Checking Account
Bank Loan/Line of Credit
Source: Enterprise Survey
One of the most influential theories of corporate leverage is the pecking order theory of capital
structure (Myers, 1984). This theoretical framework suggests that firms prefer internal to external
finance due to adverse selection. The data for St. Vincent and the Grenadines, on the surface, fits
this hypothesis with 56% of investment being financed by internally generated cash, with most of
the remainder coming from debt and insignificant amounts from supplier credit and equity (Figure
26). The over reliance on internal sources of finance has traditionally been seen as a constraint to
firm growth as it limits the ability to exploit profitability investment opportunities (Moore, Craigwell
and Maxwell, 2005), this is particularly the case for younger and smaller enterprises.
56
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
% of Total
Figure 26: Sources of Finance for Investment for St. Vincent and the Grenadines and Comparators (2010)
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Internal
Bank
Supplier Credit
Equity or Stock Sales
Source: Enterprise Survey
Besides investment opportunities, firms also require funds for working capital purposes to meet dayto-day expenses. In St. Vincent and the Grenadines, nearly a quarter of working capital finance
comes from banks, the second highest in the region after Suriname. Consequently, approximately
8% of working capital comes from supplier credit, the lowest in the region. This overall ratio of
approximately 33% is moderate in comparison with the rest of the region, which may suggest that
the cost of working capital financing may be somewhat less burdensome for firms in St. Vincent and
the Grenadines than elsewhere in the region.
57
Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 27: Sources of Finance for Working Capital for St. Vincent and the Grenadines and Comparators
(2010)
30.0
25.0
% of Total
20.0
15.0
10.0
5.0
0.0
Bank
Supplier Credit
Source: Enterprise Survey
5.2.5
Corporate Taxation
If taxation is set comparably high in a country, it could lead to significant downward pressure on
savings, investment and economic outlook. The nominal corporate tax rate in St. Vincent and the
Grenadines is 30%. The general business income tax rate is 30% of profits. International entities
registered in St. Vincent and the Grenadines are not subject to taxation. There is no capital gains tax,
no inheritance tax, no tax on dividends and corporate tax ranges from 10-30%. Withholding tax rates
are:
 Royalties- 20%
 Property Rights- 10%
 Other Payments- 10%
A feature of the local tax system is the Trader Permit system. Tax here is collected annually and
levied on businesses of all sizes that carry stock or inventory and is graduated based on assessed
stock value. The table below shows the number of trader permits issued in 2007 and 2008 at various
levels of stock value, and revenue received from each size category.
Table 11: Revenue per Trader Permits Issued in St. Vincent and the Grenadines (2007 -2008)
Stock Value
Traders
July 2006-7
<$1,000
$1,000-$10,000
10,000-$100,000
$100,000-$1Mil.
>$1Mil.
TOTALS
479
873
344
156
27
1,879
Traders
July 20078
439
884
351
136
35
1,879
% Total
2008
Fees
Levied
25.5
47.1
18.7
7.2
1.5
100
$20
$50
$100
$250
$1000
Fee as % of
Stock
Value
2.0 ++
0.5- 5.0
0.1- 1.0
0.025- 0.25
0- 0.1
Revenue
July 20067
$9,580
$43,650
$34,400
$39,000
$27,000
$153,630
Revenue
July 20078
$8,780
$44,200
$35,100
$34,000
$35,000
$157,080
% Total
2008
5.6
28.1
22.3
21.7
22.3
100
Source: MSME (2010)
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
As indicated from the Doing Business Survey of 2012 (Doing Business, 2012), labour taxes are one of
the lowest among comparator countries and total tax as a percentage of profits is 39%, one of the
lowest in the OECS with the exception of Dominica (38%) and St. Lucia (34%).
Figure 28: Corporate Taxes for St. Vincent and the Grenadines and Comparators (2012)
80
70
Percentage
60
50
40
30
20
10
0
Labour Tax
Total Tax (% Profit)
Source: Doing Business 2012
Overall, enterprises interviewed during country visits did not see corporation tax as a significant
hurdle, however, the imposition of the new indirect value added tax (VAT) and customs duties were
seen as bigger hindrances. The views expressed in the interviews are somewhat supported from the
results of the Enterprise Survey (2012), as shown in the figures below. In relation to tax rates as a
constraint to doing business, 45% of exporters and 34% of non-exporters noted this as a constraint.
In relation to major constraints in this area: 9% of enterprises noted licenses and permits as a major
constraint, the second highest in the OECS after Antigua and Barbuda (17%); tax administration
(19%), the second lowest in the OECS after Dominica (less than 1%); and business licensing (3% for
exporters and 10% for non-exporters).
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
%
Figure 29: Tax Rates as a Constraint to Doing Business for Exporters and Non-Exporters (2010)
100
90
80
70
60
50
40
30
20
10
0
Non-Exporter
Exporter
Source: Enterprise Surveys (2010)
Figure 30: Major Constraints to Doing Business- Licenses and Permits and Tax Administration (2010)
50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Licenses and Permits
Tax Administration
Source: Enterprise Surveys (2010)
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
%
Figure 31: Business Licensing as a Major Constraint to Doing Business (2010)
70
60
50
40
30
20
10
0
Non-Exporter
Exporter
Source: Enterprise Surveys (2010)
5.2.6
Business Environment
According to Doing Business (2012), regulations relating to protecting investors can determine
whether investors are confident or reluctant to invest in the country. Indicators measured if
regulations were clearly defined, promoted disclosure requirements, required shareholder
participation and standards of accountability for company insiders. The report ranked St. Vincent
and the Grenadines at 29, the same as the rest of the OECS and only bettered by Trinidad and
Tobago at 24. On the Strength of Investor Protection Index, St. Vincent and the Grenadines was also
high, again only bettered by Trinidad and Tobago in the region.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
200
9
180
8
160
7
140
6
RANK
120
5
100
4
80
3
60
40
2
20
1
0
0
Protecting Investors - Rank
Strength of Investor Protection Index (0-10)
Figure 24: Strength of Investor Protection for St. Vincent and the Grenadines versus Comparators (2012)
Strength of Investor Protection Index
Source: Doing Business 2012
Although corruption was only noted by 21% of non-exporters and 6% of exporters as a major
constraint to doing business from the Enterprise Surveys (2010), the lowest in the OECS apart from
St. Lucia, the results from private sector field surveys showed a general concern about the function
of Government in this area.
%
Figure 32: Corruption as a Major Constraint to Doing Business (2010)
80
70
60
50
40
30
20
10
0
Non-Exporter
Exporter
Source: Enterprise Surveys (2010)
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
In relation to other crimes, theft and disorder, only 12% of non-exporters and 15% exporters viewed
this as a major constraint to doing business, one of the lowest in the region.
In relation to other major constraints, currently 65% of firms consider that they are competing
against the informal businesses, but overall most firms do not see practices of the informal sector as
a constraint, again one of the lowest in the region.
%
Figure 33: Crime, Theft and Disorder as a Major Constraint to Doing Business (2010)
90
80
70
60
50
40
30
20
10
0
Non-Exporter
Exporter
Source: Enterprise Surveys (2010)
%
Figure 34: Practices of Competitors in the Informal Sector as a Major Constraint to Doing Business (2010)
90
80
70
60
50
40
30
20
10
0
Non-Exporter
Exporter
Source: Enterprise Surveys (2010)
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
In relation to transportation, only 12% of non-exporters and 5% of exporters identify this as a major
constraint. However, because of St. Vincent’s topography, domestic transport takes considerably
more time, which speaks to efficiency and productivity.
%
Figure 35: Transportation as a Constraint to Doing Business (2010)
90
80
70
60
50
40
30
20
10
0
Non-Exporter
Exporter
Source: Enterprise Surveys (2010)
5.2.7
Technology and Innovation
The Neo-Classical paradigm describes changes in technology and technical advancement (human
capital) as fundamental for business and overall macroeconomic growth. As shown in the table
below, of the manufacturing firms surveyed for the Enterprise Survey (2010), 21% had an
internationally recognized quality certificate, one of the highest in the region, and 25% of
manufacturing firms used technology licensed from foreign companies, the highest amongst
comparator countries. However, only approximately one-third of firms had an internet presence,
one of the lowest in the region.
These results suggest that St. Vincent and the Grenadines should be well placed for future business
growth, however, from the interviews conducted in the country, private sector stakeholders
identified several other issues that would constrain growth as it relates to technology and process
innovation: lack of proper business techniques and accounting, such as cash flow systems; lack of a
marketing database; and record keeping.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Table 12: Technology Use by Manufacturing Firms in Selected Countries (% of firms)
Variable
Using technology licensed
from foreign companies
St. Vincent and the
Grenadines
Dominican Republic
The Bahamas
Guyana
Belize
Grenada
Jamaica
Mauritius
Dominica
St. Kitts and Nevis
Barbados
Suriname
Trinidad and Tobago
Antigua and Barbuda
St. Lucia
Source: Enterprise Survey (2010)
5.2.8
International quality
certification
Own
website
24.6
20.9
32.3
Using e-mail to
interact with
clients/suppliers
82.2
24.1
20.1
17.4
16.7
15.2
14.6
14.4
10.3
9.6
6.8
5.4
2.2
0.0
0.0
11.8
31.1
29.5
0.7
32.6
16.5
11.1
1.3
19.4
18.3
11.1
16.9
3.7
0.6
48.9
50.1
46.0
27.8
42.5
36.4
35.9
1.8
40.4
68.2
11.0
30.8
28.3
15.4
85.3
89.5
92.5
85.0
80.6
72.6
69.3
70.8
91.5
100.0
58.5
81.2
87.9
53.9
Trade and FDI Policies
Tariffs in St. Vincent and the Grenadines are relatively low on most categories of goods imported
into the country, suggesting that the country’s local producers could be subjected to high levels of
competition from imports. The average applied tariff on all products in 2009 was 10%, in line with
the average among the group of comparator countries. The level of protection offered to the
agricultural sector is also relatively low, with the average tariff on these goods at 16%. This level of
protection is significantly lower than that offered to agriculture in other countries in the region
where the tariff a quarter of what it was in Barbados, and less than 40% of tariffs in Belize and
Trinidad and Tobago. It should be noted, however, that some industries, particularly tourism,
usually import most goods duty-free.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
%
Figure 36: Market Map Average Tariffs (2009)
70
60
50
40
30
20
10
0
Average for all products
Agricultural Products
Industrial Products
Source: Market Access Map (2009)
As noted in the previous Corporate Tax subsection, many small business importers interviewed felt
excluded from policies related to tariffs. Even with the recently passed Small Business Development
Act (2007), which exempts plant and equipment duties for qualified businesses, small businesses still
said they faced tariff challenges. These enterprises complained that government, particularly in the
recessionary period, were biased mostly towards hoteliers (as they received duty exemptions),
whilst other businesses took the brunt of high duties. For example, hotel and tourism related
businesses benefitted from: exemptions of Duties/V.A.T through the Hotel Act (1988); concessions
on electricity; and technical assistance promotion via the Tourism Authority Act 39 (2007).
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 37: Senior Management Time Spent on Dealing with the Requirements of Government RegulationsComparison across Selected Countries (2010)
14.00
12.00
%
10.00
8.00
6.00
4.00
2.00
0.00
Source: Enterprise Surveys (2010)
In relation to dealing with Government regulations in general, customs and trade regulations and
time to clear imports, it appears that St. Vincent and the Grenadines performs moderately well. As
Figure 37 indicates, 5% of senior management time is spent dealing with Government regulations.
This amount is about the same as for Belize, Barbados and Antigua and Barbuda, less than half of
that for St. Kitts and Nevis, Guyana and the Dominican Republic, and only a couple of percentage
points above Jamaica, Dominica and St. Lucia.
For customs and trade regulations as a major constraint to doing business and time to clear imports,
St. Vincent and the Grenadines also performs relatively well and was about the average for the
region; approximately 22% noted customs and trade regulations as a major constraint and it took
approximately 8 days to clear imports.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 38: Major Constraints to Doing Business: Customs and Trade Regulations (2010)
70
Percentage
60
50
40
30
20
10
0
Source: Enterprise Surveys (2010)
Figure 39: Major Constraints to Doing Business: Time to Clear Imports (days)
25
Days
20
15
10
5
0
Source: Enterprise Surveys (2010)
While the figures below illustrate that St. Vincent posted relatively good scores on trade regulations
and time to clear imports, entities such as the Chamber of Industry and Commerce and East
Caribbean Metals differed. The Chamber stated that most of their members were frustrated by the
costs imposed by the Bureau of Standards for imported products; for example, costs for a
confirmation certificate are levied on importers for Bureau testing. The Chambers further indicates
that lab testing and clearance time is poor even with the certificate. East Caribbean Metals stated
that some periods of production run continuously for months and hence require staff to rotate. One
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
of the biggest threats to production in this period is time spent to clear raw materials at the port,
which increases labour input costs for the company.
“…if you bring in the powder to make the PVC, and it isn’t cleared in time, then you have to pay
overtime for staff.” Michael Persaud, Managing Director of East Caribbean Metals.
5.2.9
Labour Regulation
Labour market distortions and regulations often make investors reluctant to invest in a country. The
main acts and legislation relevant to labour relations are the recently amended Protection of
Employment (2003) and the Wages Regulation (2008).
Protection of Employment (2003) covers employment rights, severance pay and disputes. Under
employment rights, the probationary period for employment is 6 months, terms of employment and
vacation must be written. Termination for good cause states that employees can be terminated and
ineligible for severance pay if, for example, they do not have the capability to perform the work they
were employed to perform. All other terminations, excluding illness and redundancy termination,
must have permission from the Labour Commission.
In relation to remuneration, the Wages Regulation (2008) states minimum levels by employment
category. These minimal levels are shown the Appendices.
In reviewing the results of the Enterprise Survey data, it appears that there is relatively little
dissatisfaction with the labour regulations in St. Vincent and the Grenadines, with only 5% of firms
indicating that these were a constraint to doing business, the third lowest amongst comparator
countries after Dominica (4.4%) and The Bahamas (4.9%) (see Figure 40). However, what does
appear to be a major issue in relation to the labour market is an inadequately trained labour force, a
result supported both by interviews with private sector representatives and the Enterprise Survey
(2010).
Although the percentage of the labour force with post-secondary/university education has increased
from 3.2% in 1995 to 8.6% in 2008 (Kairi Consultants, 2009) 16 , approximately 35% of firms indicated
that an inadequately trained labour force was a constraint to doing business; this was marginally
below the comparator average of 36% and above the OECS average of 30%. This result suggests that
although there is general satisfaction with labour market regulations, relative to the rest of the
OECS, the skills available in the labour force in St. Vincent and the Grenadines are below average for
the region.
16
Kairi Consultants (2009). Final Report: St. Vincent and the Grenadines Country Poverty Assessment
2007/2008: Volume 1.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 40: Labour Market Issues in St. Vincent and the Grenadines and Comparators (2010)
% of Total
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Labour Market Regulation as Constraint
Inadequately Trained Labour Force as Constraint
Source: Enterprise Survey (2010)
As regards the issue of gender, the table below indicates that there is a clear gender segmentation in
the labour market where women comprise 43% of the employed labour force and are mostly
employed in Community, Social and Personal Activities, Financial and Business Services and
Wholesale and Retail. In relation to the sectors that are dominated by females, this is seen in
Education and Social Work, Wholesale and Retail, Hotels and Restaurants and Financial and Business
Services where females account for 84%, 70%, 63% and 62% of employment in these sectors
respectively.
Table 13: Employed Population by Main Industrial Groups (2008)
Industrial Group
Female (% of Sex) Male (% of Sex)
Total
Female (% of Group)
Male (% of Group)
100.0
100.0
42.8
57.2
Agriculture & Fishing
8.4
17.3
26.7
73.3
Mining and Quarrying
-
-
-
-
2.5
3.9
32.2
67.8
-
-
-
-
1.0
25.5
2.8
97.2
12.4
4.0
70.1
29.9
6.7
2.9
63.0
37.0
Manufacturing
Electricity, Gas and Water
Construction
Wholesale & Retail
Hotel and Restaurant
Transportation
0.3
6.0
4.1
95.9
Financial & business services
18.9
8.7
61.9
38.1
Public Administration/Social
Security and Defence
Education/Social Work
6.6
5.1
49.0
51.0
11.2
1.6
84.0
16.0
24.9
20.5
47.7
