Trade Liberalisation In The Caribbean Requires A Dynamic Private Sector

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CaribWorldNews, LONDON, England, Mon. Dec. 6, 2010: Encouraging the Caribbean private sector to become more dynamic is far from easy.

This is not to comment on the largest Caribbean companies; the forty or more enterprises which are multinational, well financed and managed, and are invested in or exporting across the region as well as to North and South America and Europe. Rather it is to focus on the smaller aspirant Caribbean companies and the assistance they need if they are ever to develop the capacity and technical knowledge to take advantage of the removal of tariff barriers for goods and services.

These are the entities that typically require the help of private sector support organisations-known collectively as business support organisations or BSOs – if they are to develop the skills required to export, joint venture or invest. Unfortunately most BSOs in the Anglophone Caribbean have little capacity to provide the help that might enable companies to look outwards.

Finding ways to encourage such companies to first consider, then take advantage of the sometimes less than apparent opportunities that new trade arrangements might bring, is among the half dozen biggest challenges the region faces.

If the Anglophone Caribbean is ever to see growth resulting from trade arrangements of the kind that have been reached with Europe, are being negotiated with Canada and which may in time come from a global deal on trade liberalisation, new thinking is required on how  best  to support business development and develop much stronger BSOs.

In the Caribbean there are broadly four types of organisations representing the private sector and providing support some level of support to their members.

The most prominent of these are the sectoral associations.  These are representative, have a clear mandate from their members, are involved in outreach and advocacy at a national regional and international level, and are relatively well funded.

They include the West Indies Rum and Spirits Producers Association, the Caribbean Poultry Association, the Caribbean Association of Indigenous Banks, a nascent Coalition of Service Providers and the Caribbean Hotels and Tourism Association. For the most part these have governance structures that federate national associations in a manner that generally works well, enabling the centre to only take responsibility for a limited number of pre-approved actions or programs.

Then there are the national umbrella bodies such as the Private Sector Organisation of Jamaica and its counterparts in Barbados or Guyana and elsewhere, the Consejo Nacional de Empresas Privado (CoNEP) in the Dominican Republic and the statutory chambers of commerce to which all businesses have to belong in the French département d`outre-mer. These are bodies variously engaged in dialogue with government on national economic policy, national economic development and business outreach, or additionally in the case of the French islands, engaged in discrete quasi-commercial activities such as the management of the national airport.

Next there are the individual chambers of commerce, manufacturers associations, employers` federations all of variable size and influence and an assortment of smaller and for the most part poorly funded bodies representing often smaller businesses at a national level or in some cases the professions or sectoral interests. 

And finally there is the underfunded and under-resourced regional private sector association the Caribbean Association of Industry and Commerce (CAIC) which would like to be able to act as the umbrella for all these bodies but has over the years not managed to bring all the disparate private sector elements into their tent.

Detailing this complexity indicates why it is so hard for regional institutions or external donors to engage in a dialogue with an outcome. That is to say one that demonstrates that the region has a private sector that can deliver the growth that is meant to arise from the liberalisation of trade or the creation of a Caribbean single market and economy.

It also suggests why previous efforts led by the former Barbados Prime Minister, Owen Arthur, to establish a Caribbean Business Council seem to have run into the sand. The idea was, that for the CSME to succeed and for the region`s private sector to take advantage of trade liberalisation there needed to be a formally recognised private sector body that would be able to dialogue with Caricom or the external agencies that might fund business development. 

In an ideal world, BSOs should be a `one stop shop` assisting companies to become export ready. However, the majority of such organisations in the Caribbean are not resourced for the intensive support required to  develop market intelligence, provide information about funding and business opportunities, organise networking and training opportunities, or work as advocates for private sectors concerns: all key services that BSOs in other parts of the world provide to remain relevant to their members.
 
This is unlikely to change unless these organisations become financially and functionally viable and are seen to have power democratically derived from their members.

BSOs in the region generate income through a mixture of public funding and private sector subscriptions. Some are also successful in securing development funding from multilateral and bilateral institutions in relation to specific projects. However, in most cases such funding and human resources are limited, stopping them providing any sort of specialist service.

In much of the developed world, in the emerging economies of nations such as Brazil and South Africa, in Mauritius and many of the nations of Central America, business support organisations have come to play a central role in developing with government, strategies to increase exports, deliver joint ventures and to develop a national approach to economic priorities. It is a process that leads governments to have their Ambassadors and diplomats help open markets and identify business opportunity.

Not so in the Anglophone Caribbean where in the last few days, Caricom`s Council for Trade and Economic Development (COTED) heard Senator Joanne Massiah,  Antigua`s Ministers of State for Legal Affairs say that  it was vital that COTED institute a structured framework for engagement with the regional private sector if trade agreements can be fully accessed.

The reality is that companies are reluctant to spend time, participate in meetings, let alone act, unless they see where there is an opportunity for profit. They need to see a commercial return over a reasonable time scale and to know whether finance and other forms of support are available if they are to convince their shareholders or investors to risk their capital.

For the private sector this is self evident, but often not so when it comes to Caribbean Governments or agencies that never have to risk to make such choices. It is why intermediary institutions such as  BSOs, that are able to understand the concerns of both Government and business are essential.

 If the productive economic sector in the Anglophone Caribbean is not to be left behind the role of business support organisations, their capacity and financing and the nature of their relationship with Government and regional agencies urgently require review. –By David Jessop

David Jessop is the Director of the Caribbean Council and can be contacted at [email protected]. Previous columns can be found at www.caribbean-council.org

 

 


 

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