The Caribbean's brand potential on the world stage is not being fully realized. Deodat Maharaj, Director of Caribbean Export, argues that several regional obstacles must be addressed before the Caribbean product can be unified and finally achieve true recognition globally.
Firstly, there's financing for small and micro-businesses. They comprise more than 60% of the Caribbean's business economy. There's also the process of transitioning a business from an informal one, to a registered entity. The business environment of the region is difficult, with most of the countries ranking low in terms of ease of doing business.
Secondly, as a climate-vulnerable region, the Caribbean will need to embrace new technologies and industries based on green initiatives. These industries are poised to generate hundreds of thousands of jobs if executed properly. New methods of agriculture that are more technologically integrated could also harden the local food supply chains and assist in climate resilience goals for the Caribbean.
Thirdly, there's logistics. High travel and transport costs don't just dampen travel demand but make regional products more expensive than their externally imported counterparts. New air and sea options will be needed to better connect the import and export chains across the region.
Join Rasheed and Mr. Maharaj for this interesting discussion on the future of "Brand Caribbean" and the toward path more lucrative market opportunities.
Contact Info:
Deodat Maharaj via Twitter
Website: Caribbean Export Development Agency
Rasheed Griffith via Twitter
The Caribbean's brand potential on the world stage is not being fully realized. Deodat Maharaj, Director of Caribbean Export, argues that several regional obstacles must be addressed before the Caribbean product can be unified and finally achieve true recognition globally.
Firstly, there's financing for small and micro-businesses. They comprise more than 60% of the Caribbean's business economy. There's also the process of transitioning a business from an informal one, to a registered entity. The business environment of the region is difficult, with most of the countries ranking low in terms of ease of doing business.
Secondly, as a climate-vulnerable region, the Caribbean will need to embrace new technologies and industries based on green initiatives. These industries are poised to generate hundreds of thousands of jobs if executed properly. New methods of agriculture that are more technologically integrated could also harden the local food supply chains and assist in climate resilience goals for the Caribbean.
Thirdly, there's logistics. High travel and transport costs don't just dampen travel demand but make regional products more expensive than their externally imported counterparts. New air and sea options will be needed to better connect the import and export chains across the region.
Join Rasheed and Mr. Maharaj for this interesting discussion on the future of "Brand Caribbean" and the toward path more lucrative market opportunities.
Contact Info:
Deodat Maharaj via Twitter
Website: Caribbean Export Development Agency
Rasheed Griffith via Twitter
The investment in the Caribbean. One challenge we have is that we are telling investors come and invest in the Caribbean, we don't have projects. So we need to have shovel-ready projects for investors and if you are dollarised to use your term and you don't have those projects, it makes zero difference. Hi everyone.
Speaker 2:Welcome back to Caribbean Progress with me, rashid Griffith. Today I am joined by Diodat Maharaj. He is the ex-Secretary Director of the Caribbean Export Development Agency, the Caribbean Regional Institution with the remit to support private sector growth through export and to steer foreign direct investment to the Caribbean. Maharaj is a national train down at Tobago. He previously served as the Deputy Secretary General of the Commonwealth, where he spearheaded the trade and investment agenda. He also served with the United Nations in senior roles in the field and at the headquarters. We had a fantastic, wide-reaching conversation on all the things that the Caribbean Export Development Agency does and plans to do to spur growth in the Caribbean. It was a really fun episode. Let's just dive right in. So thank you so much, mr Maharaj, for coming on the podcast today.
Speaker 1:No, a great pleasure to join you on this podcast, Rashid. I'm quite excited about what we're going to talk about.
Speaker 2:So Caribbean Export is a pretty important aid-seen Caribbean, but it's not that well known to most people. Before we get any further into the conversation, could you give an overview of what Caribbean Export does and what it hopes to do?
Speaker 1:Caribbean Export is a regional organisation comprising Caricum countries plus the Dominican Republic, with a market size of around 27 million people, and our job is to promote Caribbean trade globally so to get our goods and services on international markets, to earn foreign exchange and create jobs for our people and also to help steer foreign direct investment into the Caribbean. How do we do our work? We do our work, working day in, day out with businesses and where it matters, on the ground. So we work directly with the private sector to boost their capacity to access new export markets, to expand market share in existing export markets and try to get foreign direct investment and stimulate regional investment right here in the Caribbean. The difference between Caribbean Export and other regional organisations is that for us at Caribbean Export, we work where it matters, on the ground, directly with micro, small and medium scale and even large businesses, so when they grow or achieve, jobs are created and opportunities are created for Caribbean people.