52.3
7.1
4.4
55.0
45.0
Other Community, Social
and Personal Activities
Not Stated
Source: Kairi Consultants (2009)
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
For males, the dominant sectors of employment are Construction, Community, Social and Personal
Activities, and Agriculture and Fishing. In terms of sectoral dominance for males, this is seen in
Construction, Transportation, Agriculture and Fishing, and Manufacturing where males comprise
97%, 96%, 73% and 68% of employment in these sectors respectively.
It should however be noted that although these statistics are intuitively accurate, the data is drawn
from a poverty survey and not a labour market survey and that there are sectoral gaps in relation to
Mining and Quarrying and Electricity, Gas and Water.
5.2.10 Infrastructure, Communications and Energy
Nordås et al. (2004) illustrated that the quality of infrastructure and telecommunication is an
important determinant of trade performance and export competitiveness. The government of St.
Vincent recently passed the ICT Investment Act (2007), which gives exemptions on duties and tax
concessions for ‘Approved’ ICT companies willing to invest, employ and overall contribute to the
development of St. Vincent’s private sector. Penetration of mobile phones and internet users per
100 persons increased twofold and sevenfold respectively in the last 6-8 years.
per 100 people
Figure 41: Availability of Services to Firms for St. Vincent and the Grenadines versus Comparators (2010)
200
180
160
140
120
100
80
60
40
20
0
Fixed broadband Internet
Internet users
Mobile cellular subscriptions
Source: World Development Indicators
As indicated in the figure above, access to fixed broadband internet is low across comparator
countries, and in the OECS ranges from 8 per 100 in Antigua and Barbuda to 27 per hundred in St.
Kitts and Nevis with access in St. Vincent and the Grenadines at 11 per 100. For internet users, this
stands at 70 per 100 in St. Vincent and the Grenadines, the third highest in the OECS after Antigua
and Barbuda (80 per 100) and St. Kitts and Nevis (76 per 100). Also indicated in the figure above is
the high level of mobile phone penetration, in excess of 100 for all OECS countries.
Drawing on the results of the Enterprise Survey (2010) results showed that the major constraints in
relation to Infrastructure, Communications and Energy were electricity (25% of firms), and transport
(12%). Of interest here is that these results are below LAC and World averages, as shown in the
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
table below. In addition to these results, it appears that the electricity system in the island is
performing well given the low number of electricity outages per month, duration of outages, and
losses due to outages, all below LAC and World averages. In relation to the source of displeasure by
25% of firms that identified electricity as a major constraint, the source of this displeasure may lie
more in the cost of energy rather than the infrastructure itself, as seen across the region.
Table 14: Infrastructure and Electricity in St. Vincent and the Grenadines (2010)
Percent of firms identifying electricity as a major constraint
Percent of firms owning or sharing a generator
Percent of firms identifying transportation as a major
constraint
Days to obtain an electrical connection (upon application)
If a generator is used, average proportion of electricity from
a generator (%)
Number of electrical outages in a typical month
If there were outages, average duration of a typical
electrical outage (hours)
Duration of a typical electrical outage (hours)
If there were outages, average losses due to electrical
outages (% of annual sales)
Losses due to electrical outages (% of annual sales)
Proportion of electricity from a generator (%)
Number of water insufficiencies in a typical month*
Source: Enterprise Survey (2010)
St. Vincent and the
Grenadines
25.4
22.9
12.0
Latin America
& Caribbean
37.6
28.1
23.5
World
9.3
2.9
21.3
18.4
34.3
21.1
1.7
1.6
2.5
2.5
7.0
4.9
1.2
0.8
1.3
2.8
3.1
5.0
0.6
0.2
0.2
1.1
2.1
0.7
3.0
7.0
1.4
38.9
32.5
21.8
In looking at specific differences across the rest of the OECS, the figure below indicates that
Electricity is viewed as a major constraint by only 17% of firms in Grenada, all of the other OECS
countries are above St. Vincent and the Grenadines (25%), ranging from 45% in Antigua and Barbuda
to 66% in Dominica. For Transport, the 12% that noted it as a major constraint in St. Vincent and the
Grenadines was matched by Dominica and just below Grenada at 15%; all other OECS countries were
in the range of 21% to 31%.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Percentage
Figure 42: Major Constraints to Doing Business: Electricity and Transportation (2010)
70
60
50
40
30
20
10
0
Electricity
Transportation
Source: Enterprise Surveys (2010)
5.2.11 Gender
Figure 43 and Figure 44 indicate that St. Vincent and the Grenadines outperforms all other
comparator countries in relation to both female participation in ownership (76%), permanent female
full-time workers (49%) and females in top management positions (39%). However, the figures do
not illustrate that females comprise most of the estimated 30% below the poverty line, and 55% of
those engaged of informal-type sectors.
As indicated in the discussion of the labour market, the figures also do not reveal the clear
segmentation in the labour market with female employment mainly in Community, Social and
Personal Services, Finance and Business Services and Wholesale and Retail Trade, mostly in
elementary positions.
In seeking to address gender issues in St. Vincent and the Grenadines, the Government has not only
established a Gender Affairs Agency, it has also implemented a number of initiatives to generate
employment in the rural communities that would directly benefit women.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 43: Female Participation in Establishments for St. Vincent and the Grenadines versus Comparator
(2010)
80
70
60
%
50
40
30
20
10
Percent of Firms with Female Participation in Ownership
Trinidad and Tobago
The Bahamas
Suriname
St. Lucia
St. Kitts and Nevis
Mauritius
Jamaica
Guyana
Grenada
Dominican Republic
Dominica
Belize
Barbados
Antigua and Barbuda
St. Vincent and the
Grenadines
0
Proportion of Permanent Female Full-time Workers
Source: Enterprise Surveys (2010)
Figure 44: Percentage of Firms with Female Top Managers for St. Vincent and the Grenadines versus
Comparators (2010)
45
40
35
30
25
20
15
10
5
Dominican Republic
Suriname
Antigua and Barbuda
Guyana
Trinidad and Tobago
St. Kitts and Nevis
Dominica
St. Lucia
Grenada
Jamaica
Barbados
Belize
The Bahamas
St. Vincent and the
Grenadines
0
Source: Enterprise Surveys (2010)
5.2.12 Ease of Doing Business
The influence of institutions in St. Vincent and the Grenadines on the ease of doing business is
represented in the figure below in relation to the results of the Doing Business Survey of 2012. As
the figure indicates, the country ranks 75 th out of 185 countries in relation to the ease of doing
business. Within the region, only four other countries rank higher: Antigua and Barbuda (63 rd),
Dominica (68th), St. Lucia (53rd) and Trinidad and Tobago (69th).
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 21: Overall Ease of Doing Business Rankings for Selected Countries (2012)
Trinidad and
Tobago
Bahamas, The
Suriname
Antigua and
Barbuda
200
Barbados
Belize
150
Dominica
100
St. Vincent and the
Grenadines
Dominican Republic
50
0
St. Lucia
Grenada
St. Kitts and Nevis
Guyana
Seychelles
Haiti
Palau
Mauritius
Jamaica
Malta
Ease of Doing Business Rank
Starting a Business
Paying Taxes
Trading Across Borders
Protecting Investors
Source: Doing Business 2012
In relation to the factors that contribute to this relatively high ranking for St. Vincent and the
Grenadines, the country ranks highly in relation to Trading Across Borders (3 rd), Protecting Investors
(5th) and Paying Taxes (6th). The country ranks 11th in relation to ‘Starting a Business’.
In relation to the time and cost of registering a business, 2004 data indicates that in relation to time
(in days), only St. Kitts and Nevis, Jamaica and Dominica in the region perform better than the 10
days in St. Vincent and the Grenadines. In relation to cost (as a percentage of GNI), only Trinidad
and Tobago, in relation to comparator countries, outperforms St. Vincent and the Grenadines where
cost was 2.3% of GNI.
In 2011, Doing Business indicators suggest that while days to register a business had not changed,
the cost of registering a business has increased to 21.2% of GNI (Doing Business, 2011).
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 22: Time and Cost to Start a Business: St. Vincent and the Grenadines versus Comparators (2004)
Time (days)
60
50
40
30
20
0
Trinidad and Tobago
St. Vincent and the…
Mauritius
St. Lucia
Jamaica
Palau
The Bahamas
St. Kitts and Nevis
Antigua and Barbuda
Barbados
Guyana
Seychelles
Dominican Republic
Dominica
Grenada
Belize
10
Belize
Trinidad and Tobago
Barbados
The Bahamas
Palau
Guyana
Antigua and Barbuda
Dominican Republic
Grenada
St. Lucia
St. Vincent and the…
Seychelles
St. Kitts and Nevis
Jamaica
Mauritius
Dominica
50
45
40
35
30
25
20
15
10
5
0
Cost (% of GNI)
Source: WB, and Archibald, Lewis -Bynoe and Moore (2004)
Figure 45: Cost and Time to Start a Business: St. Vincent and the Grenadines versus Comparators (2011)
Time (days)
60
50
40
30
20
0
Trinidad and Tobago
Mauritius
Palau
Bahamas, The
Antigua and Barbuda
St. Kitts and Nevis
Guyana
Dominican Republic
St. Vincent and the…
Dominica
St. Lucia
Grenada
Belize
10
Belize
Trinidad and Tobago
Bahamas, The
Palau
Guyana
Antigua and Barbuda
Dominican Republic
St. Kitts and Nevis
Grenada
St. Lucia
Dominica
St. Vincent and the…
50
45
40
35
30
25
20
15
10
5
0
Cost (% of GNI)
Source: Doing Business 2011
In relation to changes over time, the only comparable data for 2012 is 2011. However, the data does
show some significant changes over the period with St. Vincent and the Grenadines improving by 9
ranking positions for the Ease of Doing Business and 10 positions in relation to Starting a Business.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 24: Change in Doing Business Rankings for St. Vincent and the Grenadines versus Comparators (2011
to 2012)
10
5
RANK
0
-5
-10
-15
Change in Ease Rank
Change in Starting a Business Rank
Source: Doing Business 2012
Other indicators of the ease of doing business include dealing with construction permits, getting
electricity, registering a property, getting credit, protecting investors, paying taxes, trading across
borders, enforcing contracts and resolving insolvency (see figures below). Areas where St. Vincent
and the Grenadines under-performed, i.e. had a ranking higher than most comparator countries was
in relation to registering property, getting credit, and resolving insolvency. The areas where the
country performed relatively well were: dealing with construction permits; getting electricity;
protecting investors; and trading across borders.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 24: Doing Business Rankings for St. Vincent and the Grenadines versus Comparators (2012) for
Selected Indicators
200
180
160
140
RANK
120
100
80
60
40
20
0
Dealing with Construction Permits Rank
Getting Electricity Rank
Registering Property Rank
Source: Doing Business 2012
Figure 24: Doing Business Rankings for St. Vincent and the Grenadines versus Comparators (2012) for
Selected Indicators
200
180
160
RANK
140
120
100
80
60
40
20
0
Getting Credit Rank
Protecting Investors Rank
Paying Taxes Rank
Source: Doing Business 2012
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 24: Doing Business Rankings for St. Vincent and the Grenadines versus Comparators (2012) for
Selected Indicators
200
180
160
140
RANK
120
100
80
60
40
20
0
Trading Across Borders Rank
Enforcing Contracts Rank
Resolving Insolvency Rank
Source: Doing Business 2012
Drawing on data from the World Heritage Foundation (see figure below), St. Vincent and the
Grenadines performs well in relation to economic freedom in comparison with selected countries.
With an overall score of 66, the country is only surpassed by St. Lucia (71) and Barbados (69) in the
region. Underlying this overall score are good scores in Business Freedom and Property Rights.
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Figure 46: Economic Freedom, Comparison for Selected Countries (2012)
Trinidad and Tobago
Barbados
100
Belize
80
Suriname
Dominica
60
40
Seychelles
Dominican Republic
20
0
St Vincent and the
Grenadines
Guyana
St Lucia
Haiti
Mauritius
overall score
financial freedom
Jamaica
Malta
business freedom
investment freedom
property rights
Source: World Heritage Foundation (www.heritage.org)
St. Vincent and the Grenadines demonstrates relatively good rankings in relation to governance and
overall economic freedom. However, there are some institutional shortcomings in relation to
‘getting credit’ and ‘resolving insolvency’, two issues that inextricably linked in relation to difficulties
in resolving insolvency having knock-on effects in relation to increasing risk-averseness and hence
increased difficulties in ‘getting credit’. Giving the important role played by finance in the
development process, the country’s poor ranking in relation to accessing credit is a significant risk to
private sector development and growth. Key policy interventions needed in this regard include the
establishment of a public credit registry and support for the establishment of a private credit
bureau. This would reduce information asymmetries that may exists for lenders and therefore
enhance the speed and potentially the amount of credit made available to the private sector. Key
legislative changes are also required to provide greater protection to creditors as well as speed-up
the process of enforcing security rights.
5.3.
Summary
Already starting at a disadvantage, the country of St. Vincent and the Grenadines gained
independence at an average lag of 14 years compared to its More Developed Countries (MDC)
counterparts (i.e. Barbados, Jamaica and Trinidad). It is clear that the country is faced with
numerous constraints that could impede private sector development. Notwithstanding, the country
has been relatively successful in several of private sector issues previously mentioned, and it is
therefore important that the country continue its advancement in these areas, whilst ensuring
correction of the most critical private sector facets. The main strengths of the private sector
development framework in St. Vincent and the Grenadines relate mainly to institutions where there
is a clear presence of support institutions (CED, Invest SVG, NDF) and the provision of support to the
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
productive sectors through fiscal policies. It is also commendable that a public sector strengthening
exercise is being undertaken. It is also worthy of comment that there is a high level of participation
by women in ownership and management in St. Vincent and the Grenadines. However, there are
several constraints to private sector development in the country relating to time and monetary costs
of doing business (electricity, energy, importing/exporting and finance), lack of access to finance due
to stringent conditions for credit and an underdeveloped capital market, weakness in interregional
transport, and labour force issues related to a lack specialist skills and an inadequately trained
labour force. All of this is in an environment where external threats from climate change and natural
hazards, crime, and competition from new tourism destinations, present severe challenges to the
private sector in St. Vincent and the Grenadines.
Table 15: Biggest Obstacles to Business in the OECS (Enterprise Survey, 2010)
Biggest Obstacle
Access to finance
Inadequately educated
workforce
Crime, theft and disorder
Tax rates
Electricity
Political instability
Customs and trade regulations
Practices of the informal
sector
Tax administration
Corruption
Transportation
Courts
Business licensing and permits
Access to land
Labour regulations
ANT
15.3
1.3
DOM
44.0
2.1
GREN
12.8
15.4
SKN
20.9
10.0
SLU
35.0
7.4
SVG
20.6
12.8
7.9
18.2
13.0
6.1
16.1
4.8
3.6
8.6
29.7
0.0
0.9
3.1
10.2
17.6
2.7
12.3
2.1
8.4
13.4
20.0
15.2
0.5
5.2
5.8
5.1
6.0
22.4
0.2
4.0
2.7
11.3
11.0
10.6
10.2
9.9
7.8
2.4
7.7
3.9
0.0
2.7
0.7
0.0
0.0
0.0
3.5
0.0
0.0
0.0
4.4
5.7
1.4
4.1
0.8
0.0
3.9
2.9
1.4
3.5
3.4
0.0
0.0
0.7
0.0
0.0
0.9
10.7
0.0
0.0
0.0
5.6
2.6
1.5
1.0
0.3
0.3
0.0
0.0
The key threats identified from the Enterprise Survey (2010) for St. Vincent and the Grenadines
identified access to finance, an inadequately educated workforce, crime theft and disorder, tax
rates, and electricity as the five biggest obstacles to doing business in the country. These results
were mostly borne out in the examination of specific data presented in the above analysis. These
results are mostly in keeping with the rest of the region. Some of the recommendations to address
these and other issues raised during interviews with stakeholders are discussed in the following
section.
5.4.
Field Research Findings
In addition to the desk review of key private sector development challenges (presented in previous
sections), interviews were conducted with various departments, enterprises and representative
associations in the public service, private sector and civil society. These entities were chosen to
capture a wide variety of views regarding the main challenges concerning private sector
development in the country. Interviews were conducted between July and August 2012 using a
focused semi-structured interview. Both open-ended and closed-ended questions were posed to
interviews in order to obtain details on the key private sector development challenges. Following on
from these interviews, issues to emerge from the working groups developed for the Caribbean
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Growth Forum (CGF), as described in the introduction, were also reviewed. The following
subsections identify the main critical issues to emerge from the interviews and the CGF and present
a series of required actions to address these issues.
5.4.1
Priority Action Areas
The key obstacles to business growth gleaned from the background research in St. Vincent and the
Grenadines where:

Finance Issues: High interest rate spreads and high collateral requirements;




Lack of an inadequately educated workforce
Crime, theft and disorder
Tax rates
Cost of electricity
During the interviews conducted with key stakeholders, these issues were presented and
interviewees were asked to comment in relation to:




Did the list adequately capture the main issues constraining private sector development in
the country?
What other issues would they add to this list?
Identification the top three issues holding back private sector development?
Recommendations to solve the identified challenges?
From the interviews conducted and additional secondary data gathered during in-country visits, six
main issues were identified which are mostly in keeping with the results of the background research.
The following subsections investigate these critical issues affecting private sector development in St.
Vincent and the Grenadines. The main critical issues identified were:




Costs and Stringency of conditions for finance
Customs and Trade Procedures
Market Access
Inadequately skilled labour force


Political and Governance Issues which related to ad hoc planning;
A ‘silo’ mindset in the public sector in relation to agencies and departments operating in
their own interest rather than to a specific strategic plan;
Lack of fiscal space and hence a lack of Government investment in public good investments
such as tourism marketing, business support mechanisms and addressing inefficiencies in
the public service;



Cost of energy and electricity;
Lack of product differentiation and limited export market focus makes the country
vulnerable to shifts in the global business cycle.
These findings from the applied element of the PSA are not dissimilar to those emerging from the
Caribbean Growth Forum (CGF) consultations undertaken across the region in the first quarter of
2013. The three working groups (Logistics and Connectivity, Investment Climate, Skills and
Productivity) organized for the CGF for St. Vincent and the Grenadines identified a number of issues
that once addressed can catalyze private sector development. These issues were: finance, trade,
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information and ICT, business support services, skills in the labour force and productivity. The main
needs identified from the CGF Working Groups to address these issues for the development of the
private sector in St. Vincent and the Grenadines were:






Availability and Access to Finance
Trade Facilitation:
o Movement of People and Goods
o Operation of customs in relation to ease of clearing goods
o Market access and competitiveness
Use of Information and Communication Technologies (ICT) and increased access to
information
Review and rationalization of current incentives and private sector development initiatives
Education and training development to match needs of industry
Increase productivity
Drawing on the results of all aspects of the research, the following SWOT (Strengths, Weaknesses,
Opportunities, Threats) matrix was developed in relation to the private sector growth and
development in St. Vincent and the Grenadines. The matrix is subsequently used to develop
recommendations and action plans based on the main critical issues identified.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Table 16: Private Sector Growth and Development: SWOT Matrix for St. Vincent and the Grenadines
Strengths
International Relations and
Governance: Membership of
international bodies, regional
integration schemes
(OECS/ECCU and CARICOM)
and other regional bodies
(CDB, UWI, ECCB). Signatory to
trade agreements and
international conventions;
Stable democracy;
Strength of investor
protection;
Good rating on Governance
effectiveness;
Relative overall ease of doing
business;
Fiscal incentives for
businesses;
Currently strengthening the
public service;
Existence of capacity
development and business
support organisations.
Economy:
Stable regional currency;
Relatively low inflation ;
Remittances from ex-patriots;
Existence of alternative
financing options (COMFI).
Labour and Skills:
Good labour relations;
Access to education in the
domestic and regional market.
Sectors:
Established reputation in
tourism;
Established manufacturing
zones;
Environment and Society:
Natural beauty and heritage;
Transport and
Communications:
International sea port;
Proximity to regional and
international markets;
Relatively good domestic
network infrastructure
(transport and
communications);
Access to technology
platforms.
Weaknesses
Governance:
Lack of human resource capacity
in business support organizations;
Lack of formal dialogue between
social partners;
Lack of formal coordination
amongst business support
organizations;
Lack of a strategic plan to guide
public and private sector
investment and lack of an
economic board;
Lack of freely available data.
Economy:
Relatively high Government debt;
High current account deficit;
Difficulty in accessing finance due
to cost and collateral
requirements;
Limited utilisation of non-debt
financing (i.e. equity);
Small domestic market;
Low tariff levels exposes domestic
producers to increased
competition;
Costs of energy;
Cost of regional and international
transportation;
Labour and Skills:
Lack of skills demanded in the
labour market
Sectors:
Lack of diversification of products
and export markets;
Small-scale production with no
ability to obtain economies of
scale.
Environment and Society:
Exposure to natural disasters;
High levels of poverty and
unemployment;
Lack of flat land.
Transport and Communications:
Transport constraints within the
region;
Airport facilities (although new
airport under construction);
Cost of import certificates.
Technology:
Existing technology not utilised to
its full potential (private and
public sectors)
Opportunities
Economy:
Freedom of
movement of
capital in the
region;
Freedom of
movement of
goods in the
region;
Exploitation of
larger regional
market;
Labour and
Skills:
Freedom of
movement of
skilled labour
in the region.
Sectors:
Specialty
tourism;
Geothermal
energy;
Agroprocessing;
Trade
agreements.
Technology:
Exploitation of
existing
technology for
cost-savings in
the private
sector and
greater
dissemination
of information
from the public
sector.
Threats
Economy:
Lack of growth in
main trading and
inward investing
countries;
Fall in FDI inflows;
Increases in
commodity prices
on the
international
market
Labour and Skills:
Brain drain
Sectors:
Competition from
new tourism
destinations with
new tourism
products and loss
of seat capacity
from non-national
carriers;
Increased
competition from
imports for
domestic
producers with
greater trade
liberalisation;
Environment and
Society:
Climate change.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
These interrelated issues are discussed below and used to develop recommendations and action
plans in relation to the identified priority areas of: general governance issues; access to finance
issues; energy costs issues; and labour market issues.
5.4.1.1. General Political and Governance Issues
The PSA for St. Vincent and the Grenadines identified general political and governance issues as a
critical issue impacting on private sector development. Stakeholders were of the view that
development planning tended to be ad-hoc with little or no use of strategic long-term visioning. In
addition, private enterprises were of the view that there was a ‘silo mentality’ in public sector
business support organisations with these agents operating as autonomous entities without an
explicit relationship with other public sector entities and a single strategic vision. This negative view
is somewhat contrary to St. Vincent and the Grenadines’ relatively good ranking among comparator
countries for ‘Government Effectiveness’, which looks at the perceptions of stakeholders in relation
to the quality and independence of public services and the civil service, the quality of policy
formulation and implementation, and the credibility of governments’ commitment to these policies;
St. Vincent and the Grenadines ranked 7th out of 19 comparator countries and was 3rd highest in the
OECS. Other hindrances in St. Vincent and the Grenadines to emerge from the interviews in relation
to the public sector were the Bureau of Standards’ lack of proper laboratory testing and the cost of
importing certificates.
One of the main issues that appears constant across the OECS is what has been termed a ‘silomindset’ in the business support infrastructure. Most businesses in St. Vincent and the Grenadines,
both directly and indirectly, were of the opinion that domestic support organizations were either
influenced politically or lacked quality leadership. An MSME policy and strategy report from 2009
substantiates these claims in relation to the public sector, as highlighted below:
“There is a strong public perception that government departments do not work together
well, but instead have their own agendas aimed at job preservation as much as at customer
service. This situation merely reinforces a “silo mentality” in the public sector. In any
economy, particularly one with a public service in excess of 8,000 employees, there is no
justification for this kind of divisiveness.” (Commonwealth Secretariat, 2009:68)
The research undertaken for the private sector assessment somewhat corroborates these findings
and suggests similar recommendations made which call for more liberalized policies regarding
information disclosure, streamlining of support services to business, revision of fee schedules and
expanding opportunities for SMEs through Government procurement.
In addition, the
Commonwealth Secretariat (2009) report recommends:
‘Streamlining of government processes as they relate to servicing small businesses. This will
involve aggressively rationalising the multiplicity of forms, records and processes currently
required for various registrations by business (especially by MSMEs).
Revision of the CIPO [Corporate and Intellectual Property Office] fee schedule. The current
fee schedule for CIPO registrations is high and will be reviewed where such charges are
within CIPOs control to bring them more inline with international practice. Similarly efforts
will be made to downscale the attendant legal fees charged to struggling entrepreneurs.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Repackaging of public sector procurement programmes to deliberately create possibilities for
MSMEs to participate in public tenders will also be pursued and legislation will make it
mandatory for the government itself and for government-owned companies to reserve at
least 25 % of their tenders for small businesses.’
The negative views expressed above should however not suggest that there are no positive actions
being taken. In St. Vincent and the Grenadines, Invest SVG serves as the major promotional agency
for businesses and the organization has a number of accomplishments regarding trade, cultural and
fashion shows. However, some of the businesses interviewed thought that not enough time and
money was directed towards gaining market access for the small-scale productive sectors and action
of this concern has been taken. As a consequence of this constraint noted by the private sector, the
Centre for Enterprise Development (CED), conceived a program called ‘VINCYKLUS’ meant to serve
as a cluster for small businesses, with an overall objective:
“To increase and strengthen the capability of individual producers operating within the
cluster, through export development, training, marketing and promotion, and information
support, in order to enhance and develop the export capacity of firms to take full advantage
of market access opportunities”
The conception of VINCYKLUS by the CED should be commended. However, the VINCYKLUS program
currently faces human resource constraints, such as finding suitable management for the cluster
program. Hence it is recommended that policies be geared at strengthening institutional capacity at
VINCYKLUS and other business support agencies. It is also advised that for all initiatives/policies
pertaining to market access, that strong alliances/partnerships be forged among VINCYKLUS, Invest
SVG, NDF, the Chamber of Industry and Commerce and the wider business community. As with
other recommendations, there is a greater need for the development of linkages and alliances.
Such issues and recommendations should inform the development of a national strategic plan for
private sector development, an explicit delineation of the remits of various Government agencies,
and the development of greater communication channels between business support organisations
(both public and private) and greater dissemination of information. The relevant Action Plans
developed from the PSA to address these issues include:

Action 1: Establishment of a Tripartite Committee (government-employer-labour) to
identify the needs of all bodies and guide and oversee private sector development
strategies.
Once established, the Tripartite Committee should seek to also address the following:


Action 2: Rationalisation and streamlining of public sector’s business su pport
framework through the work of the Tripartite Committee to ensure a revised system
that addresses both the needs of the private sector (access to finance, technical
assistance and data) as well as wider obligations of Government.
Action 3: Development of a National Strategic Plan that mainstreams private sector
development in the country. Through the lobbying efforts of Government, the plans for
the development of the private sector should also be included in and regional strategic
plans at the level of the OECS/ECCU and CARICOM.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
A national strategic plan can ensure that national policy planning is continuous and not subject to
the electoral business cycle. It was considered that such an approach to development planning
would also enhance the transparency of government policy formation as well as reduce business
uncertainty.
An overall national strategic plan would also help to get around the common criticism of the ‘silomindset’ common in the public sector. Rather than focussing on departmental or ministry-specific
objectives, technocrats would be working towards national objectives. While this approach does not
necessarily mean that intra-governmental lines of communication would improve, it does however,
provide a basis for overall strategic planning and developing policy priorities. ICTs and knowledge
platforms could then be used to facilitate communication between various departments and
ministries.
The development of a national strategic plan however offers up some logistical challenges in relation
to who develops the plan and how to ensure that it would be followed with changes in Government.
These challenges should however not be viewed as insurmountable and the existence of these
challenges should not deter action. Indeed, if the private sector was sufficiently strong, and insisted
that successive government keep to a development plan, the concern about political business cycles
would not be present. This therefore suggests that if the private sector is afforded the space to
grow, these problems with implementation would wane.
One of the other issues that warrant discussion is the lack of fiscal space afforded to the
Government. While the development of a strategic plan for the development of the private sector
will not in itself solve the fiscal problems of government, the demonstration of commitment to
private sector development can act as a boost to investor confidence and open avenues for publicprivate partnerships in public goods where opportunities exist. In addition, the establishment of a
more interactive and proactive business support framework can assist in expenditure savings
through rationalisation, as well as revenue enhancement through the general growth and
development of the private sector.
However, in order to effectively execute these action plans a number of issues will need to be
addressed including:

Lack of information sharing and research by the private sector;

Lack of economic and labour market information; caused in part by the limited use of
existing technology by the public sector.
Private enterprises are reluctant to share information on their enterprises and by greater inclusion in
the decision-making process there may be greater willingness to share relevant information. The
private sector will need to inculcate this culture of information sharing to assist governments in
understanding the situation of the private sector, and its contribution to the economy. One such
avenue that this can be addressed through is the establishment of a private sector funded research
unit, perhaps overseen by the private sector representative on the Tripartite Committee. Such a
unit could identify opportunities (domestic and foreign) for private sector growth as well as potential
threats to the various sectors. Pooling of resources would allow the decision-making process of
individual firms and other economic agents to benefit from evidence-based research and data which
should enhance profitability and sustainability.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
There is also a strong demand by private sector enterprises for data, to assist in strategic planning
and the formulation of business plans for accessing finance. However, the situation is not that data
does not exist in the region, it is basically that the data is not collated or mined as public sector
agents are not fully exploiting the available technology. Individual governments, through such
agencies as Inland Revenue Departments and National Insurance Schemes, collect information over
specific periods that could provide more detailed information as regards revenue and expenditure
by sector, employment levels and categories, and investment data. The problem in this regard is a
lack of infrastructure and human resources to consistently collate and present data. This is an area
where, at the country and regional level through national statistical offices and the OECS Secretariat
and the Eastern Caribbean Central Bank, that donors could direct resources; especially as it relates
to technical assistance in the development of such a system. These are the sorts of issues that will
need specific attention to enable all of the action plans to be effectively implemented.
It should however also be noted that the private sector is also not utilising the available technology
to its fullest potential even though they would benefit from its use in the general operations of their
firms. As an example, firms utilize a significant amount of their human resources physically
collecting payments whilst the technology exists that can provide a far more efficient solution,
thereby reducing fraud and associated security issues. Once implemented, the current resources can
then be deployed to enhance the levels of service delivery or to more productive areas within the
business operation.
5.4.1.2. Access to finance
A problem that has been consistent in the region is the cost of financing and under-developed
capital markets. Private sector stakeholders interviewed in St. Vincent and the Grenadines stated
that finance was either difficult to attain due to collateral pre-requisites or that it was too costly to
borrow (high interest rates). Loans from credit unions and other financial intermediaries were
typical mortgage and consumer type financing, and these institutions tended to shy away from
private sector funding. Although the interest rate spread in St. Vincent and the Grenadines is the 3 rd
lowest in the OECS, the spread in this regard is important to monitor as it provides a relative
indicator as to the efficiency of financial institutions and/or the level of competition in the sector;
high interest rate spreads can either indicate that financial institutions are inefficient or that they are
exploiting a dominant market position. High transaction and operating costs are passed onto the
consumer via higher interest rates.
In St. Vincent and the Grenadines, working capital and other financial services are predominantly
sourced from commercial banks, as demonstrated from the Enterprise Survey (2010). The problem
with the commercial banking system is, first, a large percentage of banks are foreign-owned with
conservative portfolios and employ a strategy of ‘cherry-picking’ the least risky private sector
borrowers. Second, transaction and operation costs are relatively high and hence transferred to the
interest rate paid on loans. Ultimately, the high level of informal unaccounted businesses and
information asymmetries increase the risk of lending, which also contributes to higher up front
collateral requirements.
It should however be noted that these limitations to accessing finance are not purely institutional,
that entrepreneurs also either propose impractical projects, or present poorly constructed business
plans due to a lack of skills, as well as a lack of data.
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The main hindrances therefore, for productive enterprises in relation to finance in St. Vincent and
the Grenadines, relate to the cost of finance (high interest rates) and collateral requirements. For
creditors, they insist that due to high operating costs, informality, and a lack of accounting records,
that their risks are increased due to an increased likelihood of default and hence this needs to be
offset by higher interest rates and collateral requirements.
To address these access to finance issues (collateral requirements and high interest rates), there is a
need to investigate the cause of these issues which relate primarily to efficiency in financial
institutions, high transaction and operational costs, and information asymmetries in relation to
borrower information available to lenders. In addition, there is also the need to balance the savings
deposit rate and the reserve requirements set by the ECCB. The ECCB’s Savings Deposit Rate (SRD),
the statutory minimum rate on savings deposits, has been shown to be positively correlated with
interest rate spreads from commercial banks operating in the OECS (Grenade (2007). This, taken in
relation to the Reserve Requirement Ratio (RRR), proxied as the percentage of reserves to total
deposits mandated to be held by commercial banks, which has an effect on the amount of funds
available to make loans, together influence higher interest rates on loans in the region as this
burden is normally passed on to customers. It is recommended that these two variables, RRR and
SDR, are assessed intermittently to find a suitable balance as they both affect the cost of borrowing
in St. Vincent and the Grenadines and the OECS in general. The other causes of high interest rates,
high interest rate spreads and high collateral requirements are discussed below.
Transactional and Operating Costs
Transaction costs are defined by Coase (1937) as the costs associated with a transaction on the open
market, and by Wang (2003) as the economic value of resources used in locating trading partners
and executing transactions. Communications charges, legal fees, informational cost for finding the
‘right price’ are all examples that apply to banking transaction costs. The World Bank (2008) stated
that modern trends in transactional lending suggest that any improvements in information available
and technological advances are likely to improve access to finance for MSME’s (for example through
credit registries and automated credit appraisal) and hence reduce transactional costs. To quote:
“Encouraging the development of specific infrastructures (particularly in information and
debt recovery) and of financial market activities that can use technology to bring down
transaction costs will produce results sooner than long-term institution building.’ World Bank
(2008:15)
The IMF (1998) noted that operating costs for commercial banks in the Eastern Caribbean was a key
determinant of interest rate spreads. Grenade (2007) showed that operating cost ratios, defined as
operating costs to assets, for foreign banks in the Eastern Caribbean were higher than indigenous
banks and the overall average ratio was higher than the acceptable international standard of 3.6 17 .
It can be assumed that the operating cost ratio for commercial banks operating in St. Vincent and
the Grenadines, is presently higher than Grenade’s 2003 estimates, due to substantial changes in
energy prices and other expenses.
The concept of introducing technological advances to reduce transaction and interest costs from
banks operating in St. Vincent and the Grenadines should be high on the priority list. However,
17
Moore and Craigwell (2000)
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
because of the informality of most businesses in the country, which leads to more personal catering
between the borrower and lender, transaction costs may still prevail. In addition to this, a reduction
in overhead costs to assist with lowering interest rates could potentially displace many employees in
the banking sector. For example, a Vincentian banking representative interviewed for the private
sector assessment, stated that they always wanted to introduce cost reducing mechanisms such as
internet banking and other technological reforms, however, because of the mindset of the
population and the informality of business customers, there was a preference for face-to-face,
relationship-based, banking. To reduce transaction and operating costs it is therefore recommended
that policies be structured around ensuring the formality of businesses (i.e. the registering of
companies, technical assistance for product/service development), technological advancement (i.e.
credit information systems), and efficiency of operating costs (i.e. incentives/policies that reduce
variable costs of electricity such as retrofitting). All of these policies should contribute to reductions
in interest rates charged for credit services.
Given that inefficient operation of financial institutions will result in increased costs to consumers, it
is also recommended that a quarterly assessment be taken of the overall efficiency rate to ensure
commercial banks operating in St. Vincent and the Grenadines are running efficiently and, as a
result, benefitting the consumer, individual or enterprise, from competitive prices. The overall
efficiency rate in this regard relates to profitability rates, margin rates, weighted results rates and
employment efficiency rates18 .
Information Asymmetries
Informational asymmetries, as well as informality, directly affect the level of collateral required by
commercial banks in the region as they increase the uncertainty of lending, id est. higher risk. This
uncertainty is therefore passed onto customers through collateral requirements. While average
collateral in St. Vincent and the Grenadines was 211%, the world average was 168%, and the average
for Latin America and the Caribbean was 197% (Enterprise Survey, 2010). Any measures to reduce
information asymmetries, and increase formality, should therefore assist in reducing the cost of, and
access to, commercial finance.
A problem that has been encountered, not only by financial institutions, but also NGOs, public and
technical institutions, is that lack of information and record keeping from private enterprises in St.
Vincent and the Grenadines. For example, one indigenous bank interviewed stated that their
institution was considered ‘the poor man’s bank’ and that many customers are facilitated even
without the correct paper work. Another statutory institution stated that businesses wanted both
technical assistance and finance, but were unwilling to divulge information and records on their
business. This lack of information disseminated by businesses can be attributed to:
18
Profitability Rates, defined as: Return on Assets (ROA)- presented as a ratio of financial results and a bank’s
assets; Return on Equity (ROE)- a ratio of financial results to a bank’s own fund; Return on Sale (ROS)- a ratio of
financial results to a bank’s income; Costs Ratio (C/I)- a ratio of costs to income. Margin Rates, defined as: Net
Interest Margin- a ratio of interest results to assets; Interest Spread, which can be interpreted as a difference
between the average interest-bearing assets and the average expense of interest-bearing liabilities. Weighted
Results Rates, defined as: The result rate charged with reserves (reserves balance) which is shown as a difference between the building up and dissolution of reserves, and the achieved result; The result rate charged
with operating costs, i. e. the rati o of operating costs to the result. Employment Efficiency Rates: The rate
presented as a ratio of assets to a number of employees (job positions); The rate presented as a ratio of a
result to a number of employees. See Wozniewska (2008)
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


