Public-private partnerships market in Barbados and the Eastern Caribbean
Background
In 2020, Canadian exports to Barbados were valued at CAD $48 million. Even before the start of the global pandemic, it was estimated that the Caribbean region would need to invest a minimum of $150 billion annually to augment services and help to close the infrastructure gap. However, as fiscal budgets are further constrained due to shifts in priority during the pandemic, these estimates are expected to increase, making the mobilization of private investment crucial to infrastructure finance in the region.
Furthermore, given that the islands are prone to costly and frequent natural disasters and are very vulnerable to the effects of climate change, there is an urgent need to modernize critical infrastructure sectors, including:
- power
- transportation (airports, seaports and maritime transportation)
- water and sanitation
- waste management
- social and government infrastructure
These sectors are among those that can be catalysts for post-pandemic economic recovery across the Eastern Caribbean. Access to quality infrastructure is germane to strengthening economic growth and resilience, which is a priority throughout the Caribbean.
Infrastructure development
Infrastructure development has proven difficult for smaller islands, such as those in the Eastern Caribbean, given the limited capacity to achieve economies of scale in infrastructure investment. Additionally, the middle- to high-income status of several of the islands means that there is also little to no access to concessional financing, which is another obstacle to funding infrastructure projects.
The region regards public-private partnerships (P3s) as an attractive option for developing infrastructure, but this option has proven challenging, as well. The primary reasons for the difficulty developing and executing P3s in Eastern Caribbean countries are that the projects are often too small to attract international investors and governments lack capacity and funding to manage project development. As a result, interest in the use of P3s has waned in the region over the past decade. However, some P3 projects were and are being executed, despite the absence of official P3 architecture. One prime example is the project to the redevelop and expand the Grantley Adams International Airport in Barbados, for which 13 concessionaires were shortlisted in recent months. Remaining opportunities are largely in the energy sector, specifically in wind and geothermal projects with members of the Organisation of Eastern Caribbean States, and range from establishing the requisite P3 framework to project development and execution.
While there isn’t a significant number of projects in the P3 pipeline in the Eastern Caribbean, infrastructure needs still exist and the sub-region remains open to creative ways of developing and financing projects. Multilateral development banks such as the World Bank, Inter-American Development Bank and Caribbean Development Bank continue to play a vital role as financiers of infrastructure projects in the Caribbean. There are, therefore, several opportunities to contribute to the development and modernization of critical infrastructure across the smaller islands in the Caribbean. Among these are geothermal energy plants in the islands of the Organisation of Eastern Caribbean States and water and sanitation projects across the region.
The Caribbean region is committed to improving its infrastructure in various areas and is open to seeing more Canadian companies developing these projects. The decision is yours!
For additional information please contact Tammy Brathwaite, Tammy.Brathwaite@international.gc.ca.