Speaker 2:Why is it that there needs to even be a Caribbean Export Agency or the Collective? Why is it that the governments themselves or the Caribbean countries should be able to promote their investment criteria with themselves?
Speaker 1:Most countries, if not all of the Caribbean countries, they actually have investment promotion agencies. They also have export promotion agencies. The challenge is that I worked in Asia Pacific, I worked in Africa and different places. And as much as we believe we are very important in the Caribbean Russia and we are but the fact is I'm my last posting in the UN was Mozambique. I know what you knew about Trinidad and Tobago. I am from Mozambique. They know perhaps not what you say in both in Jamaica and maybe in Ragi, but most of our countries don't have that brand recognition.
Speaker 1:So there is a lot of virtue in leveraging economies of scale, pooling the resources together to promote the Caribbean as a region, because brand Caribbean or a brand that's absolutely Caribbean has more name recognition than brand Sanquitz and even Brand Grenada or even Brand Trinidad and Tobago. In a market like Indonesia or market like Japan or market like even in China, the value of Caribbean export is that we profile and promote and give visibility to the Caribbean. So when we take so an individual country may not be able to afford four, five, six trade missions to Europe, or we were in a recent trade mission to Africa, to Ghana, nigeria, just in June of this year. But when we pull our resources together, we can do it in a more organized and systematic manner. Try and get results for our businesses. And why are we doing that, rashid? Because we want to create jobs and opportunity for Caribbean people.
Speaker 2:So is there pool resources? What is the funding structure of Caribbean export? Is it an independent carry-com entity or how is the funding structure work?
Speaker 1:Okay, so we have 15 member countries and our member countries contribute financing to our work, but that represents a small percentage of our total financing. We have been working over the last two decades or so with the European Union, which has provided a lot of financing enabling our businesses to access the highly lucrative half a billion people European market. Now we have a partnership with the Caribbean Development Bank. We have been working with the Inter-American Development Bank, expertise France and other partners as well, because we recognize that one we can do it alone. Secondly, the resources coming from government that those resources are not sufficient for sure, and to really do meaningful work and to have a lasting impact, you need much more resources. Hence the reason we have these strategic partnerships, including with the private sector. So Republic Bank, for example, the largest indigenous bank in the Caribbean, is that we have an MOU with Republic Bank as an example.
Speaker 2:So what are some of the biggest success stories of recent that Carabay Esport has been able to increase Either the Esport or Investment Induction in Caribbean.
Speaker 1:So I think it's always good to tell stories for Shire and your listeners, I think, certainly will appreciate that, and I would like to talk about Nalido. Nalido is a company that does organic turmeric in Belize, nalido. We've been working with them for a bit over two years, enabling them to understand the packaging requirements for the EU market, the labeling requirements, phytosanitary requirements, all the boring stuff. They took them to trade shows in Europe and last year, for the first time, nalido got an order for a container of organic turmeric to the European market. They were able to penetrate that market. Secondly, they have secured orders as well for Ireland. So think about it, this small Belizean company that was producing organic turmeric of high quality. Okay, they have accessed a highly lucrative market and they have now started to contract farms to supply them with organic turmeric. So think about it in a small community, you're creating 50 or 100 jobs, earning 10, 20 million United States dollars in foreign exchange. That's concrete and that's practical earning precious foreign exchange and creating jobs.
Speaker 1:We had our Caribbean Investment Forum in Port of Spain, trinidad, over the period 9 to 11 November last year. The next one is in the Bahamas and I hope I can talk about that as well. We had a business process outsourcing company from out of the region coming meeting the people in Dominica and look, within 10 months they have set up shop in Dominica. They have already hired 30 or 40 people. They'll hire a couple hundred people. That's another good example. We got UTEL, which is a business process outsourcing company out of Jamaica, to meet the people in St Lucia and set up a shop in St Lucia where they have hired, I think, at least 900 people. For us, this is concrete. This is practical. This work is generating jobs and generating and supporting livelihoods. It's not about the employees, but the fact is that each employee has a family of three or four right, at least.
Speaker 2:It sounds like a lot of the work of Caribbean exports very private sector oriented. Is that a fair interpretation?
Speaker 1:We work with governments as well, but our job is to support trade. Get investment by working with business.
