REVIEW OF DONOR FUNDED ENABLING ENVIRONMENT

REVIEW OF DONOR FUNDED

ENABLING ENVIRONMENT INITIATIVES

FOR PRIVATE SECTOR DEVELOPMENT

CARIBBEAN REGION

Produced for DFID Caribbean

First Draft, July 2002 The Law & Development Partnership Limited 28 Albert Road LONDON N4 3RW Tel + 44 (0)20 7561 0299 Fax + 44 (0)20 7263 3031 [email protected]

Review of Donor Funded Enabling Environment Initiatives for Private Sector Development: Caribbean Region First Draft, July 2002

The Law & Development Partnership Limited, July 2002

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Contents

Page Foreword to First Draft

3

Abbreviations Executive summary

4

7

Chapter 1: Introduction

13

Chapter 2: Constraints on private sector development

17

Chapter 3: Overview of key actors in private sector development

31

Chapter 4: Inventory of enabling environment initiatives

36

Chapter 5: Donor strategies, tools and delivery partners

49

Chapter 6: Conclusions and the way forward

57

Annexes:

Annex A: Terms of reference

62

Annex B: Interviews conducted

66

Annex C: Documents considered

75

Annex D: Inventory of donor initiatives

78



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Foreword to First Draft This first draft is a consultation document. The intention is that it will be circulated for comment, correction and if appropriate, validation. Data for the mapping of donor enabling environment initiatives in the Caribbean was gathered during a 9-day mission to the Caribbean (visiting Barbados, Guyana, Jamaica and St. Lucia) at the end of June. We were required to consider initiatives delivered on a regional basis (e.g. through CARICOM) and also initiatives in 4 case-study countries – Dominica, Grenada, Guyana and Jamaica1. Initially the draft will be circulated within the donor community for consideration of the accuracy of the map. During our mission we identified and mapped 80 relevant initiatives - gathering basic information on the geographical coverage, delivery mechanisms, objectives, activities, and (where possible) outcomes of each project. In some instances this data is not totally complete. In particular, data from the ILO will be incorporated after first draft stage, as relevant officers were (and still are) on regional missions. There were other instances where we were unable to interview relevant people, and collect relevant data within the time constraints of the project. The conclusions we have drawn from our consideration of a wide range of donor projects in different countries in the Caribbean will need careful consideration. We suggest that consultation in this respect should be as wide as possible – involving governments, regional bodies, the private sector as well as donors. In particular there is need for consideration of if and how proposals future work in this area should be taken forward. The importance of this work lies in the fact that private sector development in the Caribbean is necessary for growth. Prioritised and strategic donor interventions can play a vital part in strengthening efforts to ensure that the right factors are in place to enable this private sector-led growth to occur. We would like to thank donors, Government, regional body and private sector representatives for their time and effort in patiently assisting us with the mapping and review exercise. Thanks are also due to DFID offices in Barbados, Guyana and Jamaica for organising our itinerary during our mission.

The Law & Development Partnership Limited July 2002

1 We were not required to visit Dominica and Grenada during this mission, as we have previously undertaken enabling environment related work in these countries.



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ABBREVIATIONS CAIB

Caribbean Association of Indigenous Banks

CAIC

Caribbean Association Of Industry and Commerce

CAREC

Caribbean Epidemiology Centre

CARICAD

Caribbean Centre for Development Administration

CARICOM Caribbean Community (comprises OECS members and Barbados, Belize, Guyana, Haiti, Jamaica, Suriname, and Trinidad and Tobago

CARTAC

Caribbean Regional Technical Assistance Centre

CDB Caribbean Development Bank

CDE

Centre for the Development of Enterprise (ACP Brussels)

CIDA

Canadian International Development Agency

CPEC Caribbean Regional HRD Program for Economic Competitiveness

CSME Caribbean Single Market and Economy

DFID

UK Department for International Development

EBAS

EU/ACP Business Assistance Scheme

ECCB Eastern Caribbean Central Bank

ECEMP

Eastern Caribbean Economic Management Program

ECERP Eastern Caribbean Education Reform Project

ECTEL Eastern Caribbean Telecommunications Authority

EDU

Export Development Unit of the OECS

EIB

European Investment Bank

ENCAPD

OECS Environmental Capacity Development Project

EU European Union

FDI Foreign Direct Investment

FIAS Foreign Investment Advisory Service

GEO Guyana Economic Opportunity



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IDB (IADB)

Inter-American Development Bank

IFC International Finance Corporation

IIC Inter-American Investment Corporation (of the IDB)

IICA

Inter-American Institute of Cooperation in Agriculture

IMF International Monetary Fund

JMA Jamaica Manufacturers Association

JAMPRO

Jamaica Promotions Corporation

JEA

Jamaica Exporters Association

JPIP

Jamaica Public Investment Programme

JTAT

Jamaica Trade and Adjustment Team

JUPP Jamaican Urban Poverty Programme

KRC

Kingston Restoration Company, Jamaica

MFI

Micro finance institution

MIF

Multilateral Investment Fund (of the IDB)

MIGA Multilateral Investment Guarantee Agency

NDF

National Development Foundation

NGO Non-governmental organisations

NRMU

National Resources Management Unit (of the OECS)

OAS Organization of American States (comprises USA, Canada, Central and South American countries and Caribbean countries)

OECS Organisation of Eastern Caribbean States (comprises Antigua and Barbuda, British Virgin Islands, Dominica, St Kitts and Nevis, Montserrat, St Lucia, St Vincent and the Grenadines and Grenada)

PAHO

Pan-American Health Organisation

PIOJ

Planning Institute of Jamaica

PRSP Poverty Reduction Strategy Paper

PSOJ Private Sector Organization of Jamaica



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PSRP Public Sector Reform Program

RNM Regional Negotiating Machinery of CARICOM

SAJ Shipping Association of Jamaica

Sida

Swedish International Development Cooperation Agency

SME Small and medium sized enterprise

TIC Technology Investment Centre (Jamaica)

TORs Terms of Reference

UK United Kingdom

UNDP

United Nations Development Program

UNFCCC

United Nations Framework Convention on Climate Change

USAID

United States Agency for International Development

UTEC University of Technology (Jamaica)

WTO

World Trade Organization



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Executive Summary

This Review covers 80 projects operating at a regional and national level in the Caribbean. The Review considers a wide range of possible constraints on private sector development from firm-level constraints to high- level rules of the game. It concludes that there are a number of strategic opportunities existing within the region to strengthen donor enabling environment initiatives.

Background 1. This Review maps donor initiatives for strengthening the enabling environment

for private sector development in the Caribbean, and considers their effectiveness and efficiency. It considers –

• donor initiatives that are regional/sub-regional in scope; and . • donor initiatives undertaken at a national level - using Dominica and

Granada (both in the Windward Islands), Guyana and Jamaica as case studies.

2. “Enabling environment” in this context is taken as factors needed for the

development of a well-functioning private business sector. These range from “hard” infrastructure – such as ports and roads, to “soft” infrastructure such as laws and regulations. The Review focuses on those issues identified during our research as the key constraints to private sector development in the Caribbean.

3. The Review covers initiatives that affect the private sector – which is broadly

taken to mean business activity, or activity undertaken for profit. This includes business activity in the informal sector. The vast majority of all enterprises in the Caribbean are, by global standards, small and medium-sized enterprises (SMEs) – defined as encompassing –

• micro enterprises: ie up to 10 employees, total assets of up to US$100,000

and annual sales of up to US$100,000; • small enterprises: ie up to 50 employees, assets of up to US$3 million, and

annual sales of up to US$3 million; and • medium-sized enterprise: ie up to 300 employees, total assets of up to

US$15 million and annual sales of up to US$ 15 million. 4. The Review has a particular focus on factors that constrain the development of

businesses at the lower end of this scale.

Constraints on private sector development in the Caribbean 5. The Review identifies a wide variety of factors that are constraints on private

sector development in the Caribbean. Some of these have been identified as common to small states globally –



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• remoteness and isolation resulting in relatively high transport costs (coupled with a small domestic market);

• openness, resulting in heavy exposure to events in global markets and trade regimes, over which they have little influence;

• susceptibility to natural disasters and environmental change; • limited resource base and little diversification; • limited capacity in the public and private sectors; • high per capita costs of social and infrastructure services; and • limited access to external capital: private markets tend to see small states as

more risky than larger states, so that spreads are wider and market access more difficult

6. 4 types of constrainton private sector operations in the Caribbean are identified -

ranging from constraints due to global or external factors, to constraints due to the competence or capability of particular firms. Between these 2 extremes there are 2 other types of constraint – constraints caused by high level rules of the game for the effective operation of markets; and constraints due to restrictions on firms’ access to markets.

7. These constraints operate at (and can be addressed at) a national level, and also at

the regional (or sub-regional2) level. In particular the rules governing the way in which the market operates and issues concerning firms’ access to markets need to be considered in the context of regional and sub-regional markets.

8. A summary of the wide variety of constraints identified as particularly important

for the region were identified and are listed in the box below.

External constraints due to global/external factors • Access to international markets • Global capital flows • International drug trade Macro constraints: high level “rules of the game” National level constraints - • Political/social environment • Macroeconomic environment • Legislative framework • Public service operations • Tax policy and administration • Financial sector regulation and structure • Land policy, laws and administration • Procurement laws and practice • Contract enforcement

2 In this Review, sub-regional refers mainly to the Organisation of Eastern Caribbean States (OECS) countries.



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OECS level constraints • Macro-economic environment (OECS currency union)

Regional level constraints

• Limited regional harmonisation (Caribbean Single Market and Economy)

Meso constraints: affecting firms’ ability to access markets Affecting access to global, regional and national markets –

• Transportation/utilities • Business support infrastructure: standards and quality to meet

international standards • Social capital3: networks and linkages between enterprises • Structure of the private sector: oligopolistic tendancies of a few large

firms. Micro constraints: competence and capacity of firms • Access to capital • Managerial/business skills

9. Most of these constraints impact most severely on businesses at the smaller end of

the scale in the Caribbean, which have fewer resources and are therefore less well placed to overcome them. For example, larger firms may have access to international capital. For many enterprises, the response to the poorly functioning or inaccessible formal market is to operate in the informal sector. The challenge for government is to reduce compliance costs (ie improve the operation of the high level rules of the game) and improve enforcement (for example in relation to revenue collection) and thus create a level playing field for all operators, without extinguishing what can be a vibrant informal sector.

Actors in private sector development

10. Key actors in private sector development in the Caribbean were identified and mapped. These include donor agencies and multi-lateral development institutions; regional and sub-regional public sector bodies; regional service providers; the national and local governments of the 15 CARICOM countries and regional and national private sector organisations. Map of donor initiatives

11. Donor initiatives addressing identified key constraints on private sector development were mapped, focusing on regional/sub-regional initiatives and country specific initiatives in Dominica, Grenada, Guyana and Jamaica. Regional/sub-regional initiatives were considered to be those where support was delivered to a regional/sub-regional institution or delivered on a multi-country basis adopting a similar approach in more than one country. 80 such initiatives were identified as follows –

3 Defined in the Sida Evaluation as “the intangible assets available to individuals as a result of their membership of groups”



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Project scope Number of projects

Regional/sub-regional 24 Dominica 2 Grenada 2 Guyana 29 Jamaica 43 TOTAL 80

12. Donor focus in the region is on addressing macro or “rules of the game”

constraints on enterprise development – through interventions such as public sector reform, legal and regulatory reform, judicial reform and financial sector regulation. Around half of all donor enabling environment projects are at this level. About a third of donor interventions are focused on addressing firm level constraints – in particular access to capital (mainly through micro finance projects) and business skills constraints. Less focus is placed on addressing constraints that affect firms’ access to markets. Interventions of this type focus on assisting with strengthening pro-competitive regulatory regimes for utilities (especially telecommunications) and with improving business linkages between firms. There are 7 projects that support the Caribbean in trade negotiations and other interventions aimed at addressing external (global) constraints.

13. Not all identified programmes are specifically focused on the creation of an

enabling environment for private sector development, or on SMEs. But programmes not couched in these terms – public service reform programmes for example, which may result in a less expensive, more facilitative public service – clearly have the potential to create a more favourable investment climate. Similarly efforts to address the justice system for example, may not have the creation of a more enabling environment for private sector development as an explicit output, and yet improving the performance of civil and criminal courts, will improve contract enforcement and contribute to a safer, more secure environment, including for businesses.

Donor stratgies for reform

14. The Review gives an overview of strategies donors adopt in order to take forward the enabling environment agenda – which usually involves influencing the policy, laws, regulations and administrative procedures of Governments. A number of strategies used by donors to promote enabling environment reform at the regional level were identified –

• high level donor/government agreement on a common agenda eg World

Bank and OECS; • common donor regional/sub-regional approach and funding modality eg

CPEC; • partnership with existing regional governmental institution eg CARICOM; • establishment of new regional governmental/regulatory bodies eg ECTEL;



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• establishment of/support to regional service providers eg CARTAC; and • learning lessons across the region.

