By: Kimberly Ramkhalawan
August 16, 2022
‘Marshalling Development Finance’ theme looks to pivot MVI measures
As St.Lucia assumes the chair of the CDB Board of Governors ahead of its 53rd annual meeting in 2023, its Prime Minister, Phillip J. Pierre says he intends to ensure his one year tenure is defined by finding solutions for difficult times, as the region emerges from the pandemic, while facing the effects of the Russia-Ukraine war.
And critical to the future, the newly elected Prime Minister says part of this is focusing on what his cabinet is calling the youth economy, which also aligns with what the CDB is spearheading, access to adequate and affordable financing for development. In taking up the chair, Prime Minister Pierre says currently seven percent of the Caribbean population is currently between the ages 15 to 24 years old, and 25 percent ranges ages 10 to 24 years old, a large youth demographic that has the potential to contribute significantly to social and economic development. However, he remarks that for this potential to be realized, optimal engagement of its youth in the economy is imperative, as this segment also grapples with unemployment and poor economic decisions remain serious concerns among the youth. As a result, he says his government intends to create this youth economy by pushing hobbies into entrepreneurial endeavours and skills into business.
Through an agile specialized agency, the youth economy agency will focus on the provision of financial and technological assistance, by tapping into the innovation of youth, something the St.Lucian PM hopes will take root in a similar manner across the region.
The 2023 theme of the Caribbean Development Bank annual meeting has been set as ‘Marshalling Finance for Development’.
In launching the event, CDB President Dr.Gene Leon says the theme rises to a different level, where the shift in ensuring finance is available for development changes and takes into consideration the Caribbean and all its business sectors, while forcing it to respond in unison. Dr.Leon says while development has often been viewed as a people issue, and focus of its welfare placed on the shoulders of the government. He is saying this is something that has often been enshrined in models of government, and delivering on this has become a thing of the past, making it no longer feasible. The CDB President is calling for mindsets to be changed on what and where governments should not be expected or charged with responsibility, however in the same breath says it cannot be left totally to the private sector. Instead, what Dr.Leon, says he is putting on the table, is a new model of partnership for development between the public and private sectors that can work together to address those goals that can get countries to addressing and overcoming the challenges.
A partnership in development that can promote adequate and quality investment activities that can meet the goals both parties agree on, and can therefore overcome the challenges often faced as individual nations and as the collective region.
He adds that “even after all those investment activities are lifted, the need for access to adequate and affordable financing, in order to avoid the debt trap that often keeps countries down” is the reasoning behind the 2023 theme.
And while he shares that starting from now, a slew of activities will be launched that can help address these issues he says will take some time in overcoming.
As to how the CDB suggests this be achieved, Dr.Leon says financing must be multi-sourced, by this he means incorporating individual efforts or the utilizing of national savings which must be raised and generated, mobilizing private sector finance, and access to concessional financing, something which has been taken on as an advocacy issues among Caribbean states before global financial institutions.
Underscoring the presence of an already large pool of concessional financing, the issue remains how the Caribbean can get more out of it, which he says pivots around per capita gross national income, which in recent years has been a challenge to the region as a majority if not all of the nations in the Caribbean have been deemed to be too rich to be able to access concessional finance.
He says the matter has engaged “the CDB assiduously to come up with an alternative mechanism that would say it can access finance because of its vulnerabilities, resilience capacity and ability to bounce back, one that also does not rely on the progress the region has made, nor considers what it has attained by increasing its GNI to the point that most states no longer qualify for concessional finance. Dr. Leon says this is often seen as punishment where Caribbean countries are forced to pay for their progress before the international financial community, and instead deploy concessional financing in that way to assist nations.
The CDB President adds while financing must be multi-sourced, it must also be multi-instrument, as not all financing is equal, and there needs to be a way in which it is able to distinguish the terms for finance rescue operations, such as post a natural disaster such as hurricanes, and the terms for financing under recovery mode. This also applies to longer-term financing, which helps to position countries in a different space.
What the CDB proposes involves three measures, and calls for the need to start designing instruments that are internally consistent and works simultaneously together, that even if ‘temporarily-consistent’, decisions and terms in the short-term does not become a problem in the long term. This he says is coming up with a “financing engineering type of idea that utilizes the combined sources present with the different types of instruments that can be mustered and remain internally coherent and temporarily consistent”, which he calls the current challenge they must face.
Its second measure looks at implementation and how financing is actually developed, which Dr.Leon says is often seen as the biggest problem, but can be tackled in terms of relationship between both the public and private sector, while monitoring and evaluation systems are needed to know where they are, where they are going, and monitor across the space at each point, what progress is being made or why its not being made, all while pivoting to stay nimble enough to stay on track. The measurement can be a distance to a goal metric, whether it’s a sustainable development goal, SDG, where they want to be giving it a large part of how measurement is to be done, which comes off what was said last year’s theme, “measure better to target better”.
The third element of implementation, he calls the nation’s psyche, in hindsight as to what is their role, and looks at youth as the next generation and the transition period in a continuum as to how they approach these issues.
These topics while not new to the CDB, as stemming from recent conferences and talks about financing, it has sought to align the region’s vulnerabilities, debts associated with it and it its financial needs. Dr.Leon says what the CDB is looking at doing is putting in place a measure as a new methods for seeking finance for the region, for those seeking finance, other factors can be considered, including the vulnerability and how quickly you can recover post disaster.
When asked about the David and goliath situation of the Caribbean going up against global financial institutions, Dr.Leon says the world struggles with this idea that GNI is not an appropriate measure of development, as well as access to finance for development. He says in the last 35 years, no solutions to this have been produced and where it stands, the world agrees that a way needs to be found to get around it.
He mentions that the concept of the MVI, Multi-dimensional vulnerability index is what it hopes to establish, except with CDB broadening its scope to distinguish vulnerabilities that you have which is before an event occurs and vulnerabilities that arise post a disaster, and also considers your susceptibility and whether the recovery period takes longer.
These vulnerabilities include the scope of it being social, economic and environmental. The ability to recover, the static before and the dynamic of change.