Speaker 2:What has been some of the major roadblocks? You found that most is a large chunk of small companies and Caribbean have been facing when it comes to even growth internationally.
Speaker 1:We chose better to get the perspective of businesses right. So, together with CDB, at the height of the COVID pandemic, we did a survey, together with CDB, of 450 or so micro, small and medium scale enterprises and they said their biggest obstacle is actually access to finance. So that's one. Secondly, based on the data and the evidence that we have and that we know of the business environment in the Caribbean is quite difficult. It's very difficult to do business in Caribbean. In the last World Bank's ease of doing business report, with the exception of Jamaica, which was around in the mid-60s, and St Lucia, which is in the mid-90s, out of 200 countries globally, caribbean countries were in the bottom half of those 200 countries.
Speaker 1:We are making progress, so it's easier now to register a business. In many jurisdictions they have decided they're using online platforms rather than going in person. We still have a long way to go, but the lack of finance is a big issue and that is why we are having our Caribbean investment forum. The last one, port of Spain, the next one, 23 to 25th at the Atlantis resort in the Bahamas this year, and what we are focused on is getting projects, rashid, and getting investors to invest money in those projects. We recognize the problem. But to recognize the problem and do nothing about it is not the way you're going to get a solution, an effect change and transmission. So that is why Caribbeaninvestmentforumcom, over the period 23 to 25th of Bahamas, is addressing this precise issue of unlocking finance for projects that could drive transmission in the Caribbean.
Speaker 2:To dive in a bit more on that. Why is it you can see Corvius why they cannot get the easy access to finance? What's the driving factor there?
Speaker 1:Well, there are various reasons. One is the cost of capital is high. Cost of financing is high, especially for micro entrepreneurs. Secondly, many of the micro entrepreneurs they're not formal businesses, they're part of the informal sector. So you need to transition from informal to formal to have the documentation required to go to the bank to get the loot. And that's why the ease of doing business environment is important, because you have to make it easy for people to register a business and when they register a business certainly for micro entrepreneurs they have special purpose funding programs available so they can get capital at minimal cost. So at least you give them that start. When you have many models out across the world, you have the Grameen banking model in Bangladesh, which was quite an unusual model when it was conceptualized, but now it's like a rockstar in terms of innovative micro credit schemes for small entrepreneurs.
Speaker 2:So some would say our question why would Carribean Expert even focus on such small micro businesses in the first place? Why not focus on higher up the chain in limited resources? For us on the higher up the chain, people actually already have products, already have services, doesn't need more expansion. Why actually go so far down the business chain?
Speaker 1:essentially, so let's look at the data rush rate. We should be evidence driven. So when you look at the data for businesses in the Caribbean, 70% of the businesses are either micro, small or medium scale enterprises. They account for around 75% of employment in the Caribbean. They account for around 55% to 60% of the returns GDP. So if you want to drive transformation and drive economic growth, you have to focus on where the majority of the businesses are. That does not necessarily mean we shouldn't focus on large business, because on the export side, we do a lot of work with businesses that are already well established to help them penetrate new markets. But if we just ignore the micro, small and medium scale enterprises, that's to our deep peril, because they comprise the bulk of businesses in the Caribbean. And remember, it's not only businesses that producing goods cocoa, coffee or rum, or tobacco or sugarcane or condiments it's about businesses that are producing services the business of music, the business of creativity, the business of culture, right, accounting services. So that is why it's so critically important for us to have a good understanding of the nature of business enterprises, because if we just focus on the well-established one, rashid, you're leaving out 70% of your people accounting for 70% of employment. So what's going to happen? The way to go is to give that attention to those businesses and to make sure they are fit for purpose.
Speaker 1:And what we are doing at Caribbean Export we are really leveraging innovation and digitalization and technology. So Tefara's technology is a great democratiser in business, and what technology does? It creates a level playing field. We are the height of the COVID pandemic in your country, rashid, barbados, and I'm based here, so it's my country as well. I'm from Trinidad and Tobago and you know what was happening Farmers, they were selling lettuce and cucumbers online in Barbados, in Trinidad and Tobago. They never did that before. So now at Caribbean Export, we are creating what we call a virtual export accelerator platform where businesses can showcase their products online, because we don't have the Amazon equivalent here in Barbados or anywhere in the Caribbean. But we know if we create opportunities and provide a platform for businesses, they will take advantage of it.
Speaker 2:What are the reasons that these small column inform? Mobilizes are not transitioning. So, yes, we hear that it is difficult to do business in Caribbean, but what is actually making it difficult to do business in Caribbean?