15. Modalities for intervention at a strategic level nationally were also identified and

considered -

• finding the right Government interlocutor; • influencing a public sector reform programme; • building on a poverty reduction strategy; • responding to Government/private sector identified priorities; • being opportunistic; and • achieving incidental enabling environment outcomes. Donor tools

16. The Review gives some examples of the kind of tools donors have used to assist them with this process. 5 commonly used tools are briefly discussed. These are – • mapping exercises; • advocacy; • government/private sector workshops/focus groups; • government/donor groups; and • legislation.

Delivery partnerships

17. The Review looks at some examples of the ways in which projects have been delivered. Most donor projects in the Caribbean are funded on a sole-donor basis, although there are a significant minority of projects that are co-funded.

18. In cases where the project addresses external or macro-type constraints, the most

frequent delivery partner is unsurprisingly, a Government body. When addressing meso, and micro type constraints, private sector and other bodies are more likely to be delivery partners.

Donor co-ordination mechanisms

19. With at least 9 donors, 15 countries and 80 projects, donor co-ordination is an important issue in the Caribbean. One issue for donor co-ordination is that some key enabling environment interventions are not considered in donor private sector co-ordination fora, because they do not fall under donor private sector programming. A case in point is public sector reform programmes, which may fall under governance programming.

20. Donor co-ordination mechanisms include –



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• multi-donor funded initiatives; • funding of regional service providers; • government, donor and private sector co-ordinating committees; • private sector donor co-ordination groups; and • donor co-ordination around a PRSP.

Conclusions

21. There are a number of strategic opportunities existing within the region to strengthen donor enabling environment initiatives -

• Opportunity to link regional and national approaches.

Where there is a strong policy environment, a commitment to enabling environment reform, an institutional framework in place to take reform forward, a regional approach to policy reform may be possible. In some cases it may be possible to maximise the effectiveness of regional approaches by supporting them with appropriate national interventions.

• Opportunity to exploit linkages between interventions

Constraints of different types (external/macro/meso/micro) are inter-linked and inter-dependant. Integrated approach have been recognised to be more effective than approaches which addresses individual constraints in isolation.

• Opportunity to mainstream enabling environment initiatives Further mainstreaming of enabling environment issues would strengthen the effect of non-private sector programme interventions, which in fact achieve enabling environment outcomes. Enabling environment issues should be conceptualised as cross-cutting and having the potential to affect eg donors’ governance, economic and environmental programming.

• Opportunity to promote pro-informal sector policies

The constraints faced by informal businesses are often addressed at the micro level – by addressing access to finance and skill constrains in the main. Informal sector issues also need to be addressed in interventions at other levels – particularly in relation to legal and regulatory reforms, where the aim should be to encourage compliance, whilst not imposing an undue burden on informal businesses.

• Opportunity to move towards a more strategic approach There is scope for Governments in the Caribbean to take the lead in promoting private sector strategies (sector-wide approaches for private sector development). This has the potential to promote prioritised and sequenced interventions and enhanced donor co-ordination. PRSPs - if focused on achieving growth, as well as on social measures to reduce poverty - have the potential to set out Government’s enabling environment priorities.



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CHAPTER 1 INTRODUCTION 1.1 Background to Review This Review maps donor initiatives for strengthening the enabling environment for private sector development in the Caribbean, and considers their effectiveness and efficiency. It particularly focuses on how these initiatives affect the development of small and medium size enterprises. The Review - together with the results of similar reviews being carried out in the Balkans, Peru, Tanzania and Vietnam - feeds into an overview commissioned by the Committee of Donor Agencies for Small Enterprise Development4 which is intended to contribute to –

• an understanding of the similarities and differences in agencies’ efforts to help countries improve their policy environments for private sector development;

• a stocktaking of those efforts by assessing specific country experience; and

• an early effort by the donor committee to derive principles of good

practice that could help guide future collaboration at the country/regional level.

1.2 Review scope and boundaries Caribbean initiatives The Review covers donor initiatives in the Caribbean – which for this purpose is defined as the 15 countries of the Caribbean Community (CARICOM) - Barbados, Belize, Guyana, Jamaica, Suriname, and Trinidad and Tobago, together with members of the Organisation of Eastern Caribbean States (OECS) i.e. Antigua and Barbuda, British Virgin Islands, Dominica, St Kitts and Nevis, Montserrat, St Lucia, St Vincent and the Grenadines and Grenada. It also includes Haiti, which is due to join CAIRCOM. Donor programmes have varying degrees of coverage within the region (including outside the CARICOM countries) – see box 1.1 below.

4 The overall findings will be presented to the meeting of the Committee of Donor agencies for Small Enterprise Development in Turin on 16-17 September 2002.



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Box 1.1: Coverage of donor programmes in the Caribbean

As Box 1.1 shows, donor programmes in the Caribbean are undertaken at 2 levels –the national and the regional (or sub-regional). This Review considers both kinds of donor initiatives –

BILATERAL SUPPORT CIDA CDB DFID EU IADB ILO UNDP USAID World

Bank Anguilla � Antigua & Barbuda

� � �

Bahamas � � Barbados � � � � � � � � Belize � � � � � � � � Brit. Virgin Islands

�

Cayman Is. � Dominica � � � � Dominican Republic

� �

Grenada � � � � Guyana � � � � � � � � � Haiti � � Jamaica � � � � � � � � � Montserrat � St Kitts & Nevis

� � � � �

St Lucia � � � � � St Vincent & the Grenadines

� � � � � �

Suriname � � Trinidad & Tobego

� �

The Turks & Caicos Islands

�

SUPPORT TO REGIONAL/SUBREGIONAL BODIES RNM � � � � � � � � CARICOM � � � � � CARI-FORUM

� �

OECS instits

� � � �

SUPPORT TO REGIONAL SERVICE PROVIDERS CARICAD � � CARTAC � � � � � � Ecemp � Carib.Tech Services

�

Micro Finance Ltd

�



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• initiatives undertaken at a national level - using Dominica and Granada (both in the Windward Islands), Guyana and Jamaica as case studies; and

• initiatives that are regional/sub-regional in scope i.e. undertaken in

partnership with regional or sub-regional organisations (e.g. CARICOM and OECS), or that cover more than one country and adopt a common approach.

The Review maps initiatives that are now completed (over the last two to three years), as well as current and planned interventions. Enabling environment The Review maps donor initiatives that support the enabling environment for private sector development. “Enabling environment” in this context is taken as factors needed for the development of a well-functioning private business sector5. These range from “hard” infrastructure – such as ports and roads, to “soft” infrastructure such as laws and regulations. Although this Review adopts a wide understanding of the “enabling environment”, it focuses on those issues identified during our research as the key constraints to private sector development in the Caribbean. Our approach and these constraints are discussed more fully in Chapter 2. Private sector The Review covers initiatives that affect the private sector – which is broadly taken to mean business activity, or activity undertaken for profit. This includes business activity in the informal sector. Small and medium-size enterprise Although the Review covers the private sector as a whole, it particularly focuses on the effect of donor interventions on small and medium-size enterprises. The Committee of Donor Agencies for Small Enterprise Development6 notes that “small” in this context has never explicitly been defined, but is considered to include formal and informal non-agricultural enterprises ranging from micro to medium size. This Review adopts the World Bank definitions set out in box 1.2 below.

Box 1.2: What is an SME7? An SME is – A micro enterprise: ie up to 10 employees, total assets of up to US$100,000 and annual sales of up to US$100,000; or A small enterprise: ie up to 50 employees, assets of up to US$3 million, and annual sales of up to US$3 million; or

5 See for example Approach and Organisation of Sida Support to Private Sector Development: Emerging Market Economics in co-operation with AF-Swedish Management Group, August 2001 para 1.1. 6 Committee of Donor Agencies for Small Enterprise Development: What is it? What does it do? October 2001. 7 World Bank Group Small & Medium Enterprise Department web site.



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A medium-size enterprise: ie up to 300 employees, total assets of up to US$15 million and annual sales of up to US$ 15 million.

On the basis of this definition, the vast majority of all enterprises in the Caribbean are SMEs. 1.3 Methodology The Review was undertaken in 4 stages.

• A conceptual framework was developed for identification of key constraints on private sector development in the Caribbean region (focusing on 4 countries – Dominica, Grenada, Guyana and Jamaica). (See Chapter 2 for details).

• Key actors in private sector development in the Caribbean were identified

and mapped. (See Chapter 3 for details).

• Donor initiatives addressing identified key constraints on private sector development were mapped. The focus was on support to regional/sub-regional institutions, support delivered on a multi-country basis, and country specific initiatives in Dominica, Grenada, Guyana and Jamaica. (See Chapters 4 and 5 for details).

• Evidence based-conclusions on the efficiency and effectiveness of the

various approaches used by donors were then drawn from the results of the mapping in the light of the conceptual framework. (Chapter 6)

Terms of reference for this Review are at Annex A. Research for the Review took place during a DFID-funded mission to the Caribbean region during June 2002. The review was conducted by -

Clare Manuel Team Leader and Private Sector Specialist Leslie Clarke Private Sector Specialist

Research was undertaken in Barbados, Guyana, Jamaica and St. Lucia by way of –

• Interviews with donors, multi-lateral development banks, representatives

of public and private sector bodies and regional institutions (see Annex B for full list of interviewees); and

• A review of key documents, listed in Annex C.



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CHAPTER 2 CONSTRAINTS ON PRIVATE SECTOR DEVELOPMENT

“Regional integration is proceeding at a snail’s pace. The private sector

must take the initiative.”

Member of Caribbean Association of Industry and Commerce Board 2.1 Background Private sector development in the Caribbean must be considered in the context of its size and geography. The region is made up of countries that are small in size and population With the exception of Jamaica (pop: 3.0 million), Trinidad and Tobago (pop: 1.5 million) and Guyana (pop: 770,000), the other island countries have individual populations ranging from 300,000 (Barbados) to 40,000 (St. Kitts and Nevis). The total CARICOM population is only 6.4 million (although when Haiti joins an additional 7.7 million people will be added to the community). Domestic and regional markets are therefore small. This is a region of small island states, many of which are themselves multi-island states - St Vincent and the Grenadines for example comprises 30 islands. These are middle-income countries (except low income Haiti and high income Bahamas), with comparatively high levels of human development. However, poverty is an issue. Haiti accounts for over 85% of the incidence of extreme poverty within CARICOM, and elsewhere pockets of extreme poverty exist8. In many of these countries economic growth has slowed since the mid 1990’s due to a variety of factors – many of which have been recognised as common challenges facing small states (see box 2.1 below).

Box 2.1: Development challenges facing small states The Commonwealth Secretariat and the World Bank have recently formed a task force to consider the special development challenges facing small states (3/4 of which are islands). The task force, having consulted widely (including with the CARICOM Secretariat) recognised that such states share a number of common characteristics and vulnerabilities –

• Remoteness and isolation resulting in relatively high transport costs (coupled with a small domestic market).

• Openness, resulting in heavy exposure to events in global markets and trade regimes, over which they have little influence.

• Susceptibility to natural disasters and environmental change.

8 Source: DFID Regional Draft Strategy Paper for the Caribbean , June 2002



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• Limited resource base and little diversification. • Limited capacity in the public and private sectors. • High per capita costs of social and infrastructure services.

The task force recognised that many of these factors combine to make small states’ economies especially vulnerable, affecting in particular –

• Income volatility: residents of small states experience higher volatility in their incomes than larger states – reflecting their high levels of exports and imports and low diversification in production and trade which leaves them exposed to fluctuations in world markets.

• Access to external capital: private markets tend to see small states as more risky than larger states, so that spreads are wider and market access more difficult.

Governments in the region have responded to the need for economic growth in the light of these challenges by recognising the need to foster a more robust private sector. Box 2.2 below highlights the particular challenges facing the 4 countries used as case studies in this Review -

Box 2.2: Dominica, Grenada, Guyana and Jamaica: key facts Dominica Population 70,000. Middle income country. Traditional reliance on preferential trading arrangements for bananas with EU, which are now being eroded. Growth has fallen from typically over 6% during the 1980’s to less than 3% during the 1990’s and to 0.5% in 2000. Grenada Population 100,000. Economic growth averaged around 5% in the latter half of the 1990’s, with unemployment falling from about 25% in 1995 to 12.5% in 1999. Facing increasing competition in tourism and in traditional agricultural exports, with prospects for growth being further damaged by the global economic slowdown. Government is placing great emphasis on the private sector as the engine of economic growth. Guyana English-speaking lower-middle income county in South America, with a population of 770,000 and a per capita GDP of about US$900. Economic growth slowed to an average of less than 0.5% during 1998-2001. Guyana started receiving debt relief under HIPC initiative in May 1999. Jamaica Population 3,000,000. Economic growth has been marginal in recent years as the country has grappled with a crisis in the financial sector, a huge debt burden, a depreciating currency, a high level of crime, and a decline in the tourism sector as a result of the global economic slowdown following September 11th.

