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Speeches & Transcripts February 13, 2020

Regional Transformation Through Innovation in the Eastern Caribbean

Dear Honorable guests, ladies and gentlemen, good morning. I would like to congratulate the Eastern Caribbean Central Bank for convening this 4th Growth and Resilience Dialogue with Social Partners.  I am especially honored that this Dialogue is being organized in collaboration with the World Bank on the highly appropriate and timely topic of Regional Transformation Through Innovation.

It is also a special honor to attend this strategic event with my colleagues from the World Bank who will join the panel discussions on Digital Economy and Renewable Energy.  I congratulate the Eastern Caribbean Central Bank (ECCB) for its leadership in bringing diverse stakeholders—public, private sector, civil society, political representatives—to debate and dialogue on Growth & Resilience.  Today’s topic recognizes the global trends that are moving towards embracing research and technological innovation in support of growth, competitiveness and jobs.  

As rightly noted in the title of this event, regional transformation, creativity and innovation are necessary to turn the region’s challenges into opportunities.  

The role of all stakeholders -including public and private sector and civil society, youth groups - is essential to fuel such innovation.  I am glad to see the diverse representation from various stakeholders who collectively bring knowledge and innovation.

In the context of today’s event, I would like to explore with you three opportunities for the Eastern Caribbean countries in their march towards regional transformation. Yes, there are limitations if you are a small state, but small economies also have tremendous opportunities to have faster impact and on scale.   

Harnessing the Blue Economy is a unique opportunity for ocean-facing small islands. Sustainably developing the Caribbean Sea for economic growth while maintaining ocean health could define a new era of economic opportunity for the region.  A World Bank report estimated the value of the ocean economy in the Caribbean to be over $400 billion (as of 2012). The OECD projected that the ocean econo­my is likely to grow faster than overall rates of economic growth in coming decades. For the Caribbean, the tourism industry generates $57 billion annually accounting for 15% of GDP and contributes to 13% of total jobs in the region.  There is huge opportunity for small states to manage and direct the growth in a way that fosters more sustainable “blue growth” in the region.

A second opportunity is through more rapid embrace of technological innovations.   In today’s world, this is a transformative opportunity that is an equalizer regardless of a country’s size.  Digital technologies can help address some of the toughest development challenges by providing access to information and offering better economic opportunities. Indeed, digital technologies offer a generational opportunity which would have been unimaginable even a decade ago.  An integrated Caribbean digital market would create the market size needed to attract digital investment and to provide space for local firms to grow before having to compete in the global arena. Regional collaboration is critical to maximize investments in the foundations for a digital economy such as developing specialized digital skills, or interoperable digital ID systems that can facilitate trade and movement across borders.

Digital ID systems have yielded important results around the world. But the region is behind some low and lower middle-income countries that have already implemented universal ID systems and e-payments.  Globally, 52% of adults use digital payments to send and receive money. In Sub-Saharan Africa, over 21% of adults have a mobile money account. In Kenya, over 40% of the population uses mobile phones to make e-payments, open savings accounts and obtain short-term loans.  Bangladesh’s Grameen Bank stands out as a pioneer in using the cell phone in the late 1990s – at a time when it was a technological novelty – under its rural microcredit program.  I am delighted to inform you that the OECS countries, the ECCB and the OECS Commission are partnering with the World Bank to launch a Digital Transformation Program for the Eastern Caribbean. 

Use of latest technologies can also maximize the investments in renewable energy including in areas likes solar storage, solar, wind, geothermal, and marine energy.  It can lower dependency on fossil fuel imports, reduce electricity tariffs and increase economic competitiveness.

In 2016, the global digital economy was worth $11.5 trillion (equivalent to 15.5% of global GDP and is expected to reach 25% in less than a decade, outpacing the growth of the overall economy). However, countries in the Eastern Caribbean are currently capturing only a fraction of this growth potential and need to strategically and proactively invest in digital economy to thrive in a digital world. 

Third, more rapid embrace of regional opportunities is critical for small states.  Regional integration is crucial to address the constraints of small size, share the cost of common services, and pool resources. The Eastern Caribbean dollar is an example of the benefits of closer integration—it has contributed to macroeconomic stability, low inflation rates and a relatively sophisticated financial system. Continued success also depends on the region’s ability to collectively enforce fiscal discipline and harmonize financial sector regulation and supervision. 

Regional risk-pooling can play an important role in diversifying risk across the region and providing liquidity to respond quickly to disasters—through successful initiatives such as the CCRIF. CDEMA is another example of regional cooperation to mitigate the impact of natural disasters and of ex-ante collaboration. 

Deeper regional integration and connectivity could enable cost sharing and risk pooling, and economies of scale that facilitate strong growth and job creation including in sectors such as tourism, IT services and agriculture. Caribbean countries can create larger markets to harness economies of scale, drive competitiveness, investment and innovation. 

Let me close by reiterating the World Bank’s commitment to the Caribbean and especially the small states in the Eastern Caribbean. The World Bank Group supports country and regional priorities for sustainable economic growth with a strong resilience agenda.  The World Bank assisted portfolio of over $2.1 billion is financing 49 projects in 12 countries. Since 1984, the World Bank has provided financing of approximately $1 billion to the six OECS countries, 70 percent of which in the form of interest-free concessional financing.  Our analytical work and technical engagement is in areas such as disaster risk financing, the blue economy, national risk assessments, public expenditure reviews among others.

Our engagement in the Caribbean includes a strong regional program. We are already financing eight regional projects amounting to approximately $200 million. Moreover, two regional projects are under preparation: the Regional Airport Resilience project, which aims to improve air traffic safety and airport infrastructure resilience to natural disasters, and the Regional Digital Transformation Project, which will take a comprehensive approach to digital development.

Let me thank again the ECCB team for hosting this special dialogue and for bringing us all together. 

Last Updated: Feb 13, 2020