Speaker 1:So, one, the process of registering a business. People prefer to remain in the informal sector because, a it's difficult to register, or it may be difficult to register, or, b when you register you have to pay taxes. But the advantage of registering is that, even though you have to pay taxes, you have access to credit. So one is you, as many prefer to remain in the informal sector, or they remain because they have no other choice. That's one that the second challenge to transition is because of limited market size, meaning if you're in San Quetzalni, if you're looking at a market of 55,000, you're living in a community, a village or small market. If you're in Greenida, it's the same. If you're in Antigua and Barbuda, it's the same.
Speaker 1:If we think of a region, the Caribbean as a region and I spoke about Caricum countries and the Dominican Republic the market size is 27 million. It's a different market size altogether. When we think about Barbados and you think about a market of 375,000, that's totally incorrect. The market is in 375,000 Barbados. The market is the 375,000 Barbados plus the 1.2 million tourists that come here every year.
Speaker 1:So if you're a farmer and you think about lettuce production, poultry production, egg production, your concept of the market has to be much bigger than your community or your parish or the residents on the island and, plus, you have a regional market. So we have to think differently as entrepreneurs. So we need to have training programs to help our entrepreneurs to think differently with respect to market size and also the issue of investing in product development. So, for example, I spoke about the European market as a highly lucrative market of half a billion people, but they very much into organic products and certification and our businesses are not certified, so that's why we have to work with them to help them to become certified so they can access these markets.
Speaker 2:So they're uncertified because they're not formal companies that link through the process, or just that. They are formal companies and some of them still have not been certified.
Speaker 1:Yeah. So for the micro entrepreneurs, they're constrained in terms of market sizes, limited, or they're focused on a small market. That's one Second for businesses. Let's say you do pepper sauce anywhere in the Caribbean Jamaica or St Lucia, for example and you've satisfied with the market in St Lucia, so you're not exporting. You can go to the market and you can sell and that's good for you. You go to the grocery store.
Speaker 1:But if you have to move to the next level, then you need the certification. So some people are content and they're happy with making extra money, dollars. But when you build awareness of the potential of profit and employment and resilient prosperity because of these new opportunities, then you have the impetus to become certified. When you have barren foods, for example, from St Lucia, barren foods has a factory in Grenada as well. They have over 40 products, clients about more than 40 products, and they export to more than 45 countries. And if they can do it right, then anybody can do it. But they had a plan set up shops, satisfy domestic market, expand to regional market, build a lot of factory in Grenada, exporting to Europe, exporting to North America.
Speaker 2:Many of your examples are very agricultural, food specific, and on the other side there is a lot of very highly educated population that's very underemployed or worse unemployed but definitely underemployed. What is Caribbean export doing if it is to kind of service that kind of talent? Well, in the Caribbean?
Speaker 1:So we have a strategic plan, rashid. We focus on one export, two, investment and three services, which I spoke about earlier in the podcast. We believe that services represent the next frontier for Caribbean business. We have had programs to help our business. Our musicians transition from being crop over artists or macho mani artists in Guayano or John Canua artists in the biomass or carnival performer to being a business person, establishing a business, making sure you secure your intellectual property, leveraging technologies such as Spotify and YouTube so you can upload your content and make money wherever you are.
Speaker 1:We have worked closely with the coalition of service industries and Trinidad and Tobago in Barbados, because we believe, as I said earlier, the importance of packaging and commoditizing intellectual property and knowledge, whether it's accounting, whether it's in other technical services. So, business process outsourcing I spoke about the example of St Lucia. I spoke about the example of the company that established Trinidad and Tobago as well. These are examples of companies that are establishing, that's leveraging the knowledge of our people. Our literacy rate is 95%, meaning that we have a fantastic university system. I'm a proud graduate of the University of the West Indies. It's a world-class institution. So we're trying to high-quality graduates so that knowledge can be commoditized and exported, and that's why, for us, knowledge in terms of services represent the next frontier for Caribbean business.
Speaker 2:What have you seen as the main investments of foreign direct investment trends in the Caribbean last decade or so? And then what kind of foreign direct investment are you trying to essentially enhance when it comes to Caribbean?