2.2 The private sector in the Caribbean Many countries in the region are currently undergoing re-structuring. Guyana for example is moving from a highly centralised economy: other countries are having to adapt from reliance on preferential trading arrangements and import substitution based on protectionism to a more export-orientated position in an increasingly liberalised regional and global environment. The non-agricultural business sector in most Caribbean countries is traditionally geared towards meeting the needs of the local markets. In the manufacturing sector, high wage rates, low productivity and a lack of know-how have made it virtually



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impossible for enterprises to produce products that are acceptable to the market (in quality and price). Trinidad and Jamaica mainly account for manufactured exports in the region – mainly resource based products, garments, agro-based products. Tourism and agriculture are the other 2 key sectors in the region. Each country’s business sector is dominated by a small number of “large” firms, most of which would be characterized as SMEs by global standards. Because of market access constraints (related to the dominance of the “large” firms and the focus on the local market), limited access to credit and capital, and limited consumer purchasing power, small firms generally find it difficult start and sustain their operations. Most SMEs are family owned and are managed by one person9. Box 2.3 below provides a snapshot of the private sector in one Caribbean country – Dominica by way of example.

Box 2.3: Snapshot of Dominica’s private sector10 The vast majority of private sector activity is small-scale. Farming is based on individual family plots, and in the manufacturing and trading sectors, most firms are run by an individual or family. There are few active limited liability companies, and most private sector activity is undertaken in the informal sector. For example as much as 80% of non-banana agricultural trade is carried out on a regional and informal basis. There are about 50 manufacturing firms – the vast majority employing less than 20 people. There is one multi-national firm – Colgate Palmolive. Other key sectors are tourism, financial services and information and communications. Remittances contribute 5% to GDP.

Despite the challenges and vulnerabilities facing private sector development in the Caribbean, the region has some comparative and competitive advantages, which are set out in box 2.4 below.

Box 2.4: Comparative and competitive advantages for private sector development in the Caribbean

• Generally well-educated Anglophone populations (although with specific knowledge gaps).

• Relative proximity to markets of US and Europe. • A tradition of democratic governments with comparatively mature political

institutions. • Broadly satisfactory economic and social infra structure. • Attractive natural resources.

2.3 Framework for considering constraints to private sector development in the Caribbean Constraints on private sector development in the Caribbean may be usefully conceptualised in the light of Sida’s recent evaluation of its support to private sector development11, which provides a helpful comprehensive framework for analysing the

9 Source: CDB Working Paper on a New Private Sector Development Strategy para 3.12. 10 Source: DFID - Dominica Fiscal and Economic Recovery Project: Scoping Study for Strengthening the Enabling Environment in Dominica: Oxford Policy Management, Dec 2001. 11 Approach and Organisation of Sida Support to Private Sector Development: Emerging Market Economics in co-operation with AF-Swedish Management Group, August 2001



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scope of the factors that can affect private sector development. Enabling environment initiatives are of course concerned to address those factors within the framework that operate as constraints to private sector development. These range from constraints due to global or external factors, to constraints due to the competence or capability of particular firms. Between these 2 extremes there are 2 other types of constraints – constraints caused by high level rules of the game for the effective operation of markets; and constraints due to restrictions on firms’ access to markets. The framework may be represented as follows -

EXTERNAL GLOBAL/EXTERNAL CONSTRAINTS

MACRO “RULES OF THE GAME” CONSTRAINTS affecting market operations

MESO MARKET ACCESS CONSTRAINTS

MICRO FIRM SPECIFIC CONSTRAINTS

This framework based on the Sida model may be used to consider constraints operating within the national context (including the impact of external factors such as access to global markets). In the Caribbean some of these constraints may also operate at the regional (or sub-regional) level. In particular the rules governing the way inwhich the market operates (macro type issues) and issues concerning firms’ access to markets (meso type issues) need to be considered in the context of regional and sub-regional markets. The diagram below illustrates the relationship between the different types of constraint identified in the Sida model and the various levels at which markets operate in the Caribbean.

EXTERNAL

MESO

MICRO

The remainder of this chapter briefly outlines the key constraints on private sector development operating at each of these levels in the Caribbean context. Chapter 3 then describes the main actors involved in private sector development and Chapters 4 and 5 map donor efforts to address these identified constraints.

MACRO

GLOBAL

REGIONAL/SUB REGIONAL

NATIONAL

FIRM



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2.4 External constraints: global/external factors External constraints are those external to the country (and region). Their effects may be mitigated, but the constraints may not be controlled. The external constraints identified in box 2.5 reflect current key issues in the Caribbean –

Box 2.5: Key constraints due to global/external factors • Access to international markets • Global capital flows • International drug trade

Of these issues, access to international markets probably has the most current prominence in the Caribbean. Because of the small size of domestic and regional markets, global markets are important to Caribbean countries. For many of them, access to global markets in the past has been based on preferential trading arrangements with European markets for traditional agro-based industries (e.g. rice and sugar in Guyana, bananas in Dominica). Trade preferences are now being eroded as a result of external forces - WTO commitments and the emergence of free trade areas and regional/hemispheric economic co-operation agreements. The Cotonou Agreement 2000 marked a major shift in the rules and nature of the trading arrangements between the EU and ACP countries (African, Caribbean and Pacific), with the principle of preferential access being replaced by that of reciprocity. The upcoming formation of the Free Trade Area of the Americas will expose the Caribbean region to further competition.

Although these forces of globalisation and liberalisation are external to the Caribbean countries, the challenge is to mitigate their effects by effective negotiation in trade rounds, informed by a strategy for effective global re-positioning – re-focusing economies on areas where there is a comparative and competitive advantage. The threat in the Caribbean is that both Governments and the private sector will fail to adapt to these new global realities. 2.5 Macro constraints: high level “rules of the game” These are the rules and the institutions that affect the way in which the market operates – and its effectiveness. They are the standards and norms that affect exchanges (e.g. the macroeconomic environment), and the institutions that regulate markets (eg Central Banks).. In the Caribbean these rules and institutions operate at national, sub-regional and regional levels, as box 2.6 below sets out.

Box 2.6: Key constraints due to high level “rules of the game” NATIONAL LEVEL • Political/social environment • Macroeconomic environment • Legislative framework • Public service operations • Tax policy and administration



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• Financial sector regulation and structure • Land policy, laws and administration • Procurement laws and practice • Contract enforcement SUB-REGIONAL LEVEL (OECS12) • Macroeconomic environment REGIONAL LEVEL • Limited regional harmonisation (Caribbean Single Market and Economy)

Political/social environment A stable political and social environment is vital for effective market operations and thus for private sector development. To take an extreme example, in a conflict situation, operations of markets will be severely constrained. Although most countries in the Caribbean enjoy democratically elected governments, there are political and social tensions, which have been identified as key disablers to private sector development. Guyana is a particular example of this – where fragile political environment with tensions between Indo and Afro-Guyanese has resulted in instability and violence (related also to drug-related crime). Drug-related crime and insecurity are also key problems for private sector development in Jamaica, deterring tourists and imposing extra costs on businesses. The garment and agro-processing industries in Jamaica are currently facing security costs of up to 5% of the value of export sales13. Even in relatively stable and secure Dominica, there have been 3 different political parties in power during the past 12 years. Box 2.7 illustrates the problem in Guyana.

Box 2.7: “Crime paralysing Guyana”

Report in Stabroek News, Guyana, June 6 2002 – The National Association of Regional Chambers of Commerce of Guyana was the latest business group to register its concern on spiralling crime…..”this state of instability can not be good for the country in economic terms. It is reducing the possibility of continuing investment….” The Director of the Private Sector Commission….remarked during an interview on Tuesday. [The ARC stated] “Capital flight will increase. Rising risk factors will drive up interest rates, further raising the cost of doing business. Psychologically, spreading fear among all segments of society will slow consumption, which, if prolonged, will lead to still greater unemployment and instability. Our brain drain will gain even further momentum…Sectors like tourism, with tremendous potential, will take a long time to recover. Communities, seen as sympathetic to instability, will be avoided by businesses and investors…”

12 The Organisation of Eastern Caribbean States who have formed a monetary union. 13 Caribbean Perspectives on Trade, Regional Integration and Strategic Global Repositioning: Summary of Interim Report for EU by ECORYS-NEI, June 2002 p 7.



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Macroeconomic environment Fiscal instability is becoming an increasing issue in the region – particularly in the OECS. Governments have increasingly resorted to domestic and external commercial sources to finance public investment programmes, and even (in Dominica) recurrent expenditure. This has put a strain on debt servicing and in some cases is crowing out the private sector. Although this is an issue that is primarily addressed at national levels, in the OECS sub-region which has a currency union, the Eastern Caribbean Central Bank has a role in addressing monetary issues (see Chapter 3 paragraph 3.2). Legislative framework Most countries in CARICOM have a legislative framework that is essentially colonial, based on English legislation. Although fundamentally sound, there are key areas where work is needed to provide a satisfactory framework for private sector development. Box 2.8 below sets out by way of example business legislation priorities that have been identified for Dominica –

Box 2.8: Priority business legislation for Dominica14 • Consumer protection: there is no Sale of Goods Act or statute relating to the supply

of services; • Employment law; • Law relating to civil evidence; • Insolvency law: insolvency proceedings are currently not used in Dominica; • Secured transactions; • E-commerce and computer crime; • Evidence and enforcement relating to praedial larceny15; • Competition law; • Environmental laws.

As well as the need for legislative drafting, access to legislation may be an issue for businesses – for example in Guyana. Public service operations Small countries have limited capacity in their public services. The problem is likely to worsen in some countries because of emigration - a “brain drain”. This is particularly acute in Guyana. In some cases Government lacks basic information - for example the Ministry of Tourism Trade and Industry in Guyana sees a key priority being the need for basic data, such as number of tourist arrivals16. Institutions which supply services to the private sector – for example business registries and investment promotion services - are frequently weak. Weaknesses in local government are an issue in the larger Caribbean countries. In Jamaica for example, parishes are increasingly gaining autonomy, and weaknesses in

14 Source: DFID Dominica Fiscal and Economic Recovery Project: Scoping Study for Strengthening the Enabling Environment in Dominica: Oxford Policy Management, December 2001. 15 Ie steeling agricultural produce from the field. Praedial Larceny Act no 53 of 1991. 16 Cited in meeting with Permanent Secretary, June 2002



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communication between the centre, regional offices and parish offices has been identified as an increasing problem for Jamaica’s private sector17 These issues affect private sector development in a number of ways. Inefficient and non-facilitative public services which are not sympathetic to the needs of the private sector can result in barriers in terms of policy decisions made and in terms of administrative operations. In addition, too large and expensive public services obviously impose costs on the private sector in terms of taxation. Some key policy and operational areas affecting the private sector in Caribbean countries are set out below. Tax policy and administration Typical issues in Caribbean countries include –

• the need to widen tax base to create a level playing field; • the need to ensure efficient and transparent tax administration; and • the need to streamline customs procedures.

Box 2.9 below gives examples of tax issues for the private sectors in Guyana and Dominica. Box 2.9: Guyana and Dominica: examples of tax policy and administration issues GUYANA • Turnover tax levied at 2% of gross turnover is due even from firms facing a loss. • 30% consumption tax rebate on SME’s input purchases is in practice rarely received. DOMINICA • Non-transparent tax concession scheme. Tax concessions not available to small

enterprises • System of taxable benefits and allowances needs rationing • Unduly complex system of taxes, charges and levies • Lack of system to appeal against tax assessments.

Financial sector regulation and structure The Caribbean does not have well-developed and regulated capital markets. There are fledgling stock exchanges in the Bahamas, Barbados, Cayman Islands, Jamaica, and Trinidad and Tobago. As far as the banking system is concerned, typically interest rates and the cost of finance are high. This is a key issue in Jamaica for example, where the private sector faces crowding out because of high interest rates, following a financial collapse in the mid-1980’s. The high cost of finance may be due to a variety of factors in the region for example – Government borrowing crowding out the private sector; lack of liquidity following financial re-structuring; the perceived risks of lending (see Box 2.10 below); and inefficiencies in financial sector operations, some of which may be due to poor regulation. In Guyana for example, the

17 Source: Jamaica Business Road Map: USAID, Jan 2001.



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banking supervision department does not have the capacity to supervise and implement the Financial Institutions Act.

Box 2.10: perceived risks of lending in the Caribbean Caribbean firms may find it difficult or impossible to access financing from international markets because of perceived international risk: the additional uncertainty crated by unanticipated changes in exchange rates and political risk in foreign markets. Using the international country credit risk rating, a default spread could be derived for most of the countries in the region. The implicit country credit rations for September 2000 indicate that only the Bahamas, Barbados, Cayman Islands and Trinidad and Tobago have investment grade ratings. The others would be listed in the speculative grades. AS a result country risk premiums would range from 0.9% to 8.5% above that of an equivalent US Treasury Bonds. Source: CDB Working Paper on a new Private Sector Development Strategy p5/6

Land policy, laws and administration The extent to which this is a constraint is very country specific. In Guyana land is seen as a particular constraint on private sector development. All land is owned by the State and let on short leases. Land fragmentation through customary inheritance is common, and it is unclear on what basis much of the land is occupied – about 80% of transfers are thought to take place in the informal market. These issues create obvious problems for the private sector – in terms of access to land and to title for use as collateral. The USAID-funded Investment Roadmap in Jamaica identifies problems in accessing Government-owned land as a key constraint for private sector development, and in Dominica, the operations of the Lands Department in relation to the granting of physical planning consent is perceived as slow and inefficient. Procurement law and practice In countries with small markets, Government procurement can be a key source of private sector contracts. Procurement laws and practices can create barriers for small firms to participate in this market, for example only larger firms may be qualified to bid, complex and time-consuming administrative procedures may deter small businesses. Box 2.11 below illustrates the perceptions of SMEs about Government procurement in Guyana.