Lack of knowledge of proper record-keeping and accounting
Unwillingness to gather income statements or other crucial information due to fear of being
imposed with taxes or other expenses
Lack of awareness of technical criteria and documentation standards required by banking
institutions.
Overall, it appears that a proportion of the informational asymmetry that leads to higher collateral
requirements is due to the level of informality of business in the country which can somewhat be
attributed to the lack of enterprise management skills. The proportion of informational asymmetry
that leads to higher collateral requirements for formal businesses could be said to be due to the
absence of credit bureaus and related registries. It is recommended that these issues be address by
the following actions:
Technical Assistance Services: To access loans from formal financial institutions, businesses must
have some formality structure. Technical assistance services make enterprises aware of customary
procedures before approaching for working capital i.e. income statements, bookkeeping, strategic
plans, and the process of registering business. For example, St. Vincent and the Grenadines’
investment promotional agency, Invest SVG, demonstrates this with the manner in which their
technical services have actually assisted many businesses in accessing capital from financial
institutions.
Establishment of Credit Bureaus: Credit Bureaus are defined as an agency which collects the credit
history on individuals and other prospective borrowers that assist financial institutions with its
lending decisions:
‘Rather than… various ill-fated schemes aimed at broadening access to credit, the countries
would be better served with a vibrant system of credit bureaus. The bureaus would provide
reliable information on all current and potential borrowers at low cost to banks and other
lenders. This would allow lenders to move beyond their fairly small circle of well-known, and
typically higher-income, business clients to lend to the broad strata of small and even micro
businesses that represent the vast majority of productive enterprises in the Caribbean.
To be truly useful, credit bureaus should be able to obtain not only bank loan repayment
histories but also all hire-purchase, tax, and bill payment histories without the prior consent
of the individuals involved. By the same token, each individual should be able to review and
challenge the accuracy of his or her record, and the credit bureau should be responsible for
correcting any verified inaccuracy on a low-cost and timely basis.’ IADB (2009:22).
In 2012, the ECCB collaborated with the IFC in a conference called “Wider Access to Credit and
Consumers’ Empowerment through Credit Information Sharing”. Representatives from regional
central banks, ministries of finance, other government agencies, and financial institutions from the
Eastern Caribbean Currency Union (ECCU) and the wider Caribbean region met to discuss credit
information sharing systems (credit bureaus) in the Caribbean. The Credit Reporting Conference falls
under the umbrella of a Canadian International Development Agency (CIDA) funded project aimed at
establishing a private credit bureau in the ECCU and the development of the credit bureau
legislation for the region. This is the first step of many needed to rectify information asymmetry in
St. Vincent and the Grenadines and the OECS.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
The only country in the Caribbean that actively participates in comprehensive credit history
collection is Trinidad and Tobago. According to USAID:
‘The Credit Bureau of Trinidad and Tobago was founded eighteen years ago by a law firm
and collection agency. The bureau currently holds over 350,000 records and reviews an
average of approximately 10,000 credit applications a month (individual and corporate
applications). The banks in Trinidad and Tobago have recently decided to create their own
platform for exchanging credit information, in which The Credit Bureau of Trinidad and
Tobago will also be included’. USAID (2004)
Establishment of Collateral Registries: Collateral registries are systems that identify and document
property (movable property or real estate). In the Caribbean, the collateral registry system is
underdeveloped and does not fit the ‘needs of a modern financial system’ 19 . For the most part,
financial entities in the Caribbean do not accept movable collateral (such as inventory, accounts
receivables, crops and equipment) which is seen by the IFC as a significant impediment to a free
flowing credit market and economic development.
‘Reforming the framework for movable collateral lending allows businesses—particularly
SMEs—to leverage their assets into capital for investment and growth. Modern Secured
Transactions Registries increase the availability of credit and reduce the cost of credit’ 20 .
Alternative Financing Options
Another factor identified during the private sector assessment which would assist in increasing
access to finance in the OECS is understanding the ideology of foreign banks, and exploring the
prospects of utilising indigenous non-bank financial institutions (NBFIs). The financial landscape in
the region is characterised by commercial banks (international, regional and domestic) and NBFIs
(insurance companies, domestic credit unions and microfinancial institutions (MFIs)). However, nonnational banks dominate and ‘cherry-pick’ in their lending while maintaining a conservative,
traditional approach to lending (collateral-based lending). There is therefore a need to encourage
the development of financial services which suit domestic needs through the enhancement of credit
unions and other NBFIs.
The traditional financial sector in the Caribbean is currently being complemented through a number
of NBFIs, such as credit unions, micro-finance and a regional export agency. The capitalization of
credit unions, particularly in Barbados, are comparable to some small banks, as firms realize the
need for a financial partner that understands the parallel between the size or stage of their business
and the type of capital assistance required to take the business to the next step.
USAID (2004) and Malaki (2006) show that microfinance institutions compliment and can coexist
with formal financial institutions, as they focus on a niche demographic; the start-up or initial stages
of firm development and the economically active poor. Though statistics on the effectiveness of
micro-finance has been scrutinized and the results subject to debate, the outreach of NBFIs has with
many small businesses, especially in the agro-processing field in St. Vincent has been encouraging:
19
USAID(2004)
20
Source:
http://www1.ifc.org/wps/wcm/connect/Industry_EXT_Content/IFC_External_Corporate_Site/Industries/Finan
cial+Markets/Financial+Infrastructure/Collateral+Registries/
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‘Shifts in the private sector structure to service industries (from agriculture) indicate that
there are opportunities for expansion of MSE financing that would have a direct and
meaningful impact on the business environment 21 .’ USAID (2004)
It is interesting to note that COMFI, a new MFI in the country, is an amalgamation of the three
biggest credit unions in St. Vincent and the Grenadines. The experience this co-operative brings is
vital, as they understand financial developments, small business issues and depositary system in the
country. This local knowledge and a synchronisation with national development goals is vital to the
development of a vibrant indigenous financial sector as well as the development of the private
sector in the country.
Another important source of alternative financing, particularly in the seed or start-up stage of
business, is venture capital. Venture capital is money provided by an external investor to finance
various stages and development of a business. The capital is invested for an exchange in equity
stake, rather than loan financing, and it offers high-risk and high-reward for both client and
financier. However, venture capital financing is limited in the Caribbean and institutions such as the
MIF, part of the IADB group, has also been working on creating a better venture capital industry in
the Caribbean. Their focus is on fund managers, helping them contribute to the venture capital
industry that invests in SMEs that cannot access funding from traditional financial institutions.
MIF results have been semi-encouraging so far on facilitating venture capital in the Caribbean. Some
problems faced by the fund is, lack of quality fund managers, no local laws for venture capital
investing, and governments not providing organized support for industry. However, the MIF is
unable to operate directly in St. Vincent and the Grenadines, as their remit is limited to the 25 IADB
member countries. This suggests that there is a need for another international or regional body to
intervene in this area to directly facilitate the development of a venture capital industry in the
region. In seeking to address this gap in financing options, the ECCB established the Eastern
Caribbean Enterprise Fund (ECEF) in 2009:
‘The ECEF is being positioned to be a mechanism for attracting investment capital and
channelling those resources to promote the development of private sector enterprises in the
region. In this regard, the ECEF will complement existing financial intermediation services of
providers in the ECCU by offering a wide range of services to assist in filling the current gap
with respect to the availability of requisite financing and technical support. Additionally, the
ECEF will foster the creation and growth of productive sectors in the economies of the region
through the injection of equity and debt financing….In addition, as the first regional fund of
its type in the ECCU, the ECEF will also play a key role in the promotion of a private
equity/venture capital industry in the region’ 22 .
Overall, it is recommended that emphasis be placed on capacity development and financial
assistance of alternative financing options such as COMFI and the NDF, as they serve a critical
purpose for micro and small businesses in St. Vincent and the Grenadines, the foundation of an
immature private sector. It is important that technical assistance, which is also recommended in
bank financing, play an important role in developing customers’ ability to be educated on private
21
Highlights from USAID (2004) Caribbean Financial Assessment document
22
http://www.eccb-centralbank.org/money/ecef.asp
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sector financing. Technical assistance to firms helps both debtor and creditor with due diligence by
preparing emerging entrepreneurs with an outlook of where the business could be, and by assisting
micro-creditors on monitoring and evaluation.
With regards to venture capital facilitation, it is advised that more emphasis be placed on capacity
development of institutions via the development of fund managers specializing in the productive
sectors, development of the legal framework for facilitating venture capital in the OECS and
awareness on the potential of a venture capital eco-system. The ECEF, conceptualized by the ECCB,
is a good start for creating a venture funding industry in the region, and it is proposed that all
international assistance be prioritized around the development of this fund.
Developing an alternative financing industry is an important element needed for financial
inclusiveness in the OECS and St. Vincent and the Grenadines in particular. NBFIs and venture
capital have helped developed many start-up and seed-staged enterprises in developed countries.
The intention of these alternative recommendations is to compliment the services of formal banks
(which have the ideology of formal conservative lending portfolios) with financing options that help
the often excluded segments (start-up or initial stages of business) of the private sector.
However, while the development of alternative financing options is important for facilitating access
to capital without the normal stringent conditions enforced by banks, these alternative financing
options are not expected to be a mainstay throughout the life of the business. As previously stated,
NBFIs and venture capital options are usually backed by grants/subsides or cash injections from
investors/co-operatives, and are designed to help businesses at earlier stages of their life cycle.
Therefore the aim of these financing options are for businesses to reach a productive capacity which
would result in savings/investment, and, ultimately, savings/investment services from commercial
banks needed for sustaining the development of the business.
The broader issue of a need for greater collaboration between various private sector
representatives, between government agencies, and between the private and public sector also
applies to the financial sector. As businesses in the private sector range in size from micro to small
to medium to large, their market focus also ranges from local to national to regional to international,
covering a spectrum of value-added activities from low to high. This lack of homogeneity in the
private sector relates to heterogeneity of financing needs. Rather than competing for clients,
financial institutions should seek to develop linkages to best serve the clientele for which they are
best suited to serve, as well as provide opportunities for graduating from non-commercial finance,
such as that offered by development-focussed NGOs and CBOs, to more commercial types of finance
as they become more ‘bankable’.
Since microfinancing institutions and commercial banks work to provide greater access to
financial services, both could gain by forming synergies among themselves. Commercial
banks have the network capability to facilitate this process, and thus each party could benefit
from the expertise of the other. Consequently, target groups and intended beneficiaries could
have greater access to both credit and non-credit services. In addition to insurance and
guarantee schemes, they could benefit from facilities that the banks could offer for
remittances and money transfers. Moreover, they could use services to facilitate payments,
such as by means of cash machines, cheques, trust receipts and so on.(International Poverty
Centre UNDP,2008)
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Such alliances are not unknown. In Africa, a number of banks are creating linkages with microlending agencies and are creating innovative fund products. The linkage with banks helps micro
financiers benefit through the reach that banking services offer, such as branch networks and
electronic transfer systems, bringing transaction costs down. In addition to this, the cooperation
between both of the financing agents offer:
a)
b)
c)
d)
Micro finance customers deposit systems
More records on transactions and repayments
Less information asymmetries on borrowers
Joint Training and Marketing
This culminates in creating greater credibility of micro-finance customers and the potential to access
more commercial banking services as they create a formal credit history.
An example of the detrimental effect a lack of cooperation and development of linkages can have on
accessing finance was demonstrated by an agro-processor in St. Vincent and the Grenadines.
Although the agro-processor was able to gain a sizeable percentage of her financing needs from a
regional export agency, because of lack of knowledge of this export financing entity by a domestic
commercial bank, the application for residual funding for the project was declined. This is an
example of the problems that arise when financing entities do not form linkages or cooperate with
each other and hence the potential of financially including many clients is lost. The International
Fund for Agricultural Development (IFAD)23 is currently working to establish ongoing links with
alternative lending agents and commercial banks to ensure that the excluded demographic gains
access to financial services beyond the life cycle of IFAD projects. Furthermore, governments are
engaging in guarantee schemes to assist with commercial bank inclusion of micro-finance customers.
It is therefore recommended that St. Vincent and the Grenadines’ commercial banking sector
collaborates and seek innovative linkages with NBFIs such as COMFI, NDF, and MFIs. Implementing
linkages and cooperation between financial entities must be facilitated by legal and institutional
policies from government.
In drawing all of these issues related to the lack of access to finance, there is a need to reduce the
cost of finance and increase the ability of firms to access finance through increasing the formality of
enterprises and provision of networking among financial institutions to enable them to better serve
private sector businesses at different stages of development. While the availability of data is
important for the development of business plans, both strategic and to access finance, this is already
addressed in relation to Action 2. However, businesses also lack the ability to access finance in
relation to a lack of record keeping, and a lack of skills to prepare viable proposals to finance
providers. By increasing formality, not only in terms of issues related to registration but also the
adoption of accepted business practices, access to credit is increased. The relevant Action Plans to
emerge from this element of the PSA include:

23
Action 4: Reduce the cost of finance through the reduction of transactional and operational
costs in financial institutions through the use of technology and monitoring of efficiency
levels; the reduction of risk and risk-averseness through the establishment of a credit bureau
From the World Wide Web: http://www.ifad.org/events/op/2008/microfinance.htm
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
and a collateral registry; and the introduction of alternative financial products and greater
networking in the financial sector.

Action 5: Increase the capacity of businesses to access finance through the provision of
support (technical assistance and training) for the adoption of accepted business practices
(recordkeeping) and the skills to develop business plans for funding and strategic planning.
These services exist in St. Vincent and the Grenadines and are provided by the Invest SVG
and the Centre for Enterprise Development, however, the utilisation of these services need
to be expanded given the results to emerge from the PSA.
It should also be noted that the negative impact of the current constraints in the financial market are
often magnified due to other costs of doing business, especially the cost of electricity.
5.4.1.3. Electricity Costs
Based on interviews and the results of the Enterprise Surveys (2010), electricity costs were ranked as
one of the biggest obstacles to doing business across the OECS. As shown in the figure below, cost
per kilowatt hour (kwh) exceeded US$0.30 for all of the OECS countries included, while this cost was,
unsurprisingly, less than US$0.05 for Trinidad and Tobago.
US Cents per KW hour
Figure 47: Electricity Rates in St. Vincent and Selected Caribbean Countries (2010)
40
35
30
25
20
15
10
5
0
Source: The Caribbean Electric Utility Service Corporation (CARILEC) (2010)
In St. Vincent and the Grenadines, businesses such as LIME, ECGC East Caribbean Metal, along with
the Chamber of Commerce, all indicated that electricity and energy costs were major constraints. In
2012, the Government of St. Vincent and the Grenadines signed an agreement with the Clinton
Foundation to provide technical and financial support for geo-thermal energy. This exploration of
alternative energy sources could have a catalytic effect on the economy of St. Vincent and the
Grenadines as demonstrated by the experience of telecommunications company LIME with the
introduction of retrofitted air conditioners; the country manager for LIME noted that the company
experienced significant declines in electricity costs, estimated at 40%, over the last 2 to 4 years due
to this retrofitting.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
There is however no quick fix for problems relating to electricity or energy costs in a country lacking
traditional mineral energy resources like St. Vincent and the Grenadines. To address the issue of the
high cost of electricity, and energy in general, the two main options involve conservation of energy
and exploitation of alternative energy options. In terms of conservation, the adaptation of
behaviour to reduce usage and the adoption of energy efficient technologies, along with retrofitting,
provide avenues to reduce costs in the short and medium term. For St. Vincent and the Grenadines,
the possibility for the exploitation of alternative energy sources is high given the country’s ranking of
sixth in the wider region in relation to the existence of an enabling environment and renewable
energy projects already operating 24 . The country however ranks low on the scale of planned
renewable energy projects. Castalia Strategic Advisors (2012) suggest that the main opportunities in
this area relate to solar and wind energy.
Some of the other recommendations emerging from consultations and previous research were:





A bi-annual review of the fuel clause tariff structure (the fuel cost element of electricity) to
reduce the incidence of price-gouging, or if price gouging is found to not be prevalent,
reassure the private sector of such;
Support for energy service companies which are providing retrofitting services;
Address the current downstream distribution value chain with hydro-carbon suppliers to
ensure the lowest possible energy prices
Exploration of the possibility of privatisation of the electricity company as a means to
increase efficiency and productivity.
In accordance with the Energy Action Plan 2010:
o Increased capacity of Energy Statistics to help bolster education/training, monitoring
and evaluation;
o Financial and fiscal incentives to any persons training or involved in the production
of RE technologies and financial institutions providing capital for RE technologies
Drawing on the results of the PSA in relation to energy costs, the need for energy conservation and
exploitation of alternative energy options relate to the following Action Plan:

Action 6: Provide incentives for energy conservation and frameworks for the exploitation
of renewable/alternative energy and reduce the cost of fossil fuels. Incentives and support
in this area will act as both a cost-reduction tool as well as an opportunity for investment
and enterprise development in the renewable/alternative energy sector. Efforts to reduce
the cost of fossil fuels would relate to periodic reviews of the fuel clause tariff structure, a
review of the distribution chain and exploration of possibility of privatisation of the
electricity supply.
Incentives in this area could include concessions related to duties on imports of materials, technical
assistance and the development of special funds for investments in alternative energy projects and
enterprises supplying complementary services such as retrofitting.
24
http://www.castalia-advisors.com/files/Castalia-CREF_RE_Islands_Index_121010-1.pdf
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
5.4.1.4. Labour Market Issues
The final issue constraining private sector development in St. Vincent and the Grenadines, but by no
means the least important, relates to the labour force. These labour force issues relate to a lack of
specialist skills in the OECS, a mismatch between what is demanded by industry and what is supplied
by training labour market, as well as a general lack of adequately trained labour. As noted by the
Enterprise Survey (2010), this was the biggest obstacle to 13% of businesses sampled in St. Vincent
and the Grenadines. In seeking to address these issues, the private sector assessment identified two
main areas that would require attention:


Implementation of education, human resource and comprehensive human capital planning
Vocational and On-the-Job Training
Human Resource Planning
There are several approaches that can be adopted to address the skill deficiencies in the labour
market for St. Vincent and the Grenadines. However, before the details of any plan can be
conceptualised, there needs to be a human resource development strategy based on a balanced
account of the needs of industry and the strategic direction of Government. Manpower planning in
this respect, along with other elements of a national strategic plan, would greatly assist in the
current work environment as well as assist in future growth of the private sector by clearly signally
the sectors which Government intends to support. Such clear signalling would encourage
investment by the private sector in these strategic sectors, both foreign and domestic. However,
there is a lack of useful data on the composition of the workforce and labour market dynamics to
usefully inform the development of human resource plans for St. Vincent and the Grenadines. Invest
SVG is currently working on increasing business registration and collecting enterprise data, which is
the first step on attaining proper labour market information on the country’s large informal
economy. To build on this effort, the government should implement a National Accreditation and
Productivity Council under the remit of the Ministry of Education, which would work closely with the
labour department and coordinate with other planning conduits25, to oversee comprehensive human
capital planning for the country.
Following the development of a balanced strategic plan (including a human resource development
plan), attention should be paid to the facilitation of research and development initiatives in key
sectors, with special attention to: technology transfer as a component of foreign direct investment;
and the development of vocational and on-the-job training opportunities that allow for the
development of specialist skills. Such an approach is not overly alien to St. Vincent and the
Grenadines as seen with the development of its tourism industry, where the Government took a
strategic decision to develop a relatively small tourism sector in consultation with key stakeholders
(Tourism Authority and Hotel and Tourism Association). One of the key initiatives in this sense was
the founding of a hospitality institute. Such efforts could be mirrored in the agricultural and light
manufacturing sectors. This concentration on the development of specialist skills and technology
transfer in the labour will be integral in the long-run for St. Vincent and the Grenadines to avoid the
attraction of footloose investors that investments solely on costs, especially labour. A strategy of
embedding investors through the development of specialist skills can avoid such unwanted
investments.
25
Such as universities, private sector, training institutes, bi-lateral partners etc.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
A combination of the right investments in labour and physical capital can change the productive
capacity of an economy. What is spurred from strategic human capital planning, is identifying the
research and development skills needed for sectors, which also helps in understanding the right type
of investments in physical capital.
Research and development, particularly in Science, Technology and Engineering, has been a
predominant feature of emerging countries human capital plan to ensure the highest return per
worker. Non-natural resourced governments such as Taiwan, Korea, and Malaysia strategized the
role of R&D for industrial competitiveness and identified competencies in areas such as information
technology, robotics, micro-electronics, laser technology, food and agro-technology, and biotechnology. St. Vincent and the Grenadines can learn lessons from these experiences and seek to
exploit advantages in relation to renewable energy technologies (geo-thermal, solar, wind and wave)
and other locational advantages such as technologies related to the marine environment, agroprocessing and niche manufacturing. The government’s human capital plan for R&D should involve
Invest SVG, CED, University and Training institutes, CARDI, Chamber of Commerce and industry
stakeholders.
Vocational and On-the-Job Training
With respect to on-the-job training and apprenticeships, interview results suggest that specific
technical skills required by enterprises were absent in the labour market.
The
promotion/incentivising for enterprises to invest in this element of skill development needs to be
implemented to ensure that enterprises attain the required skills for growth, as well as provide an
opportunity for uncertified labour to enhance their earning capacity through on-the-job certification
initiatives such as national vocational qualifications (NVQs). This is an area where the private sector
can contribute to the wider development of society.
Most respondents from the stakeholder interviews conducted stated that secondary, and even
tertiary level graduates, lacked the technical expertise and other skills needed for workplace
productivity. When asked if they participated in any apprenticeships or training programs for
inexperienced professionals, most businesses stated it was minimal to non-existent. Given the
specificity of required skills in some organisations, it is unlikely that training will be available in the
education sector and therefore these skills need to be built internally. However, this does not
appear to be promoted or practiced in St. Vincent and the Grenadines. As with incentivising
investments in plant and equipment, incentives need to be put in place to invest in training at the
enterprise-level rather than the educational institution level through apprenticeships and on-the-job
training with requisite recognition through certification and opportunities for labour to improve
their employment prospects within and outside of the specific enterprise. Caribbean and National
Vocational Qualifications (CVQs/NVQs) provide an ideal mechanism in this respect and participation
by enterprises should be strongly encouraged. Such enhancement of skills not only benefits the
productivity of the individual enterprise, but demonstrates to potential investors that there is a
skills-base in the country and that there is a commitment to on-going training.
Chambers of Commerce, Government, enterprises, training institutes, and productivity councils are
all considered as catalysts for implementing vocational training, apprenticeships and on the job
training. However, it is ultimately Government’s responsibility to promote the adoption of
apprenticeships and on-the-job training given the public good nature of such training. Collaborations
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
between Government, Chambers of Commerce and other private sector stakeholders should be
given high priority.
It should however be noted that the skill needs in St. Vincent and the Grenadines do not exist
independently of any strategic plan for socio-economic development or private sector development
specifically. Given this and the identified skill needs, the relevant Action Plan is:

5.4.2
Action 7: Education and training curriculum reform that addresses the long term strategic
direction of Government as well as the more immediate needs of the private sector. The
reforms undertaken should be informed from manpower surveys and subsequently
developed human resource development plans which should seek to catalyse the utilisation
of apprenticeships and on-the-job training. The long term strategic direction of Government
should be constructed on the basis of dialogue with the private sector.
Summary
In addition to these core issues, issues related to trade were also highlighted such as inefficiency in
customs and the need for the strengthening of the Bureau of Quality and Standards. However,
these cannot be addressed directly by the Action Plan as the plan seeks to provide a conducive
environment in the provision of appropriate labour and capital for the exploitation of market
opportunities. However, these specific issues should be kept in mind during the implementation of
the individual elements of the plan. Additionally, it needs to be noted that private sector
development cannot be separated from the overall sustainable development of the country. This
implies that social issues such as poverty, unemployment as well as environmental vulnerabilities
should be considered in any plan to enhance private sector development. Indeed, these issues can
often show up in the bottom line for businesses via higher security and insurance costs. It is
imperative that these issues be kept in mind during the development of strategic plans to support
the private sector.
It is noteworthy that the Government of St. Vincent and the Grenadines appears to appreciate this
and the general direction of the Government is in keeping with the Action Plans to emerge from the
PSA. The 2013 Budget seeks to ensure sustainable growth in the private sector through a number of
avenues in relation to enhancing investment opportunities in a number of sectors (agro-processing
and export services, including entertainment) through enhancing access to finance, reducing energy
cost and developing the human resources of the country. The Government clearly recognises that
the generation of employment is key for the sustainable reduction of poverty, while also seeking to
ensure fiscal security and foreign exchange earning capabilities to allow the Government to
undertake its other obligations to the citizenry of the country.
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6.
Conclusions and Recommendations
6.1.
A Long Term Action Plan for Private Sector Development
The preceding analysis identified a number of pertinent issues affecting the development and
growth of the private sector in St. Vincent and the Grenadines. As noted previously, the findings
from the CGF are not significantly different to that from the PSA for St. Vincent and the Grenadines.
One of the most critical recommendations to emerge from both studies is the need for the
implementation of a forum for collaboration between key stakeholders and representatives of
labour, the private sector and Government.

Action 1: Establishment of a Tripartite Committee (government-employer-labour) to
identify the needs of all bodies and guide and oversee private sector development
strategies.
At present, attempts are being made to facilitate these discussions, as noted above, however, there
is no formal forum available to discuss the issue of private sector development at the national level.
In Barbados, the umbrella institutional mechanism is known as the Social Partnership, which is
chaired by the Prime Minister with members drawn from labour and private sector representative
bodies. There are sub-committee meetings of the social partnership that then feed into the sessions
chaired by the Prime Minister. Added to this consultative process, members of the social
partnership also sit on the boards of various government agencies and key policymaking
committees. Fashoyin26 (2004:59), drawing on the Barbadian Social Partnership, provides some
conditions for effective dialogue:








Free, independent and representative organisations of workers and employers;
The willingness and readiness to consult, negotiate and share information;
Strong and capable trade unions and employers’ organisations;
Acknowledgement of the interdependence of the tripartite partners;
Shared vision and a commitment to search for wider consensus;
Mutual trust and respect for each party;
Institutional machinery for social dialogue at the various levels of the economy;
A certain degree of coordination between the levels of consultation and negotiation.
Fashoyin (2004) does however note that the framework for social dialogue cannot be neatly
exported from one country to another, and the development of a Tripartite body in St. Vincent and
the Grenadines will need to be cognisant of this, while appreciative of the challenges for meeting the
conditions for effective dialogue.
Once established, the Tripartite Committee should seek to also address the following:

Action 2: Rationalisation and streamlining of public sector’s business support
framework through the work of the Tripartite Committee to ensure a revised system
that addresses both the needs of the private sector (access to finance, technical
assistance and data) as well as wider obligations of Government.
26
Fashoyin, T. (2004). Social Dialogue in Selected Countries in the Caribbean: An Overview, Journal of Eastern
Caribbean Studies, 29 (4), 42-63.
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




Action 3: Development of a National Strategic Plan that mainstreams private sector
development in the country. Through the lobbying efforts of Government, the plans for
the development of the private sector should also be included in and regional strategic
plans at the level of the OECS/ECCU and CARICOM.
Action 4: Reduce the cost of finance through the reduction of transactional and
operational costs in financial institutions through the use of technology and monitoring
of efficiency levels; the reduction of risk and risk-averseness through the establishment
of a credit bureau and a collateral registry; and the introduction of alternative financial
products and greater networking in the financial sector.
Action 5: Increase the capacity of businesses to access finance through the provision of
support (technical assistance and training) for the adoption of accepted business
practices (recordkeeping) and the skills to develop business plans for funding and
strategic planning. These services exist in St. Vincent and the Grenadines and are
provided by the Invest SVG and the Centre for Enterprise Development, however, the
utilisation of these services need to be expanded given the results to emerge from the
PSA.
Action 6: Provide incentives for energy conservation and frameworks for the
exploitation of renewable/alternative energy and reduce the cost of fossil fuels.
Incentives and support in this area will act as both a cost-reduction tool as well as an
opportunity for investment and enterprise development in the renewable/alternative
energy sector. Efforts to reduce the cost of fossil fuels would relate to periodic reviews
of the fuel clause tariff structure, a review of the distribution chain and exploration of
the possibility of privatisation of electricity supply.
Action 7: Education and training curriculum reform that addresses the long term
strategic direction of Government as well as the more immediate needs of the private
sector. The reforms undertaken should be informed from manpower surveys and
subsequently developed human resource development plans which should seek to
catalyse the utilisation of apprenticeships and on-the-job training. The long term
strategic direction of Government should be constructed on the basis of dialogue with
the private sector.
It should be noted that the various elements of the Action Plan seek to provide a conducive
environment for private sector development in St. Vincent and the Grenadines, however, this does
not suggest that the implementation of the Action Plan in and of itself will automatically lead to
growth of the private sector; there must also be entrepreneurial action in exploiting opportunities in
the local, regional and global market. This is especially in light of anecdotal evidence that emerged
during interviews throughout the region that the private sector demonstrated a lack of interest in
looking ‘beyond their borders’ and instead seek to grow domestic market share.
As another caveat, the implementation of the Action Plan cannot be undertaken in isolation from
regional integration efforts at the OECS and CARICOM levels. If Action 3, the development of a
national strategic plan, is taken as synonymous to some degree as the development of an industrial
policy, the following should be noted:
‘Given that trade negotiations often take place at the regional level, industrial policies should
be framed by the existing and likely trade commitments and coordination should be
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
facilitated as much as feasible as it is unlikely that the Region will gain the first-world status
that it seeks without greater regional coordination’(p.145)27
In relation to the development of a national strategic plan with a regional focus, attention should be
paid to the specific recommendations that have consistently emerged from research in the region
which speak to niche market development, moving up the value chain, development of strategic
alliances and joint ventures for knowledge and technology transfer, and the development of
clusters, both vertical and horizontal28 . The current VINCYKLUS initiative in promoting clusters
provides a basis for growth in the area of clustering. While activities in these areas are not
specifically mentioned in the Action Plan due to their specificity, they should remain as options
during the development of the strategic plan for private sector development and growth in St.
Vincent and the Grenadines.
6.2.
Summary
The economies of the OECS have all been severely affected by the global economic recession, both
in relation to government’s ability to meet its obligations to its citizenry as well as the private
sector’s ability to grow. Growth in St. Vincent and the Grenadines has been quite volatile over the
last few years. In addition to the downturn in the global economy, several natural disasters have
derailed the economy. Between 1994 and 2010, the island has been affected by five tropical storms
and one category 2 hurricane (Tomas, 2010) as well as a drought in 2010. As a result, following
average growth of 5% between 2002 and 2007, the economy contracted by 2.4% in 2009 and a
further 1.8% in 2010. The contraction in the economy largely reflected falling tourist arrivals as well
as FDI-related construction, which has had negative spillover effects on the rest of the economy.
While the private sector in St. Vincent and the Grenadines face many specific issues related to taxes,
dealing with Government departments, etc., it is considered that addressing the wider issues and
the facilitation of a forum for discussion, that many of these specific issues could be addressed. It is
also important to be aware that many of the recommended actions will not bear results in the shortterm; building a framework for the development of alternative energy and curricula reform are not
overnight processes, and require an element of structural change. In summary, the table below
outlines the relationship between the main critical themes identified from the PSA, the main critical
issues and related elements of the Action Plan.
It should be noted that while all of the Action Points relate to the establishment of a conducive
environment for the development of the private sector and are external to enterprises, that the
private sector itself will need to take a portion of responsibility and seek to adopt a more proactive
approach to exploiting opportunities available in the market. Given the perception that the private
sector is not as proactive as it can be, and as a caution in relation to interventions to spur private
sector development, it is imperative that all key stakeholders, from the international to the domestic
level, are fully aware of the current level of development of the private sector. In St. Vincent and
the Grenadines, and across the region, the private sector is relatively under-developed and limited in
27
Moore, W. (2010). Trade and Industrial Policy in the Caribbean. In: Alleyne, F., Lewis-Bynoe, D. and
Archibald, X. (2010). Growth and Development Strategies for the Caribbean. CDB: Barbados.
28
An overview of policy recommendations made in this respect can be found in: Lashley, J. (2010). Productive
Sector Development in the Caribbean: Manufacturing and Mining. In: Alleyne, F., Lewis-Bynoe, D. and
Archibald, X. (2010). Growth and Development Strategies for the Caribbean. CDB: Barbados.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
its ability to cope with current neo-liberal developments given a long period of protection through
such mechanisms as preferential trade agreements which have recently been removed. Any
interventions should therefore seek to assist the private sector, with the assistance of the public
sector, to build domestic market opportunities as well as special and differential treatment for
export goods in the short- to medium-term, rather than fully expose it to the rigours of international
competition. Lessons should also be learnt in relation to drawing on the strengths of the region
rather than seeking, as in the past, to attract investment based on low-cost labour which
subsequently led to the attraction of footloose enterprises that relocate to competitors as cost levels
change or economic circumstances deteriorate in relative terms. In this vein, the Caribbean needs to
exploit those resources for which it has an advantage and a brand, suggesting a concentration on
alternative energy (geothermal, solar), specialist agricultural products (such as nutmeg in Grenada)
and agro-processing, eco-tourism, edu-tourism (drawing on human resources in the region), heritage
tourism, health and wellness (both product-specific and related to tourism), and financial services,
among others.
In addition to drawing on the locational advantages that exist in the region, attention should be paid
to the specific recommendations that have consistently emerged from research in the region which
speak to: niche market development; moving up the value chain; development of strategic alliances
and joint ventures for knowledge and technology transfer; and the development of clusters, both
vertical and horizontal. The current VINCYKLUS initiative in promoting clusters provides a basis for
growth in the area of clustering. While activities in these areas are not specifically mentioned in the
Action Plan due to their specificity, they should remain as options during the development of the
strategic plan for private sector development and growth in St. Vincent and the Grenadines.
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Table 17: Recommendations and Actions Matrix for St. Vincent and the Grenadines
Themes
General
Political and
Governance
Issues
Main Critical Issues
Limited dialogue between
stakeholders representing
Government, labour and the
private sector
‘Silo-mindset’ in business support
organizations in the public sector
Ad hoc development planning
Lack of information sharing by the
private sector
Lack of utilization of technology.
Access to
Finance
High Transaction and Operating
Costs
Informational Asymmetries
Alternative Financing Options
Cost of Doing
Business
Cost of electricity
Labour Market
Issues
Limited availability and lack of
specialist skills in the labour
market:
Trade Issues
Limited product and market range
with a domestic focus.
Actions
1. Establishment of a
Tripartite Committee
2. Rationalisation and
streamlining of public
sector’s business
support framework
3. Development of a
National Strategic Plan
that mainstreams
private sector
development
4. Reduce the cost of
finance
5. Increase capacity of
business to access
finance
6. Provide incentives for
energy conservation
and frameworks for the
exploitation of
alternative energy
options and reduce the
cost of fossil fuels.
7. Education and training
curriculum reform.
Details
As noted by Fashoyin (2004) there is a need for:
Members to be independent and representative
Willing to consult and negotiate
Demonstrate mutual trust and respect
Need for communication at the Tripartite Committee level to determine the specific
external needs of enterprises in relation to the business environment (finance, technical
assistance) while meeting the wider obligations of Government.
Responsibility of…
Government to initiate
Tripartite Committee and
address other issues in
conjunction
with
Tripartite Committee
To address the issues of access to finance, several specific steps can be taken:
Introduction of technological advances ;
Monitoring of efficiency rate of financial institutions to identify areas for improvement;
Establishment of credit bureaus and collateral registries ;
Introduction of alternative financing options such as equity financing,
Greater competition in the financial sector, particularly the strengthening of domestic
institutions;
Provision of technical assistance and training to the private sector in relation to
increasing formality, the adoption of accepted business practices, and the skills to secure
funding.
Provision of incentives and support to help reduce energy costs through conservation as
well as for investing in the sector.
Periodic review of the fuel clause adjustment.
Assess the efficiency of the current distribution chain.
Explore the possibility of privatization of electricity supply.
Eastern Caribbean Central
Bank; Business support
organisations
Government
The specific content of any reform should be determined at the Tripart ite level and
Government
informed from the strategic plan for private sector development. Agreement will need to
be reached on the immediate needs of the private and the longer terms development
vision of Government. Specific issues that will need to be addressed i nclude:

Lack of labor market data

Lack of utilization of formalized apprenticeships and on-the-job training
The trade issues highlighted for St. Vincent and the Grenadines cannot be addressed directly by the Action Plan as the expansion of product range
and markets will require the action of private sector entrepreneurs. The Action Plan seeks to provide a conducive environmen t in the provision of
appropriate labour and capital for the exploitation of market opportunities.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
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Appendices
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Appendix 1: Structure of the OECS
The administration of the OECS is run by the OECS Secretariat, which is based in St. Lucia. The
organs of the OECS include:






The OECS Authority: The highest policy-making body of the OECS consisting of the various
Heads of Government. The Authority’s chairmanship changes annually and rotates between
the various member countries’ Head of Government.
The Council of Ministers: The Council is comprised of appointed Ministers of Government
from each member state and is responsible to the Authority. The Council act on matters
referred by the Authority and also makes recommendations to the Authority.
The OECS Assembly: The Assembly is comprised of appointed members of Government and
Opposition from each member state. The Assembly serves as the legislative arm of the
OECS. The power of the Assembly is confined to common market aspects of the Economic
Union- Monetary Policy; Trade Policy; Maritime Jurisdiction and Maritime Boundaries; and
Civil Aviation. The Assembly is permanently based in Antigua and is comprised of five
legislators from every independent state and three from every non-independent state.
The Economic Affairs Council: The Council is comprised of representatives of member states,
usually Ministers of Trade. The Council is guided by the Economic Union Protocol and the
Council is the principal organ of the Economic Union.
The OECS Commission: The Commission is the main administrative organ of the Economic
Union. It is comprised of a Director-General whose responsibility is the daily administration
of the Organisation and convenes and presides over meetings of the Commission. The
Commission also included one Commissioner of Ambassadorial rank named by each member
state. The Commission also provides the Secretariat services for the organs of the OECS and
makes recommendations to the Authority and Council of Ministers ‘…regarding the
formation of Acts and Regulations of the Organisation; and undertake other work and
studies, and perform other services relating to the functions of the Organisation as required
under this Treaty or the OECS Authority or by any other organ’ 29 .
The OECS Secretariat: The Secretariat is responsible for the coordination of the function of
the OECS under the direction of the Director-General. The organizational chart of the
Secretariat is shown below.
In addition to these organs, other relevant institutions include:



29
The Eastern Caribbean Central Bank (ECCB): The ECCB is the monetary authority of the OECS
and issues the Eastern Caribbean Dollar. The ECCB maintains currency stability and oversees
the banking system in the member states. The ECCB is governed by a Monetary Council and
a Board of Directors and is managed by a Governor, currently Sir Dwight Venner. The ECCB
was formed in 1983 and is based in St. Kitts and Nevis.
The Eastern Caribbean Civil Aviation Authority (ECCAA): The ECCAA is an autonomous body
with the OECS with responsibility to regulate civil aviation activities.
Eastern Caribbean Supreme Court (ECSC): The ECSC has unlimited jurisdiction in all member
states in accordance with individual Supreme Court Acts. The Court, established in 1967, is
the superior court of record for the OECS member states.
Op cit.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Figure 48: Organisational Chart of the OECS Secretariat
Source: http://www.oecs.org/images/oecs_org_chart.jpg
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Appendix 2: List of Key Stakeholders from Interviews and Consultations
Table 18: Business Support Institutions and Other Relevant Bodies
Name of Institution
Chamber Of Industry & Commerce (St
Vincent & The Grenadies) Inc
Invest SVG
Contact Person
Ruthmilda Patrick
Ministry of Finance and Economic Planning
Ministry of Tourism, Sports and Culture
Mr. Maurice Edwards
Mrs. Lavern Grant
National Development Foundation
Mrs. Hermia Neehall
St. Vincent and the European Development
Fund
St. Vincent and the Grenadines Hotel &
Tourism Association
Statistical Office
Ms Laura Anthony –
Browne
Commercial Technical & Allied Workers
Union
Alice Mandeville
St. Vincent & the Grenadines Co-op Credit
Union
Ms. Angela Patrick
St. Vincent and the Grenadines Small
Business Association
The Secretary
Mr. Edmond Jackson
Executive Director
Ms. Gatlin Roberts
Address
Corea's Bldg Hillsboro St Box 134
Kingstown
2nd Floor Administrative Bldg.
Bay Street P.O. Box 2442
Kingstown
P.O.Box 608, Kingstown.
2nd Floor NIS Building, Upper Bay
St., Kingstown, St. Vincent
McKies Hill, Kingstown, St.
Vincent and the Grenadines
1st Floor, Administrative Centre
Bay Street, Kingstown
P O Box 2125, Kingstown, St
Vincent & the Grenadines
Ministry of Finance, Planning and
Economic Development, PO Box
608, Kingstown
P.O. Box 245, Middle Street,
Kingstown, St. Vincent and the
Grenadines
P O Box 1265, Lower Kingstown
Park, Kingstown, St. Vincent and
the Grenadines
P.O. Box 2343, Kingstown
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Appendix 3: St. Vincent and the Grenadines Governance Framework
St. Vincent and the Grenadines gained independence from Britain on 27 th October 1979. The
Government is a parliamentary democracy based on the Westminster model. The country is a
member of the British Commonwealth with Queen Elizabeth II as the head of state. Queen Elizabeth
II is represented in St. Vincent and the Grenadines by the Governor General, Sir Frederick Ballantyne.
The Prime Minister is the Honourable Dr. Ralph Gonsalves who was elected in March 2001. The
House of Assembly has 15 elected members and 6 senators who are appointed by the Governor
General on the recommendation of the Prime Minister.
Table 19: The Government of St. Vincent and the Grenadines: Cabinet Members and Portfolios
Member
Dr. Hon. Ralph Gonsalves
Portfolio
Prime Minister and Minister of Finance, National Security, Grenadines
Affairs and Legal Affairs
Hon. Girlyn Miguel
Minister of Education
Hon. Senator Dr. Douglas Slater Minister of Foreign Affairs, Foreign Trade and Consumer Affairs
Hon. Clayton Burgin
Minister of Health, Wellness and the Environment
Hon. Montgomery Daniel
Minister of Housing, Informal Human Settlements, Lands and Surveys and
Physical Planning
Hon. Saboto Caesar
Minister of Agriculture, Industry, Forestry, Fisheries and Rural
Transformation
Hon. Maxwell Charles
Minister of National Reconciliation, the Public Service, Labour,
Information and Ecclesiastical Affairs
Hon. Cecil McKie
Minister of Tourism, Sport and Culture
Hon. Senator Julian Francis
Minister of Transport, Works, Urban Development and Local Government
Hon. Frederick Stephenson
Minister of National Mobilisation, Social Development, the Family,
Gender Affairs, Persons with Disabilities and Youth
Source: http://www.gov.vc/index.php?option=com_content&view=article&id=11&Itemid=104. Last Accessed
8 th April, 2013.
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Appendix 4: Minimum Wage Levels in St. Vincent and the Grenadines
Domestic Workers
Persons with living-in accommodation - $400.000 per month with meals
Persons without living-in accommodation - $450.00 per month with meals
Persons employed on a day-to –day basis - $25.00
Hotel Workers
Front Desk/Receptionist/Secretary………….$675.00 per month
Accounts Clerk/Office Clerk……………….. $900.00 per month
Guest Services……………………………… $ 900.00 per month
Room Attendants………………………….. $565.00 per month
House man/Bellboy……………………..… $450.00 per month
Supervisor – Housekeeping……………..….. $675.00 per month
Food and Beverage Supervisors………..……$775.00 per month
Cooks…………………………………….… $675.00 per month
Dish washer/Kitchen Helpers……….….….. $450.00 per month
Chef………………………………….………$1,100.00 per month
Laundry ………..$30.00 per day………….. $500.00 per month
Gardener………..$30.00 per day……………….$500.00 per month
Maintenance…………………………….….….. $900.00 per month
Waiter/Waitress…………………………..……. $565.00 per month
Bartender…………………………………...….. $675.00 per month
General Helper…………………………………. $565.00 per month
Industrial Workers
Workers Employed in industrial sector
Apprentice for period of six months to one year - $20.00 per day
Watchmen ………….. …………………………. $40.00 for a twelve-hour shift.
Workers in Offices of Professionals
Clerks………………….………. $ 700.00 per month
Receptionist……………….…… $ 600.00 per month
Office Attendant………..……… $ 400.00 per month
Secretary/Typist……………..….$ 800.00 per month
Shop Assistants
1. Persons with previous working experience
Cashiers $175.00 per week $700.00 per month
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Sales Clerk $150.00 per week $6 00.00 per month
2. Check-out attendants, office
Attendants, packers and cleaners (full time) $125.00 per week
Part time cleaners (3 hours or less) $200.00 per month
3. Porters $150.00 per week
4. Watchmen $200.00 per week
5. Office clerks
a. With previous working experience $600.00 per month
b. Persons sixteen and over:
On first employment, first six months $500.00 per month
Thereafter: $600.00 per month
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Appendix 5: Donor Matrix Report for St. Vincent and the Grenadines
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Compete Caribbean
Private Sector Donor
Matrix Report for St.
Vincent and the
Grenadines
August 2013
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Description of the Donor Community
Please see Section 5.2.3 of the main PSA Report for information on:

Active multilateral and bilateral donors




Formal and Informal Coordinating Mechanisms among donors
Methodologies for indentifying priorities for donor funding
Monitoring and evaluation by donors
Opportunities to improve coordination amongst donors
For information on programs and projects undertaken by donors in the country and in the OECS in
general, please see DMX Appendix 1: Donor Projects and Programs.
Description of Local Stakeholders
Public Sector Stakeholders
The main public sector body in St. Vincent and the Grenadines supporting private sector
development is the Ministry of Agriculture, Industry, Forestry, Fisheries and Rural Transformation.
The Department of Industry is:
‘The principal institution responsible for shaping the government’s policy in respect of the
country’s institutional development and to stimulate the development of the industrial sector
by promoting greater economic diversification, export competitiveness and improved
productivity. This unit processes applications for industry incentives under the Fiscal
Incentives Act, Chapter 366 of the Laws of St. Vincent and the Grenadines (Revised Edition)
1990.’ 30
In addition to the Ministry, St. Vincent and the Grenadines also operate the Centre for Enterprise
Development, an investment promotion agency, Invest SVG, and a National Development
Foundation. An overview of these agencies is provided in Section 5.2.2. while additional information
is included in the table below.
Private Sector Stakeholders
A listing of main private sector stakeholders is shown in Section 5.2.2. Please see below for specific
information the background of these organisations are well as the main constraints faced and
sectors considered as having potential for future growth.
30
http://www.agriculture.gov.vc/index.php?option=com_content&view=article&id=218&Itemid=181
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Table 20: Overview of Key Stakeholders in St. Vincent and the Grenadines
Name
Type of
Organisation
Business
Support
Background
Main constraints faced
To attract FDI, act as policy advocate to create a more facilitating
environment. Provision of aftercare services, trade shows, technical support
St. Vincent Hotel
and Tourism
Association
The Chamber of
Commerce
Business
Support
Marketing Hotels and Advocacy for Hotels and tourism related businesses
Business
Support
To build organisational commitment and capacity to deliver sustainable,
developmental and innovative solutions to all business partners and
stakeholders.
Bureau of
Standards
Business
Support
Bequia Tourism
Association
Business
Support
VINCYKLUS
Business
Support
Established in 1992, The Standards Act No. 70 of 1992 (amended by Act No.
28 of 2001) gives the SVGBS authority, inter alia, “…. to prepare and promote
standards relating to goods, services, processes and practices produced
and/or used in St. Vincent and the Grenadines, to ensure industrial efficiency
and to assist in industrial development as well as to promote public and
industrial welfare, health, safety and to safeguard against negative effects to
the environment”.
The Bequia Tourism Association (BTA) was formed in December 1999 by a
group of individuals from the Bequia business community, with the dual aims
of protecting and enhancing the island's resources for both visitors and the
community, and of attracting more visitors to the island through its own
promotional and marketing initiatives. Its membership has now become
more broadly based, encompassing not only business people but also
representatives of community groups, Bequia schools, private residents, and
Bequia lovers from around the world.
The overall objective of VINCYKLUS is to increase and strengthen the
capability of individual producers operating within the cluster.
1)Energy Costs
2) Book keeping and Efficiency of
Business
3) Access to finance
1)Access to Finance
2) Energy Costs
3) Airlift
1)Bureau of Standards Certificate
costs
2) Energy costs
3)Market Access
1) Human Resource Capacity/ Skilled
Staff (In Bureau)
2) Capacity to implement
3)No National Labs
Center for
Enterprise
Development
Business
Support
(Government
Owned
Statutory)
THE CED is a people-centred organisation with the professional competence
and commitment to deliver timely, relevant and reliable services,
information and advice to potential and existing entrepreneurs on all aspects
of business resulting in increased competitiveness, higher levels of business
success and sustainability in the local private sector.
Invest SVG
Areas/Sectors with potential
for future growth
1) ICT
2) Construction,
Infrastructure
3) Agro-Business linkages
1) Airport Opportunities
2) Eco- Tourism
3)Sport Tourism (Kite Surfing)
1) Linkage between
Hospitality and Agro-Business
2) ICT
3)Green Projects
1) Agro-Business/Processing
2) Linkages among sectors i.e.
Tourism
3) Service Industry
1)Energy Costs
2)Maintenance Costs-Sea Salt
3)Access to the island (Transport
Costs)
4)Public Awareness on Tourism
5) Security
1) Diving Facilitation
2) Hospitality Training School
3)Bequia as central to tourism
in SVG
1)Access to Finance
2) Certification Standards
3) Customs
4) Capacity Issue in VINCYKLUS
1)Access to Finance specifically
(equity) 2) Energy Costs 3) Customs
Efficiency
1) Agro-Production
2) Micro-Enterprise
3)Creation of Synergies
1) Agro-business
2) Cultural Industry
3) Designing a sustainable
financial services model for
entrepreneurs
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Port Authority
Business
Support
(Government
Owned
Statutory)
Business
Support/Fina
nce
The St. Vincent and the Grenadines Port Authority (SVGPA) is responsible for
the operation and administration of the Port of Kingstown, the nearby
Campden Park Container Port (CPCP) and the Cruise and Ferry Terminal. The
Port Authority's mission is to provide a coordinated effective and efficient
system of port facilities to the public
The league came out to unify the system, train and develop services in Credit
union, Compliance, monitor their performance, discuss cooperative issues
1)Operating inefficient running 2
ports
2)Access to finance
3)Infrastructure
4)Brain Drain (Technical Fields)
1)Infrastructure, Airport Services 2)
Access to finance
3)Credit Unions inadequate focus on
production
1)Centralized Port
2) Tourism
The National
Development
Foundation
Business
Support/Fina
nce
Established to assist the poor with training, technology and funding.
1) Agro-Business
2)Clustering
3)Poultry, Meat
The National Bank
of St. Vincent
Finance
(Private
Enterprise)
Cooperative Bank
Finance
(Private
Enterprise)
1)Politics(Policies superficial )
2)Unskilled labour force
3)Energy Costs
1) Agri-Business
2)ICT/ Services
Ministry of Tourism
Public Sector
The Statistical
Department
Public Sector
The Bank of Saint Vincent & the Grenadines, formerly the National
Commercial Bank (SVG) Ltd. was founded in June 1977 by The Honorable
Robert Milton Cato the then Premier of Saint Vincent with 11 staff members
at a single Branch. Bank of Saint Vincent & the Grenadines currently offers
services in retail banking which includes savings and deposits in addition to
credit and investment banking.
st
The St Vincent Co-operative Bank Limited opened its doors to business on 1
February 1945 and is one of the oldest indigenous financial institutions in St.
Vincent and the Grenadines. We are committed to providing Banking
services that consistently conform to customer requirements; to deliver
them efficiently, whilst maintaining the highest degree of service quality in
order to achieve total customer satisfaction.
The objective of Ministry of Tourism is to ensure that there is a high quality
visitor experience for all consumers of St. Vincent and the Grenadines’
Tourism Product.
Mission is to facilitate informed decision-making through the provision of
high quality, relevant, user-oriented and dynamic statistical services by
coordinating Statistical activities and promoting the adherence to Statistical
standards.
1)Funding decreased to NDF
2)Record Keeping
3) Market Access
4) Energy Costs
5) Customs
1)Unskilled labour force
2)People resistant to
innovation/change
1)Access to Finance 2)Youth
Entrepreneurship 3) Hotels data
sharing
1)Data Collection, 2)Human Resource
Capacity in Stats
1)Agro-Business
2) ICTs
3) Tourism Linkages
1) Fashion Cultural, 2)Benefits
from Diaspora
Credit Union
League
1) Financial Services (Credit
Unions, Micro-Financing)
2) finding Synergies
3) Youth in Agro-business
1)ICT
2)Tourism
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Description of Information Available for the Analysis of Private Sector Characteristics,
Development Initiatives and Results
The most up-to-date information on the private sector in St. Vincent and the Grenadines is provided
by the Enterprise Surveys and Doing Business Reports as used extensively throughout the PSA
Report. In addition, the Eastern Caribbean Central Bank conducts twice yearly Business Outlook
Surveys (http://www.eccb-centralbank.org/Statistics/outlooksummary.asp). A recent survey of the
MSME sector was also undertaken by the Commonwealth Secretariat in 2009.
Identification of Opportunities to Increase Efficient Design and Execution of Programs
The main issue in relation to opportunities to increase the efficient design and execution of
programs relates not only to these overlaps and duplication, but also to gaps. The gaps mainly relate
to the main issues raised in the PSA Report in relation to lack of easily accessible finance, lack of
matching of skills supplied with the needs of the private sector, and process issues related to the
operation of customs and trade-related organisations and a ‘silo-mindset’ in business support
organisations. One of the reasons for these gaps is a lack of inclusion of the private sector in
decision-making and strategic planning. It is hoped that this issue would be addressed by the
establishment of a high-level steering committee comprising of labour, private sector and public
sector representatives.
Identification of Opportunities to Address Omitted Priority Problems
The areas omitted from current support for private sector development can be addressed a s
recommended in the PSA Report. In addition, many of the agencies mentioned in the previous
section are in one way or the other are associated with the goal of private sector development in St.
Vincent and the Grenadines. While a single entity would result in some cost savings, it is likely that
such an institution might not have the necessary capacity to effective enable private sector
development in such a wide cross-section of industries. Instead, members of all the above agencies,
along with representatives from key supporting industries (e.g. finance, labour, customs, among
others) could form a special taskforce with the expressed objective of private sector development.
Such should be tasked with coordinating any overlaps or duplication that might occur in relation to
the goal of private sector development.
Recommendations
The areas where recommendations are required from the terms of reference for the DMX section of
the project relate to recommendations that improve coordination amongst donors, improve donor
coordination with local stakeholders and improve PSD-related information systems and monitoring
and evaluation.
The current activities by Compete Caribbean as an approach to improve donor coordination and the
Caribbean Growth Forum (CGF) initiative are two examples that other donor agencies not currently
participating would do well to emulate. In areas of congruence, such initiatives should be utilised to
achieve overall development goals, while unilateral targets could still be met via the donor’s
independent activities.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
In relation to donor coordination with local private sector and public sector representatives, the
results of interviews across the region speak to the issue of a lack of dissemination of information on
areas of support available as well as the results of research studies which local stakeholders have
provided information for. The inclusive modus operandi of the CGF is a good example of how to
improve the relationships with local stakeholders through inclusion in working groups and
transparency in research results. However, it should be noted that there was limited participation
by the private sector and this will need to be more actively encouraged.
This point is closely related to the issues of the development of information systems and monitoring
and evaluation. Private enterprises are reluctant to share information on their enterprises and by
greater inclusion in the decision-making process there may be greater willingness to share relevant
information. There is a strong demand by private sector enterprises for data to assist in strategic
planning. However, the situation is not that data does not exist in the region, it is basically that the
data is not collated or mined. Individual governments, through such agencies as Inland Revenue
Departments and National Insurance Schemes, collect information over specific periods that could
provide more detailed information as regards revenue and expenditure by sector, employment
levels and categories, and investment data. The problem in this regard is a lack of infrastructure and
human resources to consistently collate and present data. This is an area where, at the country and
regional level through national statistical offices and the OECS Secretariat and the Eastern Caribbean
Central Bank, that donors could direct resources, especially as it relates to technical assistance in the
development of such a system.
DMX Annex 1: Analysis of Donor Projects and Programs in St. Vincent and the Grenadines
Main donors to St. Vincent and the Grenadines include: The Caribbean Development Bank (CDB),
The European Union’s European Development Funding (EDF) program, The Department for
International Development (DFID), The International Bank for Reconstruction and Development
(IBRD), the European Investment Bank (EIB), and the International Finance Corporation (IFC). Major
bilateral assistance came from the Canadian International Development Agency (CIDA), USAID, and
the Government of Taiwan. In addition, multi-donor support is provided through Compete
Caribbean.
In relation to the nature of projects funded, the majority of active projects are focussed on the
Business Support, Finance (access to finance), the Business Environment in general or a combination
of these objectives. For projects focussed on these objectives, there are 42 active or recently
completed donor funded projects in St. Vincent and the Grenadines specifically, and 12 operating at
the OECS level. Of these projects, at the country level, the majority of projects are focussed on the
Business Environment (38%) and Business Support/Access to Finance (38%). The largest area in
terms of funding is Business Support/Access to Finance with US$41 million. It should however be
noted that although Access to Finance by itself only accounts for 5% of projects, it accounts for 31%
of funding (US$38 million). In terms of the sector focus, 52% of these main objectives are targeted
at the service sector.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
OECS
St. Vincent and
the Grenadines
Location
Table 21: Main Objectives and Sector Profiles of Donor Projects in St. Vincent and the Grenadines and the
OECS
Objective
Business
Support/Institutional
Structure
Access to finance
Business Environment
Business Support/Finance
TOTAL
Business
Support/Institutional
Structure
Access to finance
Business Environment
Business Support/Finance
TOTAL OECS
Share
(%)
Agriculture
(%)
Industry
(%)
Services
(%)
Value of Active
Projects (US $’000)
19.0
4.8
7.1
9.5
$
13,803
4.8
38.1
38.1
100.0
41.7
2.4
19.0
11.9
38.1
8.3
2.4
11.9
11.9
33.3
8.3
2.4
28.6
11.9
52.4
8.3
$
$
$
$
$
37,503
29,647
41,608
122,561
31,140
16.7
25.0
16.7
100.0
8.3
8.3
8.3
33.3
8.3
8.3
8.3
33.3
16.7
8.3
8.3
41.7
$
$
$
$
1,940
14,190
2,060
49,330
At the OECS level, for projects in these areas which are operating at the sub regional level, the
service sector is also the focus, accounting for 42% of projects. In terms of the number of projects
and value, the Business Support/Institutional Structure objectives dominate with 42% of projects
and funding in excess of US$31 million.
In terms of gaps in support, although access to finance has been noted as a major obstacle to
business development in the region, projects specifically targeting this area at the sub regional level
only account for 17% of projects, and less than US$2 million in funding. However, at the domestic
level in St. Vincent and the Grenadines, while only accounting for 5% of projects, support for access
to finance accounts for 31% of total funding in these areas.
In taking the region as a whole, access to finance is only the main focus of 14% of projects, and a
joint focus with Business Support for 13% of projects. However, within these categorisations, 22% of
funding is directed to Access to Finance, while 21% of funding is targeted at both Access to Finance
and Business Support.
Table 22: Overview of Main Donor Projects by Objective, Sector and Value 31
Objective
Business Support/
Institutional Structure
Access to finance
Business Environment
Business Support/
Access to finance
Total
31
Active/Recent
Completed
Projects
67
Average
Share (%)
27.0
Agriculture
Projects (%
of total)
6.3
Industry
Projects (%
of total)
7.9
Services
Projects (%
of total)
10.8
Total Value of
Main Projects
(US$'000)
$
107,738
36
91
35
14.1
33.5
12.9
5.9
9.0
4.8
6.7
10.1
5.2
10.6
19.0
7.0
$
$
$
104,390
155,733
96,996
229
-
26.0
30.0
47.4
$
464,857
Note that some percentages do not sum to 100% due to rounding during aggregation.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
As indicated in the table above, the greatest number of projects relate to the Business Environment,
accounting for on average 34% of projects at a total value of US$156 million. In terms of sector
concentration, on 47% of projects are focussed on services. The table below outlines the main
information by the main objectives, sector of focus and value at the country level in the OECS.
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
Table 23: Main Objectives and Sector Profiles of Donor Projects in the OECS and Member States
St.
Lucia
St. Kitts and Nevis
Grenada
Dominica
Antigua and
Barbuda
Country
Objective
Business Support Insitutional
Structure
Access to finance
Business Environment
Business Support and Access
to finance
TOTAL
Business Support Insitutional
Structure
Access to finance
Business Environment
Business Support and Access
to finance
TOTAL
Business Support Insitutional
Structure
Access to finance
Business Environment
Business Support and Finance
TOTAL
Business Support Insitutional
Structure
Access to finance
Business Environment
Business Support and Access
to finance
TOTAL
Business Support Insitutional
Structure
Access to finance
Active/Recently
Completed Projects
12
Share of Total
(%)
37.5
Agriculture
Projects (%)
6.3
Industry
Projects (%)
3.1
Services
Projects (%)
9.4
Total Value of Main
Projects (US$'000)
$
15,350
5
11
4
15.6
34.4
12.5
6.3
3.1
3.1
6.3
9.4
3.1
6.3
3.1
9.4
$
$
$
1,250
19,049
3,457
32
11
100.0
31.4
18.8
11.4
21.9
11.4
28.1
22.9
$
$
39,105
14,553
6
15
3
17.1
42.9
8.6
11.4
2.9
2.9
11.4
11.4
2.9
17.1
42.9
8.6
$
$
$
20,873
20,243
4,150
35
10
100.0
28.6
28.6
5.7
37.1
14.3
91.4
20.0
$
$
59,819
9,950
7
16
2
35
10
20.0
45.7
5.7
100.0
28.6
5.7
5.7
20.0
11.4
8.6
20.0
8.6
5.7
45.7
8.6
$
$
$
$
$
11,081
19,688
34,658
75,377
7,493
9
14
2
25.7
40.0
5.7
2.9
8.6
11.4
11.4
14.3
34.3
$
$
$
9,093
15,243
3,820
35
11
100.0
28.9
20.0
5.3
31.4
10.5
57.1
7.9
$
$
35,648
15,450
5
13.2
10.5
7.9
7.9
$
22,651
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
OECS Level
St. Vincent and the
Grenadines
Country
Objective
Business Environment
Business Support and Access
to finance
TOTAL
Business Support Insitutional
Structure
Access to finance
Business Environment
Business Support and Access
to finance
TOTAL
Business Support Insitutional
Structure
Access to finance
Business Environment
Business Support and Access
to finance
TOTAL
Active/Recently
Completed Projects
16
6
Share of Total
(%)
42.1
15.8
Agriculture
Projects (%)
21.1
2.6
Industry
Projects (%)
18.4
5.3
Services
Projects (%)
15.8
5.3
Total Value of Main
Projects (US$'000)
$
37,674
$
7,243
38
8
100.0
19.0
39.5
4.8
42.1
7.1
36.8
9.5
$
$
83,017
13,803
2
16
16
4.8
38.1
38.1
2.4
19.0
11.9
2.4
11.9
11.9
2.4
28.6
11.9
$
$
$
37,503
29,647
41,608
42
5
100.0
41.7
38.1
8.3
33.3
8.3
52.4
8.3
$
$
122,561
31,140
2
3
2
16.7
25.0
16.7
8.3
8.3
8.3
8.3
8.3
8.3
16.7
8.3
8.3
$
$
$
1,940
14,190
2,060
12
100.0
33.3
33.3
41.7
$
49,330
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Compete Caribbean Private Sector Assessment Report for St. Vincent and the Grenadines 2013
DOCUMENT END.
126