Speaker 1:The Caribbean is a premier tourist destination. So investments, certainly in the eastern Caribbean Barbados, jamaica tend to be a lot in the tourism sector. That's one. So Trinidad and Tobago, which has an energy-based economy and no Guyana oil-based economy. I believe that, whereas tourism will continue to be the main, still a big portion of the economies of much of the Caribbean, I think that what COVID-19 has taught us, what 9-11 taught us, is that you become so vulnerable, rashid, because there were no tourists during COVID, then our economy is in a state of extended shock, an extensive shock For us at Caribbean Export. We have to get investments that could drive transformation of our reach. They create jobs and opportunity for our people. So we are focusing on four sectors.
Speaker 1:One green economy transition. As the most climate-vulnerable region on the planet, together with the Pacific, a green economy transition is not an option for us. It's an imperative, but also it represents a big opportunity. The International Labor Organization and the IDB, the Inter-American Development Bank, did a survey and they said that a green economy transition in the Caribbean will result in the creation of an additional 400,000 jobs. So take, for example, we're going to have electric vehicles. You have to have people who will service those vehicles. That's a high-paying job. You have people who will have to install the charging stations. Who will have to service the charging stations High-paying jobs. We're going solar across the Caribbean. Who's installing those panels? Who will be servicing them? Okay, can we manufacture them here? So a green economy transition is vital first.
Speaker 1:The second area is agriculture, but leveraging technology in agriculture. We are the most food insecure region on the planet. We have a market size of 27 million people In 2019, we had 31, 32 million tourists, so that's a big market when you add tourists as well. And for us, agriculture provides a unique opportunity, if we treat it as a business, to create hundreds of thousands of jobs in the region, and that is why, for us, getting investment in agriculture is critical. The third has to do with innovation, digitalization and technology. If our businesses don't go in that region and we don't embrace technology, quite frankly, we'll be left out, and that is why we need investments in this and that sector.
Speaker 1:And the last area we're focusing on is transport and logistics. There's no way that I should be paying $450 to go from Barbados to Trinidad and Tobago roundtrip, which is a 35, 45 minute journey. I shouldn't be paying $400, $500 to go from Barbados to Greenator roundtrip. That's the five minutes. So, sant Lucia, the cost of traveling the Caribbean is exorbitant. We can't have a unified and resilient Caribbean if four people can move freely and it's not affordable to travel. So that is why investment in transport and logistics would be critical.
Speaker 1:So, to recap, the priority sectors that could drive transformation, that's what we are about R1, getting investment in the green economy. 2, agriculture. 3, innovation, digitalization and technology. And 4, transport and logistics. That's why the Caribbean Investment Forumcom in the Bahamas 23 to 25th of October this year, or just next month, will be focusing on those sectors and getting investors to come and first to present projects on these sectors. Because I am convinced Rashid be on a shadow of a doubt that we have an option. It's business as usual or the opportunity to drive a truly transformational agenda for our region to create jobs and opportunities. So our people wouldn't be voting with their feet.
Speaker 2:I agree that agriculture, of course, is very important. But when you say agriculture, do you have a focus on the larger islands, the larger countries Belize, guyana, suriname and so on? Because in small countries you can't increase your full security essentially by doing domestic agriculture, because there's just no space at all. So when you say that kind of full security agriculture or you have a focus on the Guyana, for example, Actually no, and I have a different view from you, rashid and agriculture.
Speaker 1:We are focusing on agriculture, but with an emphasis on ag tech or leveraging technology in agriculture, whereas we have the wide open space of Belize, suriname, jamaica, thales and Guyana, and perhaps Trinidad and Tobago. By leveraging technology in agriculture, you can mass produce one notion of lettuce in Grenada, st Lucia, antigo, trinidad, wherever in the Caribbean is lettuce on the ground and lettuce using hydroponics technology as a skyscraper, so that one lot of land is exponentially increased. Because guess what, rashid, you're going up, you're using six inch PVC pipes, right, and you're going up, so you don't have one layer lettuce on the ground. So that's one. So that is why, for us, leveraging technology and agriculture is really vital to help us build food security. So that's one.
Speaker 1:But it's also connected to transport and logistics, because the islands are close by and if you have an effective ferry system transporting goods from Grenada to Trinidad or Trinidad to Guyana or Guyana to Suriname, it's quite easy actually, because the distances are not far. So for us in agriculture respect agriculture it's about building food security and resilience by one leveraging the larger economies. For some stuff you need to have space, massive amounts of space, but Antigua and Barbados or Barbados. You guys stayed at the hilltale and I just came to Barbados and I'm having breakfast at the hilltale here and everything is imported, Rashid. Everything is imported the banana, the watermelon the eggs.