Box 2.11 Case study: Bidding for a Government contract in Guyana

A family-run SME in Guyana put in a bid for a Government contract – for a small piece of building-related work. The bid was unsuccessful. The owner of the SME reported that he felt the playing field was not level and that there was a lack of integrity in the system.

Contract enforcement The private sector needs to resolve business disputes and to ensure that contracts entered into are enforced. Court systems in many Caribbean countries are under strain – with backlogs, continual adjournments, poor staffing, inadequate facilities and ethical codes. In Guyana for example, it often takes more than 5 years to finalise a case. The situation is frequently worse in the Magistrates Courts – which typically deal with smaller disputes (and therefore are more likely to deal with disputes



26

affecting small firms). In the OECS for example, the High Court operates on a sub-regional basis, and although it has weaknesses, it is generally recognised that it is the nationally organised Magistrates Courts that are under the most strain. Limited regional harmonisation The above constraints all operate primarily at a national level. In the Caribbean, the operation of the regional market also imposes constraints on the operation of the private sector, through non-harmonised tariff and non-tariff barriers. Many of these barriers arise because most of the CARICOM countries have not fully implemented the legal instruments required to give full effect to the Caribbean single market and economy. In the absence of these instruments, traditional barriers to trade remain in existence. In spite of this, firms in Tinidad and Tobago have been able to lever a favourable exchange rate and low energy costs to develop a vibrant manufacturing sector that exports throughout the Caribbean and the world. In some instances, these firms have expanded and established operations in other Caribbean islands. 2.6 Meso constraints: access to markets Even if the market (global, regional or national) operates well and fairly, individual firms will only be able to participate in it to the extent to which the factors are in place that give them access. In the Caribbean access to markets is affected by a number of constraints, which operate to limit firms’ access to global, regional and national markets. These are set out in box 2.12 below.

Box 2.12: Key constraints on access to global, regional and national markets Constraint Key issues Level of market

access most affected

Transportation/ Utilities

Port infrastructure and administration Air links Roads (especially in larger countries) Telecommunications Electricity

Global and regional

Business support infrastructure

Standards and quality to meet international standards

Global

Social capital18 Linkages between firms Regional Structure of the private sector

Oligopolistic tendancies of few large firms in the market

National

Transportation/utilities In a region comprised of many small islands, the costs and availability of transportation - particularly by air and sea – are significant constraints on private sector development. On the other hand, the costs of transportation and 18 Defined in the Sida Evaluation as “the intangible assets available to individuals as a result of their membership of groups”



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communications have a high per capita cost. Box 2.13 below illustrates the problems that transport can cause for private sector development–

Box 2.13: Watermelons in St Lucia An initiative in St. Lucia to grow melons for export to the UK and Europe had to be abandoned, after the start of operations and the investment of considerable capital, because air transport was not available to those markets.

As well as having the hard infrastructure in place, transport facilities will only function properly if they are backed up by efficient administration. Box 2.14 below illustrates issues that are high on the agenda for private sector operators in Dominica –

Box 2.14 Case study: customs and port procedures in Dominica19 The formal private sector identified problems with Customs and with port stevedores as one of the most significant constraints on their operations. A major manufacturer complains that production lines have to be closed down because of the inability to access raw materials, which are held up in Customs. The cost of stevedore services are about 40% higher than othe OECS countries, with a highly unionised industry. Well-regulated and efficiently run utilities are obviously also important for private sector development. For small countries, the creation and operation of an efficient regulatory agency can involve substantial fixed costs, as box 2.15 illustrates.

Box 2.15: Cost of telecommunications regulation20 Effective telecommunications regulation requires expensive inputs - spectrum monitoring equipment, computers and programmes, professional assistance for activities such as interconnection, cost estimation and spectrum management. The World Bank estimated that even a bare-bones regulatory authority would be likely to cost Dominica in the region of US$ 2 million a year – 5% of Dominica’s government’s budget.

Business support infrastructure In order to compete in global markets, compliance with international standards is vital, requiring testing, inspection and certification facilities, including laboratories. For small countries these are expensive, and a key issue for the Caribbean is the extent to which economies of scale can be reaped by providing these services on a regional basis. For example in Dominica, with a population of 70,000, there are a variety of Government regional, sub-regional and national organisations assisting farmers and other businesses to find markets and with standards, as box 2.16 shows -

Box 2.16: Marketing/standards organisations in Dominica Institution Regional/na

tional Role Relationship with other

institutions Caribbean Export Development Agency (Carib. Export

CARICOM (local office in Dominica)

• Export promotion Collaboration with EDU (officer assigned to EDU)

19 Source:DFID: Dominica Fiscal and Economic Recovery Project: Scoping Study for Strengthening the Enabling Environment in Dominica: Oxford Policy Management, Dec 2001 20 Source: World Bank Global Economic Prospects and the Developing Countries, 2002 p 83



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Project) Export Development Unit

OECS • Export promotion (originally agricultural focus but now mainly manufacturing eg agricultural processing, food beverages, furniture, arts and crafts)

• Technical assistance (product development, pricing, packaging, management systems) (not for micro-enterprises)

Apex body at sub-regional level

Dominica Export Import Association (DEXIA)

National • Export promotion • Technical assistance –

particularly in relation to standards

Mainly agricultural- (non-banana)

EDU works in collaboration with DEXIA eg trade promotion.

Dominica Banana Marketing Board (DBMC)

National • Marketing of bananas • Technical assistance

for banana farmers

National Bureau of Standards

National • Sensitisation and training on standards, quality assurance and certification

Partners with DEXIA, Caribbean Agricultural Development Institute, National Development Corporation, and DBMC. A member of the Caricom Common Market Standards Council

Social capital In the Sida Evaluation social capital is defined as “the intangible assets available to individuals as a result of their membership of groups”. This is an important issue in the Caribbean because of the structure of the business sector – with many small family owned firms acting in isolation. There is a need for linkages at networking both on a national level, and across the region. Belonging to a group or network can provide such benefits as sharing know-how, reaping economies of scale, providing safety nets. Groups may be formal or informal. The need for consolidation of formal business groups in the Caribbean is illustrated in box 2.17.

Box 2.17: private sector organisations in Jamaica

Jamaica has four major organizations that currently represent private sector interest in the Jamaica: the Jamaica Chamber of Commerce (JCC); the Jamaica Manufacturers’ Association (JMA); the Jamaica Exporters’ Association (JEA) and the Private Sector Organization of Jamaica (PSOJ) The PSOJ was formed in the late 1970’s as an umbrella body for the other associations, with



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a view to having all private sector interests represented within on institution. This did not materialize as expected and the associations have largely represented the interests of their members over the years. Recently, there has been another attempt to consolidate the private sector associations within on body. As a first step, the PSOJ and the JEA have agreed to share office space and equipment and have a single Executive Director for both institutions. The Chamber and the JMA have also entered into a similar arrangement. It is expected that these arrangements will eventually lead to full mergers and that the two new organizations will replace the four that now exist. There is further expectation that the process will eventually result in one organization to represent the private sector in Jamaica.

Private sector structure As has been mentioned above, in Caribbean countries a few firms tend to dominate the economy, crowding out new entrants. This problem is particularly acute in small societies, where the political and business elite form a small group: the private sector itself thus becomes a disabler to private sector development. 2.7 Micro constraints: competence and capacity of firms These constraints are at the level of the competence and capability of individuals and businesses. Box 2.18 sets out key firm level constraints in the Caribbean.

Box 2.18: Key constraints at the firm level • Access to capital • Managerial/business skills

Access to capital Access to capital is a major constraint for most business operations in the Caribbean, as highlighted in paragraph 2.5 above. Many firms access finance by rolling over short term credit - or as Box 2.19 below illustrates rely on self-financing - even in Jamaica and Trinidad and Tobago, where the business sectors are comparatively well developed.

Box 2.19: Self-financing of businesses Studies conducted in Jamaica and Trinidad and Tobago show that personal savings and assistance from relatives are the main sources of start-up capital for small-scale enterprises Institute of Social and Economic Research (1993) Study on the Small and Micro-enterprises in Jamaica; University of Warwick Research Institute/University of the West Indies Institute of Social and economic Research (1996), Characteristics and Constraints of Small Businesses in Trinidad and Tobago: Final Report of a National Baseline Survey and Sector Assessment Study for the Small Business development Programme in Trinidad and Tobago

Managerial/business skills A key constraint on private sector development in many Caribbean countries is the weak entrepreneurial culture. With a socialist or state marketing-based background, production is often inefficient. There can be a lack of understanding on part of private sector on the need to look outside government for answers to problems. In the formal sector, traditional economic activity is now under threat from global forces, and the tendency is to lobby government for further protection and concessions, rather than to adapt to the new environment. In the informal sector, cottage industries tend not to be business-orientated or interested in joining the formal sector. The informal sector can



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however be vibrant – as the fishing industry in Guyana and the regional traders in agricultural produce (the hucksters) illustrate. Emigration has created a “brain drain” of management talent. In addition, the fact that many firms are family-owned lack can mean that they have limited managerial capacity. With traditional reliance on protected markets, marketing skills are also scarce in the region. 2.8 Effect of constraints on SME development The constraints focused on above are faced by all sizes of firm in the Caribbean. In any event, as noted above, the vast majority of firms in the region are SMEs by global standards. However the larger of these firms are clearly better place to cope with and overcome many of these constraints than smaller ones. With increased competition as markets are increasingly opened up, it is the larger enterprises that are better able to generate new products, source capital and form mergers or strategic alliances.

For many enterprises, the response to the poorly functioning or inaccessible formal market is to operate in the informal sector. In Guyana for example, even fairly large operations (e.g. fishing, taxi services) operate outside the formal economy, creating a general culture of non-compliance. The challenge for government in addressing this issues is to reduce compliance costs (ie improve the operation of the high level rules of the game) and improve enforcement (particularly in relation to revenue collection) and thus create a level playing field for all operators, without extinguishing what is often a vibrant informal business sector.



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CHAPTER 3 OVERVIEW OF KEY ACTORS IN PRIVATE SECTOR DEVELOPMENT

“They don’t know how to love us”

Comment by leading manufacturer in Guyana on Government’s attempts to

promote private sector growth 3.1 Donor agencies and multi-lateral development institutions Box 3.1 lists the donors and multi-lateral development institutions involved with private sector development in the Caribbean and summarises the main thrust of their activities. Box 3.2 shows the extent of the physical presence of donors in the region. Box 3.1: Donor agencies and multi-lateral development institution involved with

private sector development in the Caribbean21 CDB Intermediary concessional lending (through national development banks and commercial banks) to private sector. Only 6% loan portfolio is now direct lending to private sector22. Provides macroeconomic advice. Provides technical assistance to private sector groups, but not to individual firms. Recently developed new regional private sector strategy which stresses CDB’s role in working towards an enabling and supportive policy environment for the private sector. CIDA Regional programme is focused on OECS countries. Development of micro-finance best practice, human resource development, institutional development and strengthening and management development DFID Supports inter alia the development of enabling environments, micro finance best practice, and strengthening of business linkages EU Provides funding for private sector development and institutional strengthening through Stabex Funds, competitiveness programmes such as Target Europe, and ACP initiatives such as EBAS I-ADB Provides loan and equity finance for private sector initiatives, and to Governments for infrastructure and reform programmes (including public sector modernisation and land reform). 21 Adapted from: CDB Working Paper on a new Private Sector Development Strategy, Appendix 1 22 During the 1970’s and early 1980’s direct lending was provided to individuals or small firms for investment in small hotels and agricultural production enterprises.



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ILO Provides assistance in reform of labour legislation and occupational health and safety issues UNDP Micro finance best practice and support to micro enterprise development USAID Focus on improving competitiveness including improving the business environment to meet international standards and increasing the efficiency and fairness of the legal systems. World Bank Lending to Governments through project financing and co-financing. Analytical work.

Box 3.2: Donor offices in the Caribbean

3.2 Regional and sub-regional public sector bodies The major regional and sub-regional public sector institutions serving the Caribbean include - CARICOM Secretariat The Secretariat was established as the executing agency for implementing the Caribbean Common Market (CARICOM). It is based in Guyana and is responsible coordinating all activities that are being undertaken to bring about the realization of the Caribbean Single Market and Economy (CSME). The Secretariat is also responsible for negotiating trade treaties and related matters, on behalf of CARICOM, with WTO, the EU and FTAA. CARICOM has a variety of agencies that execute particular regional programmes. The CARICOM Secretariat and CARICOM programmes are funded jointly by contributions from member countries, and by donors. Regional Negotiating Machinery (RNM) The RNM has been established by CARICOM to conduct trade negotiations. It is funded by all the countries and by many of the donor and lending agencies that operate in the region. The RNM was actively involved in negotiations related to the EU/ACP trade and economic assistance treaty (COTONU), and is currently involved with WTO and FTAA negotiations

CIDA CDB DIFD EU IABD ILO UNDP USAID World Bank

Barbados � � � � � � � Belize � � Dominican Republic

� � �

Jamaica � � � � � � Guyana � � � � � � Haiti � St Lucia Trinidad & Tobago

�



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OECS Secretariat The OECS Secretariat was established to coordinate activities in functional cooperation, eventually leading to an economic union of the member countries of the Organization of Eastern Caribbean States (OECS). OECS Supreme Court The High Court and the Court of Appeal in OECS countries are organised on a regional basis, as the OECS Supreme Court. Eastern Caribbean Central Bank (ECCB) The ECCB was established as the Central Bank for the countries of the OECS which use a common currency – its role in relation to this Eastern Caribbean Currency Union is described in box 3.3 below. The Bank has responsibility for the regulation of the financial sectors in the countries under its jurisdiction.

Box 3.3: Operation of the Eastern Caribbean Currency Union The ECCB has the responsibility for fixing the exchange rate of the EC$. The Bank sets statutory borrowing limits and has core reserves, which cannot be touched by Governments. Other policies are implemented at the individual country level. Fiscal policies of individual states clearly have implications for the group. Sustained fiscal deficits by a significant number of countries would have implications for the viability of the exchange rate and therefore the value of the currency. The Monetary Council of the ECCB sets fiscal saving targets, but can only influence, and not control national policies in this respect. Similarly, the ECCB can only influence interest rates of member states - having no authority to fix them.

3.3 Regional service providers A number of regional bodies have been set up by CARICOM and/or donors to provide services to countries in the region which relate to private sector development. Some of these are briefly described below. CARICAD The Caribbean Centre for Development Administration, based in Barbados, is a CARICOM institutions mandated to promote the managerial capabilities and systems in the Caribbean for public policy formulation. Its functions include providing and facilitating consultancy advice and promoting networking in the area of public policy formation. CARICAD has promoted events involving government/private sector dialogue and its 2002-2007 Strategic Plan includes enhancing private sector in order to strengthen the private sector’s contribution to policy debate. CARTAC The multi-donor funded Caribbean Technical Assistance Centre opened in 2001 as a regional resource, based in Barbados, to provide technical assistance and training in economic and financial management. Caribbean Export



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Serves Cariforum23 with trade information, marketing research and promotion, export development and market assistance to facilitate the development of trade among, and exports from, the member countries EDU OECS’s Export Development Unit provides trade information, market research and promotion, export development and marketing assistance focusing on market intelligence, business advisory and export facilitation services for not-traditional manufactured goods. 3.4 National governments Most Caribbean countries are democracies with Westminster style Parliaments. As stated above, the small size of these countries means that there is limited capacity in Government. For many Governments in the region, the focus on private sector-led growth is relatively new, and attitudes and structures of Government do not necessarily reflect this priority. Ministries are often organised on sectoral lines (Ministries of Tourism, Agriculture etc) and there is often no champion within Government for private sector development and pro-private sector policy making and administrative practices. In some cases, key institutions necessary for private sector operations are weak, for example justice systems for timely resolution of business disputes. In some of the larger countries, such as Guyana and Jamaica, regional government also has a major impact on private sector operations. 3.5 Private sector organisations Box 3.4 describes the key private sector organisations in the Caribbean.

Box 3.4: Private sector organisations in the Caribbean Caribbean Association of Industry and Commerce (CAIC) CAIC is a regional umbrella body of private sector organizations with the key role of advocacy for private sector, particularly in relation to private sector interests in trade negotiations. Its 140 members are national Chambers of Commerce and private sector organisations, corporate members and associated members. Although membership tends to represent large enterprises, some small and medium size members are represented through their membership of national organisations. Regional associations There are a host of regional associations representing various sectoral interests, whose members are national chambers. Some examples are – Caribbean Tourism Association Caribbean Hotel Association Caribbean Poultry Association Caribbean Agribusiness Association Caribbean Oils and Fats Association Caribbean Livestock Association West Indian Rum and Spirits Producers Association Caribbean Insurance Association National Chambers of Commerce 23 Regional body for channelling EU regional funding.



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Chambers of Commerce exist in all of the Caribbean countries. Membership in these organizations tend to be well represented by the traditional, well established business firms. Some of the Chambers have attempted to broaden their portfolio beyond traditional business and industry (e.g. the St. Lucia Chamber of Commerce, Industry and Agriculture). National Manufacturing Associations These exist in most of the more industrialized countries (e.g. Jamaica Manufacturers’ Association (JMA)). Exporters Associations These generally exist at the country level (e.g. Jamaica Exporters Association (JEA)). Recently, attempts have been made to form an OECS Exporters Association comprising firms from the OECS that have been involved in the OECS-EDU export competitiveness project Small Business Associations Small business associations have recently been formed in some countries to represent the interest of firms in the emerging small business sector (e.g. St. Lucia Small Business Association). These small firms tend to feel uncomfortable within the umbrella of the Chamber of Commerce, which they view as catering to the interests of the “establishment”.



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CHAPTER 4 INVENTORY OF ENABLING ENVIRONMENT INITIATIVES

“What takes root takes root at the national level”

Regional Service Provider

4.1 Scope of reform initiatives Annex D contains an inventory of donor enabling environment initiatives in the Caribbean - which are regional24 in scope or which are specific to one of the case study countries – Dominica, Grenada, Guyana or Jamaica. We have been able to identify 80 such initiatives as follows –

Project scope Number of projects Regional/sub-regional 24 Dominica 2 Grenada 2 Guyana 29 Jamaica 43 TOTAL 80

Box 4.1 below shows the types of private sector related initiatives undertaken by donors in Jamaica by way of example, and gives an indication of the wide scope of constraints on private sector development being addressed –

Box 4.1: Scope of donor enabling environment initiatives in Jamaica

CIDA DFID USAID CDB EU World Bank

IADB UNDP

Road Infrastructure

� �

Financial Sector Reform

� � �

Export Competitiveness

� �

Crime, Security and Justice

� � �

Small Enterprise Development

� �

24 Ie which fund regional/sub-regional bodies, or which adopt a similar approach in more than one country.



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Private sector Development & Assistance

� � � �

Public Sector Reform & Modernization

� � � � � �

Micro Enterprise Credit

� � �

Human Resource Development

� �

Focus on “rules of the game” and firm level constraints Donor focus in the region is on addressing macro or “rules of the game” constraints on enterprise development – through interventions such as public sector reform, legal and regulatory reform, judicial reform and strengthening financial sector regulation. Around half of all donor enabling environment projects are of this type. (See box 4.2 below.) About a third of donor interventions are focused on addressing constraints at the level of individual firms. The focus here is on the provision of training (e.g. in environmental management, marketing or specific sector skills) and also on improving firms’ access to capital – in the main focusing on micro enterprises in the informal sector through micro finance projects. Donors have put less focus on addressing constraints that affect firms’ access to markets. Interventions in this area are mainly concerned with establishing and strengthening pro-competition regulatory regimes for utilities, and also with improving business linkages between firms. The smallest group of projects are those that support Caribbean in trade negotiations and other interventions aimed at addressing external (global) constraints.

Box 4.2: Constraint types addressed in donor projects Constraint type Number of donor

initiatives addressing

constraints25 External – global 7 Macro – rules of the game 54 Meso – firms’ access to markets 17 Micro – firm capability and competence 34

Lack of explicit private sector/SME focus Many donor programmes identified as addressing enabling environment constraints do not explicitly recognise this as an output. But programmes not couched in these terms – public service reform programmes for example which may result in a less expensive, more facilitative public service – clearly have the potential to create a more favourable investment climate. Similarly efforts to address the justice system

25 These add up to more than 80 because some projects address constraints of more than one type. For the purposes of this first draft report a crude analysis based on number of projects has been carried out. It would also be possible to conduct a more detailed analysis based on total donor spend on each constraint type.



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may not have the creation of a more enabling environment for private sector development as a specific objective, and yet improving the performance of civil and criminal courts, will improve contract enforcement and contribute to a safer, more secure environment, including for businesses. The rest of this Chapter gives an overview of the main thrust of donor enabling environment initiatives in the region, illustrated by examples. For a full inventory - turn to Annex D. 4.2 Initiatives addressing external constraints to private sector development due to global factors Paragraph 2.4 sets out key external constraints faced by the private sector in the Caribbean – access to international markets; global capital flows and the international drug trade. Of these, countries in the Caribbean have most opportunity to influence their access to international markets - through participation in the range of on-going trade negotiations.

The Regional Negotiating Machinery (RNM) is the CARICOM structure established to co-ordinate the negotiating process for the Caribbean and to represent the Caribbean countries’ collective interest in negotiations. The RNM is focusing in negotiations on increasing market access in services, and on obtaining longer transitional periods to allow for repositioning and readjustment. The RNM is supported at the institutional level by 6 donors26, whose various projects can be summarised as aiming to strengthen the capacity of the RNM to operate effectively. Successful negotiations leading to the re-positioning of Caribbean countries to enable them to participate in global markets, requires support at a number of levels (see box 4.3). A particular concern at both the regional and country level is at the lack of sufficient inter-action with the private sector - both to inform the negotiations and to inform the private sector in the Caribbean of new opportunities created.

Box 4.3: Issues to strengthen the negotiating process • RNM is not yet operating on the basis of an overarching trade policy to inform and

ensure consistency in various negotiations, and to ensure effective global re-positioning – re-focusing economies on areas where there is a comparative and competitive advantage - for example on knowledge-based sectors such as services, tourism, the financial sector, entertainment, music, film locations, and professional and business services27.

• There is limited capacity at country and sub-regional level to interact with RNM.

(Donor initiative to address this issue include CIDA’s OECS Trade Assistance Project; Regional Trade Project and the EU’s Support to Trade Adjustment Team in Jamaica.)

• Negotiations are insufficiently informed by dialogue with private sector. CAIC may be a

26 CDB, CIDA, DFID, EU, I-ABD, and USAID. 27 See: Caribbean Perspectives on Trade, Regional Integration and Strategic Global Repositioning: ECORYS-NEI for the EU, June 2002.



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vehicle for giving the private sector a voice in RNM. (Donor initiatives to address this issue include CIDA’s Regional Trade Policy Responsive Fund - aimed at enhancing the capacity of groups to participate in trade policy formulation).

4.3 Initiatives addressing macro level constraints due to high level “rules of the game” These are constraints caused by the operation of markets – governed by institutions and high level formal or informal “rules of the game”. The key constraints for Caribbean countries under this head are summarised in box 2.6 (and described more fully in the paragraphs following that box). Donor initiatives to address these constraints are summarised below. Political/social environment Donor efforts to address political and social instability in the Caribbean do not tend to fall under their private sector programming. Despite this, in both Guyana and Jamaica, political and social instability have been seen as key constraints on private sector development. Examples of donor efforts to address these issues are USAID’s Governance Project in Guyana (which focuses inter alia on the law-making process, judicial reform and electoral reform) and CIDA’s Democracy and Governance Fund for Jamaica (a new project focusing on the electoral and democratic process). Donor efforts are also focused on improving safety and security through interventions in the criminal justice system, including police forces. Examples are I-ADB’s Citizen Security and Justice Programme in Jamaica, which supports the preparation of an integrated crime prevention strategy, and DFID support to police reform in Jamaica and Grenada. Macroeconomic environment Fiscal instability is becoming an increasing issue in the region. Dominica is currently facing a fiscal crisis, and is likely to be the subject of an IMF programme. Donor efforts to address macroeconomic issues are focused on a regional initiative – CARTAC (see paragraph 3.3) – a regional technical assistance centre, staffed through the IMF, which aims to enhance country’s capacities to achieve macroeconomic, fiscal and monetary objectives. Typical activities are illustrated in box 4.4 below -

Box 4.4: Extracts from CARTAC’s work programme June-Nov 2002

Trinidad & Tobago Assist Ministry of Finance in workshop to address the effectiveness of the use of the country’s fiscal resources through improved budget preparation, execution and management Region Plan regional conference on Public Expenditure Management aiming to expose senior managers to best practice and to establish a public expenditure management network

With CIDA as the lead donor, funding is also provided by CDB, ECCB, EU, I-ADB, UNDP and USAID. The model for CARTAC is a similar regional resource in the



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South Pacific. CARTAC is a new initiative for the Caribbean, and so it is not yet known how effective it can be influencing sound macroeconomic policies in individual countries from its base in Barbados. CIDA have adopted a similar approach on a sub-regional level in their Eastern Caribbean Economic Management Programme (ECEMP) through which a cadre of regional experts have been trained in fiscal management to provide technical assistance in OECS countries. Country-specific interventions include CIDA’s Guyana Economic Management Project, and DFID’s Dominica Financial and Economic Recovery Programme. The Dominica project inter alia, assisted Government to analyse its debt and fiscal situation, in preparation for IMF consultations. Legislative framework There are a variety of donor initiatives to address specific problems with business-related legislation in the Caribbean. So far these initiatives have been carried out mainly on a country basis for example USAID funded the drafting of a Small Business Act and an Investment Code in Guyana (which have not yet become law). Lack of legislative drafting capacity is a chronic problem in Caribbean countries, as in many developing countries. CARICOM is attempting to address this by setting up a regional drafting facility – both to provide cost effective expertise in this area, and to assist with harmonisation of the legislative framework through the production of model laws –eg in the area of competition. OECS countries have addressed this issue on a sub-regional level by producing model laws for adoption in individual countries, for example the CIDA-funded model Companies Act, which has recently been adopted by Dominica. Public service operations There are a variety of public sector reform initiatives in the Caribbean as summarised in Box 4.5 below.