Speaker 2:But isn't it the case that things are primarily imported not because of bad reasons, because they're cheaper?
Speaker 1:They are imported because we haven't used technology to drive down the cost of production to be able to compete with the perceived cheaper imported product. That's the reason here in Barbados and tourism-based economy, we are a high-cost tourist destination, so we are not like in places in Africa or Asia. I was in Thailand over the summer and in Thailand or you go to Cambodia, you go to a five-star hotel, you'd be astonished how much you'd pay for a beer or what you'd pay for a meal. In the Caribbean you pay at least what you would pay in Europe or more, and therefore the tourists will intepay the premium dollar for the premium product. So you have a different type of tourists and consumer patents here in the Caribbean. My view is that if you produce here and you produce in the quantity, the market is readily available.
Speaker 2:I agree that the tourists are willing to pay for premium organic products, but most people in the Caribbean probably will not be. Even now. You see, domestic products are not that much, mostly not particularly expensive, but you still go pay for the imported products in the first place.
Speaker 1:It depends. In Guyana, where I served in Suriname, that's not the case. In Belize, that's not the case. But you talk about imported products. It's always good, rashida, to give precise examples. So in Trinidad and Tobago, I think Trinidad and Tobago imports like maybe around 20 to 25 million US dollars a month in strawberries and blackberries. Why, in the national of Trinidad and Tobago eating strawberries and blackberries? I can't comment. I like tropical fruits, but I accept that it's their right to eat whatever they wish. But guess what? This company okay, that's using hydroponics technology, that has established a farm in Tobago that's producing strawberries, that's producing blackberries, that's producing blueberries that they will be able to meet all the import requirements. They've been so successful that they have set up shop in Guyana. I was in touch with Ralph Bulkoff, one of the principals in this enterprise, and he told me they're setting up shop in Antigua and Barbuda now. So that's a very good example of a premium product that's being produced here and using hydroponics technology.
Speaker 2:That's true and I would say I guess the food goes different topic. I do hear a lot of people recently in Caribbean politicians talking about the food import bill. Yes, it is substantially high, but of course it's going to be higher in the Caribbean country. But the majority of the food import bills have nothing to do with natural produce. It's primarily like kind of like cereal, primarily like wine from France. That is the cost. That really is the very high product of the food bill. So usually when I hear food bill, then the DVA and say therefore we should grow more strawberries. But that's not the actual big cost in the food bill.
Speaker 1:But I think, if you disaggregate the data in a place like Guyana or a place like Suriname or a place like Belize, there are not known to be places that consume massive quantities of wine, for example. I think the food bill, the majority of the food bill, would be in basic food stuff Cheese from New Zealand, for example, imported rice, imported sugar, imported cereals across the board, and the inputs into making bread and flour and whatever Some of these things we can produce. So I was at Marseille, in Warrens, here in Barbados, just yesterday and for the first time I had an option now there was breadfruit chips or french fries. You know that you can buy frozen ones, which is good to see, right.
Speaker 2:Yeah, I was looking to see some of the some detailed research of all the breakdowns of the different food import bills in the Caribbean countries and see what the primary components actually are Now. It would be quite interesting. In terms of tourism, you mentioned that during COVID also, we had a slow down in tourism or a stop essentially in tourism. Kim, there's time still, let's slow down. But it recovered not that long after the problem was over and if, for example, the Caribbean countries had a good fiscal budget and had good management, that two year gap wouldn't have caused such a big problem. So isn't that tourism actually is like a thing you need to diversify away from, or just you have to get some better management of the money that you earn from the economy?
Speaker 1:Believe in the age old wisdom of the term don't put all your eggs in one basket. I think our ancestors and our grandparents and parents, they knew what they were talking about. Look, you can't have an economy based on one sector. One day it would be COVID, another day might be a 9-11, as we saw. Another day it might be hopefully not a global conflict, financial crisis in your tourist source countries. It makes little sense to just rely on one primary sector. I'm not saying you should stop tourism. I all mean you should continue. But let's look at the data on tourism. There's something called local content in most economic sectors and local content is the amount of local input into the particular industry. In terms of the tourism sector, the Caribbean has the lowest amount of local content in its tourism sector. Less than 10 cents of every dollar tourist spends remain in the Caribbean Less than 10 cents. Even though you have a lot of tourists coming, you have a lot of money remaining in the country.