Box 4.5: Public service reform initiatives Initiative Donor(s) Objective/activities

REGIONAL INITIATIVES CARICAD CDB

DFID Regional technical assistance service for public sector reform

Canadian Competitiveness Fund CIDA (planned)

Aim is to enhance the capacity of government institutions to provide a policy framework in favour of private sector development

NATIONAL INITITATIVES (Dominica, Grenada, Guyana and Jamaica) Dominica: Fiscal and Economic Recovery Project

DFID Includes support to public service reform: change management and component specifically aimed at a more facilitative and enabling public sector

Grenada: Public Sector Management Improvement Project

DFID Includes a focus on the development of a more pro-private sector public sector



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Grenada: Support to public sector reform

CIDA CDB OAS UNDP

Modernisation of the public service

Guyana: Public Sector Technical Assistance Credit

World Bank (planned)

Public Sector Modernisation

Jamaica: Public Sector Modernisation Project

CIDA Supports training for public sector modernisation programme

Jamaica: Technical Assistance Fund

CIDA Leading edge Canadian technical assistance to public sector modernisation programme

Jamaica: Policy Capacity Building

CIDA Strengthen capacity of Government in policy making and analysis

Jamaica: Performance Improvement Programme

DFID Technical assistance to public sector reform focusing on key spending Ministries and Ministry of Finance

Jamaica: Public Sector Modernisation

EU Support the conversion of public sector departments to executive agency status

Jamaica: Public Sector Modernisation Programme

World Bank Public sector modernisation

LOCAL GOVERNMENT INITIATIVES Guyana: Municipal Management Project

CIDA (planned)

Aims to strengthen institutions for the management of local government through technical assistance

Guyana: Making Cities Work Project

USAID’ Aim is to assist New Amsterdam Town Council to improve service delivery, including to private sector

Guyana: Linden Economic Advancement Programme

EU Aims include strengthening local government in Region 10

In some cases –for example DFID’s projects in Dominica and Grenada - a specific pro-private sector/enabling environment component has been included in projects. This aims to ensure that reform and modernisation includes (and even prioritises) public institutions that impact directly on the private sector (such as business registries and investment promotion agencies). In addition these projects attempt to “mainstream” pro-private sector policies, regulations and administrative practices by joining them up with an overall reform programme. A Cabinet Retreat shortly to held in Dominica under the DFID project there will consider how to best to institutionalise such a cross-cutting policy within government. Areas to be considered include a high-level champion for private sector development within Government and the establishment of a “better regulation” unit in a powerful Ministry. An alternative approach, adopted by USAID in Guyana for example, is to have a separate project that targets key institutions within Government that are vital for private sector operations. Under its Guyana Economic Growth project USAID is supporting the strengthening of the Deeds Registry and also Go-Invest (Guyana’ investment promotion agency).



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Tax policy and administration Support in this area has been provided on a country specific basis – for example DFID support - mainly through technical assistance - to customs reform and modernisation in Grenada. However with the formation of CARTAC, the potential exists to provide such support through this regional service provider. CARTAC has various projects underway or planned in this area – for example – support to the ECCB tax commission in preparing a study on OECS tax systems and administrations; regional training on property taxation and a mission to St Lucia to assist in the reform of PAYE system. Financial sector regulation and structure A sound financial sector is key to private sector operations. Donor support in this area has been provided on a country-specific basis – mainly through technical assistance and capacity building in relation to financial sector regulation; improving operational efficiency and supporting the development of capital markets. Financial sector re-structuring and regulation has been particularly important for the private sector in Jamaica, following the financial collapse of the banking system in the mid-1980’s. The World Bank and the I-ADB have supported this process, which is seen as a major success story. Despite high interest rates, the banking system in Jamaica is now sound. Initiatives aimed at improving the efficiency and financial sector institution’s operations include USAID’s work in supporting the Jamaica Bankers Association in the setting up of a credit reference agency, and USAID’s Automated Clearing House project which aims to establish a system to reduce the time required for processed and clearing cheques form 14 to 3 days. Donor efforts to support capital market development in the Caribbean have focused mainly on the setting up of regional or national stock exchanges. I-ADB’s Multi-Lateral Investment Fund for example, supported the formation of the Eastern Caribbean Securities Exchange, the Caribbean Stock Exchange, and the Barbados Stock Exchange. As with tax policy and administration, there is potential for technical assistance in the field of financial sector regulation and supervision (including offshore financial operations) to be provided from the region through CARTAC. For example, CARTAC is working with the I-ADB and the Bank of Guyana to strengthen financial institution supervision. Land policy, laws and administration The availability of land – both for development and for use as collateral is a key issue for private sector development in Guyana. The I-ADB and DFID (through its GLASP project) are working with Government to regularise titles and convert short leasehold titles to either long leases or freeholds. GLASP has assisted with the formation of a semi-autonomous Lands and Surveys Commission in the Office of the President, mainly through the provision of technical assistance, and the I-ADB has inter alia



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provided technical assistance to address the legislative framework relating to collateral. The I-ADB, through its Land Administration and Management Programme is also assisting the Government of Jamaica to establish a dynamic land market that promotes efficient use of land resources. Procurement laws and practice The World Bank is supporting procurement reform in Guyana through its Financial Sector and Private Sector Institutional Development Project. A recent World Bank SME Mission to Guyana28 has highlighted the importance of ensuring that such reform does not impose barriers to participation in Government procurement by SMEs eg through bond requirements or complex bidding requirements. Contract enforcement The formal institutions responsible for contract enforcement in most Caribbean countries are the Magistrates Courts – for small debts (typically less then US$3,000) and the High Court for larger debts. Donor initiatives have focused on improving the system on both levels. In the OECS for example, CIDA’s Judiciary project focuses on reform of the High Court (which is organised on a sub-regional basis), while USAID’s Judiciary Project focuses on Magistrates Courts (which are currently organised on a national basis, although consideration is now being given to streamlining their administration under the OECS). In both cases, reforms are focused on case management, training and improvement of facilities. Key aims are to reduce the backlog and improve case flow. Limited regional harmonisation The key initiative to address issues of regional harmonisation is the Caribbean Single Market and Economy (CSME), which is intended to come on stream between 2002 and 2005. The CSME aims to create a larger economic space allowing for more efficient production and thus global competitiveness. In the light of requests from the CARICOM Secretariat to support this process29, donors have recently funded a stocktaking study on the process to date30, which has raised a number of fundamental issues. These include a fundamental concern about the feasibility of a harmonisation process which is not founded on the move to a political union, but rather seeks to achieve harmonisation through a “bottom up” process of inter-governmental co-operation; a questioning of the commitments of national governments to the process; and concern about the sustainability of key institutions required for the proper

28 Small and Medium Enterprise Department –World Bank Group – SEM Mission to Guyana, Summary of Findings and Recommendations, May 2002. 29 CARICOM’s Secretariat and activities contained 2-year workplans are funded by contributions from member states and by donors. 30 World Bank, Implementation of the Caribbean Single Market and Economy (Work in Progress Report): prepared by Havelock Brewster, Thomas Dolan and Taimoon Stewart, June 2002



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functioning of the CSME – such as the proposed Caribbean Court of Justice and Competition Commission.



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4.4 Initiatives addressing meso level constraints affecting access to markets Paragraph 2.6 above outlines the key areas where businesses in the Caribbean face difficulties in accessing global, regional or national markets. These are summarised as transport/communications; business support infrastructure; social capital; and structure of the private sector. The contents of donor initiatives to address these constraints are outlined below. Transport/telecommunications Donor efforts have focused on “hard” infrastructure projects – I-ADB’s support for Jamaica’s Northern Coastal Highway Improvement for example - and on strengthening the regulation of utilities. CIDA’s Institutional Strengthening of the Office of Utilities Regulation in Guyana involves drafting legislation and capacity building in relation to the electricity sector for example. The telecommunications sector in the region is undergoing re-structuring to break down monopolies: I-ADB is supporting this process in Guyana through its Modernisation of Telecommunications Project with inputs including technical assistance to reform the legal and regulatory framework for the sector; and in Jamaica, CIDA’s Telecom Regulatory Adviser Project is assisting the Office of Utilities Regulation in a similar way. Telecommunications reform in the OECS, supported by the World Bank and USAID, deserves particular mention as an example of a sub-regional approach to pro-competitive regulation which addresses the high fixed costs of regulation - see box 4.6 below.

Box 4.6: ECTEL31

In May 2000 the OECS countries set up the Eastern Caribbean Telecommunications Authority (ECTEL), which is the world’s first regional telecommunications authority. The OECS countries will retain their sovereign powers over licensing and regulation, and ECTEL will provide technical expertise, advice and support for national regulations. At least 4 advantages of adopting this regional approach have been identified –

• It allows economies of scale to be reaped; • It will promote the development of harmonised regulation in the sub region; • It will enhance bargaining power in negotiations with incumbents and potential

entrants; • It will allow for a greater degree of independence and hence credibility in

regulatory advice.

The World Bank cites as evidence that the creation of ECTEL along with other reforms has prompted a decline in the price of telecommunication services in the region – the cost per minute of a daytime call to the US having fallen between 24 and 42% in OECS countries.

Business support infrastructure The need for affordable and cost-effective structures for compliance with international quality standards necessary to gain access to global markets has been identified as a

31 Source: Global Economic Prospects and the Developing Countries, 2002: The World Bank page 83.



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key constraint under this head. CARICOM’s Regional Organisation for Standards and Quality with headquarters in Barbados is responsible for developing regional standards based on international ones, but for these to be effective – implementation, including inspection will have to be at national level. Donor initiatives in this area include support to CARICOM’s Export Development Agency and EU/ACP Business Assistance Scheme (EBAS), which has a component, aimed at strengthening quality certification at the firm level. USIAD and other donors also provide support though technical assistance to the Pan-American Health Organisation in relation to the development of sanitary and phyto-sanitary legislation. Social capital This constraint relates to the benefits that businesses can gain by being organised in or belonging to groups – a key issue in the Caribbean, where many firms are run by individuals or families, and linkages between firms are weak. Donors have addressed this issue in 2 ways – by supporting the strengthening of formal business organisations and by encouraging business networks and linkages through “cluster” development. There are various examples of donors providing institutional strengthening of formal private sector organisations at the national level. Box 4.7 below sets out one example of a multi-donor funded initiative in Guyana.

Box 4.7: Private sector organisations in Guyana In Guyana there are a myriad of organisations representing the private sector – all competing for Government’s ear, for members and for donor funding. The Private Sector Commission was set up in the 1990’s as an apex organisation for other private sector organisations as a local initiative. Seed funding was received from the EU. Its membership initially consisted solely of other private sector organisations but now it has some large corporate members. Donors are now assisting with the strengthening of the PSC by providing technical assistance with policy advice.

Cluster development and co-operation between businesses should be market driven, because competitive advantage is more likely to occur where there are network of related and supporting businesses, linked through horizontal and vertical relationships. However, the undeveloped nature and structure of the private sector in the Caribbean results in market failure in this respect. There are a variety of donor efforts at the national level, which aim to stimulate these processes by facilitating contacts between firms, promoting clustering and co-operation between them and developing effective networks. Examples are UNDP/UNCTAD’s Empretec Project in Guyana which aims to build capacity particularly by fostering regional business linkages – nationally, regionally and locally; DFID’s Business Linkages Challenge Fund in Jamaica, which aims to support business linkages that improve competitiveness and bring clear benefit to the poor; and DFID’s Cluster Competitiveness Project, described briefly in box 4.8 below.



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Box 4.8: DFID’s Jamaica Cluster Competitiveness Project DFID’s Cluster Competitiveness Project in Jamaica is executed in partnership with the Jamaica Exporters Association. It focuses on 3 clusters of 20 firms and aims to foster a culture of competitiveness in them by providing technical assistance eg in marketing and operations. The lessons thus learnt “on the ground” are used by the JEA as a basis for their advocacy for policy reform for SME development

4.5 Initiatives addressing micro level constraints due to the competence and capacity of firms Paragraph 2.7 above identifies 2 of the key constraints at firm level on private sector operations in the Caribbean – access to capital and to managerial/business skills. Donor initiatives to address these issues are briefly outlined below. They involve a range of modalities to supply training and capital to firms – particularly to micro and small firms who are the least able to have access to them. Themes running through these donor interventions are the concern to create a viable and sustainable market in training and capital provision, and not to distort the market (eg by provision of subsidised funding) and crowd out private sector initiatives in these respects. Access to capital I-ADB’s Inter-America Investment Corporation (I-AIC) and the Caribbean Development Bank provide intermediary finance (eg through commercial banks) to the private sector on concessional term to larger and formal businesses. I-ADB’s loans through the I-AIC would typically be in the region of US$5 million, and are small by I-ADB standards. CDB’s new Private Sector Policy document promotes as new focus for the Bank - of emphasising its role in promoting the enabling environment, rather than as a source of direct investment. Other donor efforts have focused on the generation of a sustainable micro-finance market, where there is perceived to be a market failure. These initiatives address the provision of finance for micro enterprises, usually in the informal sector. An overview of these initiatives is given in box 4.9 below. It will be noted that there is a focus on sustainability and the adoption of a “bottom up” approach of using lessons learnt in micro-finance provision to inform the development of appropriate regulatory regimes. MFIs are generally operating in an unregulated environment in the region. Currently however, there is little engagement with Governments on this issue at a policy level.

Box 4.9: Micro-finance initiatives in the Caribbean Project Donor(s) Objective/activities

REGIONAL/SUBREGIONAL Support to Caribbean Micro-Finance Ltd

DFID EIB I-ADB

MFL provides mciro-finance. Aim is to develop a successful micro-finance model that can feed through into the development of an appropriate regulatory regime for the region.

Micro Start Project CDIA/UNDP Aim is strengthen viable, sustainable micro finance market, fostering of micro finance linkages – and to develop micro-finance



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best practice in the region to contribute to the development of a regulatory regime.

DOMINICA Support to National Development Foundation Limited

EU (Stabex) Funding NDF credit lines for community-based tourism projects and small scale enterprises

GUYANA Strengthening of Institute for Private Enterprise Development

I-ADB USAID

IPED is a micro-finance institution. Donor interventions have contributed to institutional strengthening and development of financial management system

JAMAICA Credit for Micro and Small Enterprises Project

CIDA Aim is to support the development of a self-sustaining organisation to lend to micro entrepreneurs

Micro and Small Enterprises Credit Scheme

EU Aim is to increase the quantum and access to credit for micro and small enterprises

Micro enterprise lending USAID Aim is to provide micro financing to entrepreneurs through the Jamaica National Building Society

Managerial/ business skills Again, there are variety of donor initiatives which use different modalities to deliver training to the private sector – particularly to small enterprises. In some cases, it is reported that despite the micro/small enterprise focus, training take-up tends to be from the larger firms. 4 examples of varying delivery mechanisms are summarised in box 4.10 below.

Box 4.10: Examples of firm skills projects in the Caribbean • Guyana Micro Enterprise Voucher Project

Project is based on a model developed in Latin America. The intention is to create a training market by enhancing demand for training by supplying training vouchers to enterprises or groups of enterprises, and publicising the availability of training. The initiative is run by a local NGO from decentralised offices. Training includes for baking, and business skills such as book keeping. Key threat is the sustainability of the NGO running the project. The initiative is funded by CIDA, I-ADB, and USAID

• Caribbean Technological Consultancy Services

This arm of the CDB provides technological support to SMEs. The aim is to provide a mechanism by which the knowledge and skills in the region can be mobilised and applied to the needs of SMEs. MSEs can access information, training or a range of hands-on expertise that can assist in technology transfer. Other areas of assistance include marketing and management, and preparation of business plans at subsidised cost. The aim is to provide affordable practical advice

• UTech Technology and Innovation Centre Project

This project strengthens linkages between Jamaica’s University of Technology and SMEs. The aim is to develop the capacity of UTech’s Extension Centre to assist SME’s in practical ways. The project is funded by CIDA’s

• CARICOM: Economic and Enterprise Competitiveness Programme 1998-2003

Key elements include technical assistance to directly benefit enterprises to build



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capacity to produce goods, aiming at 3,500 interventions in large, medium and small firms. Caribbean Export is the executing agency. (CARICOM programmes are part-funded by USIAD, CIDA, IDB, EU and UNDP )



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CHAPTER 5 DONOR STRATEGIES, TOOLS AND DELIVERY PARTNERS

“Donors come to us with projects”

Government official in Guyana commenting on donor assistance for private sector development initiatives

5.1 Introduction This Chapter provides an overview of strategies donors adopt in order to take forward the enabling environment agenda – which usually involves influencing the policy, laws, regulations and administrative procedures of Governments. It gives some examples of the kind of tools donors have used to assist them with this process. Finally, it looks at some examples of the ways in which projects have been delivered. The wide scope of this Review means that a detailed analysis of these issues in relation to each project in Annex D is not feasible. However, this Chapter attempts to give an overview of how these processes have been approached in the Caribbean. 5.2 Donor strategies to promote enabling environment reform at the regional level During our research, several donors emphasised their desire to move from country-specific funding to a more regional approach, a process that has already begun. The aim is to reduce the high transaction costs of operating in a region of small countries, and the reap economies of scale. The issue is one of aid efficiency. What does a regional approach mean in practice? Box 5.1 sets out various approaches.

Box 5.1: Regional (and sub—regional) approaches to enabling environment initiatives used by donors in the Caribbean

High level donor/government agreement on a common agenda Examples: • In the 1997 Bridgetown Barbados Summit Accord the US and signatory Caribbean

nations committed themselves to promoting free trade and economic development, safeguarding the natural environment and enhancing justice and security. USAID’s Caribbean Regional Programme is based on these priorities, following further discussions with CARICOM representatives in Guyana in 1998.

• The World Bank’s Country Assistance Strategy for the OECS and Barbados was

completed in June 2001, in close consultation with Governments, civil society. NGOs, the private sector and international organisations operating in the sub-region. The



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promotion of sustainable, private sector-led economic diversification is a key theme. Projects under this strategy are provided under a sub-regional umbrella mechanism.

Common donor regional/sub-regional approach and funding modality These are single-donor funded projects using a regional or sub-regional “pot”, executing agency and approach for activities in countries in the region. Examples are - • CIDA’s ECEMP and CPEC projects, administered by special units headquartered in

Barbados and St Lucia respectively; and • EU’s EBAS technical assistance programme headquartered in Barbados. Partnership with existing regional governmental institution Examples – • Donor support to CARICOM and the RNM; • EU’s Export Development Programme delivered to OECS countries through the Export

Development Unit of the OECS; • OECS’s/ ECCB’s initiative to integrate national development strategies into sub-regional

development strategies (e.g. in relation to telecommunications, environmental management). This is part of a strategy to rationalise scarce resources (including donor funds) by pooling them.

Establishment of new regional governmental/regulatory bodies Examples – • ECTEL – OECS telecommunications regulatory authority supported by World Bank and

USAID • Eastern Caribbean Stock Exchange (supported by I-ADB and CDB) Establishment of/support to regional service providers Examples – • CARICAD – public sector reform • CARTAC – public expenditure management, financial sector regulation etc Learning lessons across the region These are donor initiatives to learn from successful approaches in one country in the region and adapt it for another. Examples are – • Donors in Guyana hosted a dinner for various private sector organisations in Guyana in

order to promote the Jamaica model of private sector apex organisation. Private sector representative from Jamaica were able to explain this organisational model at the event.

• CIDA and DFID are considering cluster competitiveness projects in Guyana, after

successful projects in Jamaica. 5.3 Donor strategies to promote enabling environment reform at the national level 6 (non exhaustive) modalities for intervention at a strategic level nationally are considered below. These are –

• finding the right Government interlocutor; • influencing a public sector reform programme; • building on a poverty reduction strategy; • responding to Government/private sector identified priorities; • being opportunistic; and



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• achieving incidental enabling environment outcomes. Finding the right Government interlocutor When working at a national level to promote enabling environment reform in the Caribbean, donors are in many instances working in environments where a pro-private sector culture, particularly within government is weak, and the emphasis on private sector led growth new. In some cases Government structures to not provide an obvious institutional home for enabling environment policies. Box 5.2 gives an example.

Box 5.2: Institutional home for enabling environment initiatives in Guyana There are a variety of Government Ministries and agencies in Guyana which potentially champions and has strategic responsibility for private sector/SME development, including the office of the President; the Ministry of Tourism, Trade and Industry (which has a fledgling Small Business Unit, which is not yet staffed), the Ministry of Labour; the Ministry of Foreign Affairs (trade issues) and Go-Invest (the investment promotion agency) whose Chairman has as seat at Cabinet.

In such instances, personal contacts with key players within Government assume particular importance in order to have policy influence. Influencing a public sector reform programme Enabling environment programmes have in some cases been successfully mainstreamed within national Governments (or have the potential to be mainstreamed) as part of more general public sector reform/modernisation efforts. Box 5.3 sets out 2 case studies where this approach has been, or could be adopted

Box 5.3: Case Study: Enabling Environment initiatives as part of Public Sector Reform Programmes

Grenada DFID’s Public Sector Management Improvement Project (PSMIP) supports the Government’s wide-ranging public service reform programme. It includes as specific objectives – a legal and regulatory framework conducive to private sector development, and also a modern police force responsive to the needs of all citizens. DFID was able work with Govt to create the institutional framework necessary to push these kinds of reforms through, including the establishment of a Public Service Change Management Unit within the Office of the Prime Minister. Jamaica In June 2002 Government published its Draft White Paper: Public Sector Modernisation, Vision and Strategy 2010, June 2002. The private sector was involved in the preparation of this paper and Government has promised further consultation with them. The paper includes a focus on customer service and the creation of a social and legal framework in which, with equity, business can flourish.

Building on a poverty reduction strategy Guyana is the only PRSP country in the Caribbean. However both Dominica and Grenada are now committed to producing a PRSP. Although there are concerns about the level of ownership of the PRSP within Government, it clearly provides an over-arching strategy for private sector (and enabling environment) priorities. Box 5.4 summarises key pro-private sector contained in the PRSP matrix –



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Box 5.4 Guyana Poverty Reduction Strategy Paper: Policy And Performance Matrix,

2002-2005 - Summary of Key Strategies and Activities Relating to Private Sector Development

Policy area/strategies Strategies/actions Enhance macroeconomic framework

• Undertake comprehensive review of the tax system • Provide resources to Revenue Authority to effectively

carry out its functions Strengthen financial framework

• Implement provisions of Financial Institutions Act Strengthen Banking Supervision Department of Central Bank

Support local financing for investment

• Establish Stock Market

Improve efficiency of the public sector in the delivery of services

• Rationalise roles, responsibilities and outputs of ministries and Government agencies

Improve framework for land development

• Establish autonomous land agency • Develop transparent mechanisms in land distribution • Convert leasehold to freehold

Reform tender and procurement

• Establish Public Procurement Commission • Implement provisions of Tender and Procurement Act

Decentralise public services • Strengthen regional administrations to provide basic services

Modernise the agricultural sector

• Improve extension services

Improve the environment for manufacturing

• Develop manufacturing parks • Review feasibility studies of building deep port harbour

with private sector support Develop new product lines

• Grant concessions to oil and mineral prospecting and exploration companies

Develop Information Technology businesses

• Liberalise the communications sector

Accelerate development of eco-tourism

• Develop comprehensive strategy for eco-tourism development in response to private sector demands

Support private sector to expand and maintain markets

• Strengthen institutional support for investment and export promotion

• Grant autonomy to GOINVEST (export promotion agency) and expand its functions

Integrate small businesses and cottage industries into formal economy

• Enact Small Business and Cottage Industries Act • Simplify process of business creation and registration • Support competition in micro-credit financing

Enhance framework for eco-tourism development

• Establish an autonomous National Tourism Board • Set guidelines for eco-tourism development

Enhance confidence building measures to sustain political and economic stability

• Continue political dialogue between Government and the main opposition party

Improve justice administration

• Develop administrative systems and procedures to improve records and transcripts

• Institute continuing education for the magistracy and judiciary

• Implement Police reforms Reform local government • Review status of local government laws



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• Strengthen information systems in communities • Set mechanisms within reformed system to improve

accountability and transparency • Strengthen capacity of community members to govern

Improve infrastructure to support growth

• Rehabilitate and maintain sea defence structure • Expand air, road and river transportation network • Expand and improve drainage and irrigation schemes

Improve policy analysis in Ministries and agencies

• Improve data collection • Strengthen management information systems

The World Bank is building on the PRSP process to support SME reform – as box 5.5 below illustrates.