Speaker 2:How is that being calculated? Because I can't fathom how that could be true. It's easy.
Speaker 1:When you book a ticket. So you're in Panama, you book a ticket to Barbados. 9 out of 10 times you use an Expedia. Secondly, you're coming with copper. Thirdly, you're staying at the Barbados hilton or a amount of your eminence or somewhere in the platinum coast. You pay for that in foreign currency in a hotel owned overseas. Own. That money goes there. So think about it. You rent a car. You rent a car with hilt, so thrifty or whosoever what kind of companies that are in where it's located.
Speaker 1:Okay, so you come to Barbados, you take a taxi, you go to your hotel. You just book a bottle of all imported fancy wine. You drink that wine imported from France or California or Chile or Argentina. But then you have steak. We don't produce any steak in Barbados, do you? Then in the morning we have breakfast. We have strawberries, the strawberries, the blueberry, the pineapple. Then you're not going to have a banks or a stag or a red stripe. We'll leave the morning right. So you have a pier two o'clock from banks in Barbados or Carrick from Trinidad and Tobago. Then two days you live like that. Then Friday night you go to Oisten. That's the only sector, right. It's one of the big sectors where you have money remaining, because the $50 you pay for dinner is remaining in a household.
Speaker 2:That seems to be a very skewed calculation, though, because you should never include some like tickets, for example, to come to your domestic.
Speaker 1:No but tourists you pay X of dollars as a tourist, rashid Sure, so you have to do a calculation of what is remaining in the local economy, whether it's Antigua or Barbados or Grenada.
Speaker 2:But, for example, all of the service people, all of the hotel workers. They're getting paid somehow and that's probably profit from the hotel. That's all your money you pay to the hotel. You got to include that stuff in calculations and all kinds of things.
Speaker 1:Okay, it has to be right, because, rashid let's take hypothetically a place like Antigua and Barbuda your package is $2,000. In the United States, the hotel worker earns $50 USD Cleaning 10 rooms, let us see. So that's another reason why I prefer community tourism, where tourists go and stay in a community, because more money remains in the community. Now, I am not saying that we should toss out tourism. I'm a big believer in the tourist sector with a lot of local content at it. That's one because it creates a lot of jobs and it creates a lot of employment, but at the same time, at the local level, it creates a lot of low paying jobs. It creates a lot of low paying jobs Good for the taxi drivers and it generates a lot of business. And off season, what happens then?
Speaker 1:So that is why we have to focus on sectors that could drive transformation and to leverage the high literacy and training of our people so they can earn high paying jobs. Just as how we want a micro entrepreneur to become a small business person, to become a medium business person and a medium to become a large, similarly we want the hotel worker to transition from working in the grounds to earning a small company that can service the hotels. That's the thinking. I'm not saying to toss tourism we will be silly to do that. It generates a lot of jobs and opportunity for our people. But we have to I believe, strongly believe. We have to retain the tourism product and that's why we have to have sectors that could connect to the tourism sector. Where tourism is a mean driving sector of a particular economy, where you're connecting to agriculture, you're connected to music and culture, so your artist get jobs. So it's not about Sun, sea and Stand Alone.
Speaker 2:What do you think about dollarization? Any thinks of Caribbean countries should not have their own currencies. They should just use the US dollar, and this is one benefit of it. It is less hesitation for foreign investors to come in the country because they don't have to worry about currency risk effects, risk capital controls and so on and so on. Do you think that would be a good business promotion tool that Caribbean could do?
Speaker 1:Well, in a good example, let's look at the Eastern Caribbean, the organization of Eastern Caribbean states. I mean they have an easy dollar which has worked really well for them I used to work in the Pacific and you go to Vanuatu, they have their own currency. You go to Tuvalu, they have their own currency. You go to Ander Island next door, fiji they have their own currency. It's quite complicated.
Speaker 1:I see the value of having a common currency, but I mean it should be tool politically and otherwise. It's going to be a very difficult journey to have agreement on one dollar. And then you seek about dollarization, but I'm not sure dollarization is going to work. No, the US dollar is like the primary global currency. But the fact is that the world is changing. I mean, no, the global power shift has taken place where India, for example, now has replaced the UK as the fifth largest economy in the world. Chinese economy, I mean, is competing closely with the US economy to see which would emerge as the largest economy on the planet. And when you look at the history of civilization and the history of the world, you know you have appeared where the UK was the primary global power. You had appeared where Portugal. You had appeared, where Spain was the same right. Then you had the time of the United States, and I believe with time that will change as well. So I think it's better. As Prime Minister Mowgli said, we are friends of all and satellites of them.
Speaker 2:Sure, I agree, but let me clarify that comment because, in terms of dollarization, as it is now, the dollar is the thing that all Caribbean countries invoice exports and imports and investment in. Of course, seven years ago it was sterling, but we switched to dollar, to the cause of the issues, and then if, for some reason, in 50 years from now, it would be different currency, then you'll use that. On the currency also, the question is more of do you think, instead of having domestic currencies, that if you had a globally realized currency that has more stability and more trust, that would have a positive impact on the investment portfolio in the Caribbean?
Speaker 1:I do not think so. The investment in the Caribbean one challenge we have is that we are telling investors come and invest in the Caribbean, but we don't have projects. So we need to have a portfolio of projects. So when an investor comes, this is the solar plant I want you to build, this is the land where it will be located. These are the incentives I'm giving you. This is the market size, these are possible financial partners that you could use Country X as a beachhead for the whole Caribbean market, for the European market, for Canada, columbia, cuba, because we have free trade agreements. So we need to have projects. Shove already projects, four investors and if you are dollarized, to use your term and you don't have those projects, it makes zero difference. Okay, so that's one. Secondly, we need to have an environment that, across the board, that investors will be attracted to.
Speaker 1:I was in Kigali, rwanda, last year, in June of last year, and I lived in Tanzania at the height of this terrible genocide that took place in Rwanda. Thousands of bodies were flowing in this river, the border between Tanzania and Rwanda. It was just totally tragic and in one generation Rishit. You know they have transformed that country because they've made it so investment friendly. Claire Kamazi, the head of the Rwanda Development Board equivalent, I think, to the Investment Promotion Agency said you know, I want you people to apply to establish a business and do business here in Rwanda and I guarantee you that within 16 hours you will get a response and approval. And we want you to buy Rwandan products. So what we will do, we will email you the certificate so you can use your scarce, your limited luggage space to take Rwandan coffee and other products here in the Caribbean. We are way behind on some of these matters. In Singapore you can get within 24 hours to do a business approval. In Mauritius within 48 hours. Here it can take months.
Speaker 1:Yeah.
Speaker 2:I was in Kigali this year and I was blown away by the transformation. Rapid transformation, yes.
Speaker 1:There you go and they're embracing technology. Rishit they have like a tech city. You go in the middle of Kigali. They have this incubator where young people with their ideas can go and help, can develop products. They can talk to businesses who may wish to finance their app. It's just fabulous and what it takes is vision, but vision backed by action, not vision backed by talk. So vision plus action equal transformation.
Speaker 2:What's your view on the citizen-shipping by investment programs that the five Caribbean countries have? So you think I'll leave it there. What's your view on that?
Speaker 1:Well, I think that people across the Caribbean I mean we need precious foreign investment and we have tried different routes. I mean, when we tried to establish offshore banking centers, that became an issue. Many forward jurisdictions are blacklisted and we started to look at different ways to get investment and money into our countries. And that's how the CBI the Citizen by Investment program came up. I think it continues to be implemented in many of these countries. My own view is that we need to have a sustained way of attracting investment, and a sustained way of attracting investment is to have priority sectors, to have a portfolio of projects, to build these projects and to have a very targeted and systematic strategy of attracting investment. That is how we work at Caribbean export and that's how we are going to continue to work, and that type of investment, organized in a very systematic manner, can generate the jobs that you need At the scale that is required. So our people would not vote with their feet.
Speaker 2:So my last question what do you think is the top three or top one most important policy changes that need to be done to enhance the business environment of most Caribbean countries?
Speaker 1:I think one people should be able to apply and get approval to start a business within 24 hours, at max 48 hours.
Speaker 2:Thank you so much, Mr Maharaj. It's been a delightful conversation.
Speaker 1:I'm sure the pleasure has been mine and thank you so much.
Speaker 2:That's all for today and thank you again for listening to Caribbean Progress. Be sure to follow Caribbean Progress on Twitter, at CPSIorg, or on our substacks at CPSImedia, where you can subscribe for all our latest episodes and also some very good deep dive analysis of Caribbean issues. If you have any questions on today's episode, feel free to contact me on Twitter at Rashid Gual as Rashid GO, or via our progress email, which is progress at CPSIorg. Thank you, and I'll look forward to seeing you again in the next episode.