Box 5.5: Case Study: World Bank/IFC SME Mission to Guyana The World Bank Poverty Reduction Support Credit Team is currently negotiating with the Govt of Guyana on a loan to support the PRSP. The Team requested the SME Enterprise Department of the World Bank and International Finance Corporation to review the possibilities of including some conditions and initiatives with the PRSC that would specifically support SME and private sector development. Pro-SME proposed conditions included a recommendation that the proposed school-feeding programme should ensure that that small enterprises could be used to supply the food and pro-SME procurement reform.

Responding to Government/private sector identified priorities In some instances, Government and the private sector have taken the initiative and worked together to identify key constraints and priority interventions – as box 5.6 below illustrates.

Box 5.6: Identification of priorities in Guyana and Dominica Guyana In Oct 1999 Government held a Business Summit involving the President and Cabinet and private sector representatives. 34 prioritised actions were agreed - including an Investment Code to remove discretions, the creation of a Tourism Authority, public sector reform, the introduction of VAT and a Small Business Act. USAID in particular has supported the taking forward of some of these initiatives, including the drafting of an Investment Code (See further the paragraph on legislation under paragraph 5.3 below) Dominica Government and the Dominica Association of Industry and Commerce held a Cabinet Retreat to consider private sector development in 2001. A number of key reforms were identified, which DFID was able to pick up in the design of the enabling environment component of its Fiscal and Economic Recovery Programme.

It should be noted however, that such consultations tend to involve the formal private sector – the elite - and not the informal private sector and micro enterprises. In Dominica for example, the Association of Industry and Commerce does not represent informal micro enterprises. In this instance, DFID32 was able to work with Government to ensure that small-scale and informal sector representation was included at a subsequent Retreat to validate proposed project interventions.

32 Through its implementing consultant for the Fiscal and Economic Recovery Project.



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Being opportunistic Some success stories in the region related to donor responses to crises. Examples are World Bank support to Jamaica’s financial sector re-structuring following financial collapse in the mid-1980’s and DFID’ response to Dominica’s fiscal crisis though its Fiscal and Economic Recovery Project. Incidental enabling environment outcomes As has already been noted, some donor initiatives which impact on the enabling environment in the Caribbean do not have an explicit pro-private sector focus, and are not necessarily looking for enabling environment outcomes. Some public sector reform programmes, land reform and judicial reform projects are examples. To this extent it can be said that pro-private sector outcomes are incidental to the explicit aim of these projects. 5.3 Donor tools to promote enabling environment reform A wide variety of tools are used by donors to take forward enabling environment reform. 5 commonly used tools are briefly discussed below. These are –

• mapping exercises; • advocacy; • government/private sector workshops/focus groups; • government/donor groups; and • legislation.

Mapping exercises Box 5.7 provides some examples of mapping exercises, which have serviced to highlight constraints to private sector development at a national level, and upon which reform efforts have been built.

Box 5.7: Mapping exercises Jamaica USAID in consultation with the JAMRO, the national investment promotion agency for Jamaica commissioned a Business Road Map for Jamaica, an in-depth analysis of the steps required for a local or foreign investor to become legally established in Jamaica. Typical constraints identified included complex investment procedures, land acquisition procedures and licensing processes. Since the release of the report in early 2001, the Agency has taken steps to address some of the areas identified as impediments and is in the process of designing programmers to address many of the others. The Government of Jamaica has also begun to address the impediments identified as related to its operations, through its public sector reform initiatives (see box 5.3 above). Guyana 2 mapping exercises have been undertaken – a USAID-funded map Investor Roadmap USAID funded in Guyana. Impact has been that tim taken to make decision s on applications for incentives and other forms of assistance from investors has been greatly reduced. Roadmap identified several impediments to further reduce decision/approval time. Feed back from potential investors has been encouraging.



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Grenada A DFID-funded study33 reviewed the constraints in the institutional, regulatory and legal framework for private sector development, highlighting the level of bureaucracy an the lack of transparency in government deveisons as key constraints. The results of this study informed the design of DFID’s support to Grenada’s public sector reform programme (supported also by CIDA, CDB, OAS and UNDP).

Advocacy Donors can take forward the debate on enabling environment reform by supporting advocacy at various levels – as box 5.8 below illustrates.

Box 5.8: Examples of pro-private sector advocacy

Jamaica USAID funded Michael Fairbanks to advocate particularly to private sector players on the importance of competitiveness. This laid the foundation for DFID’s Cluster Competitiveness Project, which aims to foster a culture of competitiveness in firms in different sectors by assisting with marketing and operations. Jamaica The Cluster Competitiveness Project in Jamaica is executed in partnership with JEA. Lessons thus learnt “on the ground” are taken on board by JEA and used as a basis for their advocacy for policy reform for SME development. Dominica DFID is funding a Cabinet Retreat with the aim inter alia or strengthening Government’s understanding of the respective roles of the public and private sectors in economic growth.

Government/private sector workshops/focus groups Tripartite workshops or focus groups involving private sector stakeholders, Government and donors are frequently used tools in project design and identification of key constraints for private sector development. For example, the USAID funded project to Modernise Justice systems involved a lengthy process to ensure Caribbean ownership, involving focus groups including private sector representatives to identify key problems. Government/donor working groups Sustained and effective Government/donor dialogue is necessary for maximum effectiveness at the policy level. In Guyana, the PRSP is seen by donors as a vehicle for this, with the creation of Government/donor working groups to take forward PRSP interventions. The proposed working group on economic growth has, at the time of writing yet to get off the ground. However, in Jamaica, a private sector development co-ordinating committee has been established. This involves Government, donors and private sector representatives. Legislation In some cases, donors have used technical assistance with legislative reform as a tool to take reform forward. This has had a mixed record of success. The legislative process can often be long and slow (and the process opaque to donors). Ultimately the successful passing into law of legislation is an act of political will – and is subject to Parliamentary time. In Guyana for example, there are a number of donor-funded 33 A study of the enabling environemtn for private sector development in Grenada., 2001



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drafts of legislation, which have yet to make it to the statute book – including small business legislation and the Investment Code. 5. 4 Delivery partners Most donor projects in the Caribbean are funded on a sole-donor basis, although there are a significant minority of projects that are co-funded. In the cases where the project addresses external or macro-type constraints, the most frequent delivery partner is unsurprisingly, a Government body. When addressing meso, and micro type constraints, private sector and other bodies are more likely to be delivery partners as box 5.9 below illustrates in the case of 2 projects in Jamaica

Box 5.9: Non-government delivery partners in Jamaica CIDA’s UTech Project involves supporting a technical university in Jamaica to enable it in turn to pass on its technical know-how to MSES. DFID’s Cluster Competitiveness Project in is executed in partnership with the Jamaica Exporters Association.

5.5 Mechanisms of donor co-ordination With at least 9 donors, 15 countries and 80 projects, donor co-ordination is important in the Caribbean. One issue for donor co-ordination is that some key enabling environment interventions are not considered in donor private sector co-ordination fora, because they do not fall under donor private sector programming. A case in point is public sector reform programmes, which may fall under governance programming. Private sector donor co-ordination mechanisms are described in box 5.10 below.

Box 5.10: Donor co-ordination mechanisms Multi-donor funded initiatives Public sector reform programmes, because of their size tend to be multi-donor funded. There are a large number of other multi donor funded initiatives. Examples from Guyana include the Micro-enterprise Voucher scheme co-funded by CIDA, USAID and I-ADB; and funding of the Private Sector Commission by CIDA (as the lead donor) , DFID and USAID. Funding of regional service providers The prime example is multi-donor funded CARTAC Government, donor and private sector co-ordinating committees Jamaica’s private sector co-ordinating committee Private sector donor co-ordination groups In Guyana for the past year a private sector group led by CIDA takes the lead on private sector development issues. This is an ad hoc group that meets about once a quarter. Another group covers trade issues. The private sector group was formed in response to concerns about the lack of donor co-ordination in private sector projects. Donor co-ordination around the PRSP The strategy for public participation in the preparation of Guyana’s PRSP led to the strengthening of donor co-ordination through a High Level Government Committee. A PRSP Steering Committee was also formed. Thematic groups involving donors and line Ministries have now been formed to take forward implementation of the PRSP, reporting to the High Level Committee – although it is currently unclear whether such a group will be formed to address private sector development issues.



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CHAPTER 6 CONCLUSIONS AND THE WAY FORWARD

6.1 Assessment of impact of donor initiatives How effective are donor interventions in terms of enhancing competitiveness, and strengthening local and foreign direct investment in the Caribbean? This is not an easy question to answer. While some donor projects contain performance indicators aimed at such an assessment, many do not. Projects that have key enabling environment outcomes do not necessarily contain enabling environment indicators, as box 6.1 illustrates. Box 6.1: Verifiable indicators for Guyana Land Administration Support Project

Access to land and problems with security of land title have been identified as a key constraint on private sector development in Guyana. The GLAP project, a donor intervention, is addressing this issue. The project focus is on sustainable livelihoods. The project goal is to improve sustainable livelihoods options for all land users, especially poor and vulnerable groups, through good land administration practice. Verifiable indicators at purpose level are –

• enhanced security of tenure and livelihood security for poor people; • lands and surveys commission established and meeting annual targets for

sustainability; • re-established functioning lease registry by end 1st quarter 2003; • conversion to freehold initiated by 2002.

Possible tools for assessing the overall impact of donor initiatives on private sector development are set out in Box 6.2.

Box 6.2: Suggested tools to evaluate success of initiatives • Base line and follow-up local and international perception surveys of the

investment climate; • Base line and follow-up roadmap studies. Box 5.7 above gives examples of

mapping exercises that have been carried out in the region. It would be possible to conduct follow-up studies to assess the extent to which barriers to private sector investment have been reduced. This approach was adopted by USAID in Tanzania, where an initial roadmap survey was followed by a subsequent study a few years later.

• International credit ratings reflecting the perceived riskiness of countries in the region.

• National statistics (although note that in Guyana for example lack of basic data on the private sector has been identified by Government as a key constraint34).

Donors have also developed more specific performance indicators in relation to particular projects – for example the success of USAID’s support to Go-Invest (Guyana’s investment promotion agency) include an assessment of the percentage of

34 Interview with Permanent Secretary, Ministry of Tourism, Jun 2002



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potential users expressing satisfaction with the institution; average number of months to process investment applications for duty free concessions and other discretionary incentives. It is already clear that successes have been reaped in these respects. Support to private sector advocacy typically considers numbers of advocacy campaigns undertaken, and membership levels of the private sector organisation concerned. In court reform projects, indicators will typically relate to case management, case flow and reduction in case backlog. This Review has outlined a number of donor success stories, and has also highlighted interventions that have been less successful. This Chapter now presents an overview of strategic opportunities existing within the region to take forward enabling environment reform. Some of these opportunities are Caribbean-specific: others may have wider relevance. 6.2 Opportunity to link regional and national approaches The desire of some donors in the region to move away from country-specific projects to funding regional bodies has been noted (see box 5.1 in Chapter 5 above). Table 6.3 below sets out some possible pros and cons of a regional approach which would involve funding and interacting primarily with regional, rather then national bodies.

Box 6.3: Advantages and disadvantages of a “regional approach” Advantages of a “regional approach” There is limited public sector capacity at the national level to administer donor projects and to deal with reporting requirements. For example, OECS has recognised that it can make more effective use of resources by pooling them, and using them to support OECS-wide, rather than country strategies and institutions and is thus developing OECS strategy papers. Some regional bodies have the potential to manage donor funds cost-effectively and to take the lead in project implementation eg USAID grant to EDU; OECS Secretariat’s role in USAID’s environmental programme; I-ADB funds in Caribbean lent on by CDB. Sustainable regional regulatory authorities have the potential to reap substantial economies of scale eg ECTEL Logistical problems for donor operations and high transaction costs of operating on a country basis. Regional service providers such as CARTAC and CARICAD can provide cost effective technical assistance. There are clear synergies in terms of issues and provision of technical assistance eg knowledge sharing, establishing best practice. Some key issues for private sector development are regional issues - eg barriers to regional trade, need for harmonisation, regional competition issues. In addition, Caribbean countries have undertaken a regional approach to global trade negotiations through the RNM. Disadvantages of a “regional approach” Most constraints which relate to “rules of the game” operate at sovereign state level. It is unclear how committed countries in the region are to regional co-operation, which is proceeding slowly from the “bottom up”. Most CARICOM countries have not fully implemented the legal instruments required to give full effect to the CSME. Some regional bodies are weak, and rely to a large degree donor funding. The history of levels of commitment of member states to regional bodies is not encouraging – for example the failure of the Eastern Caribbean Investment Promotion Service (ECIPS) in Washington following the withdrawal of donor funds. Reform often ultimately depends on political will. There is not political union in the Caribbean – or a move towards one. Donors therefore need to influence policy at the level of the nation state. The effectiveness of a regional approach may therefore depend on the extent to which



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national governments are committed to private sector led economic growth and to pro SME policies. Models can be tested on a national basis, before being replicated in the region eg successful cluster competitiveness projects in Jamaica, now being used as model for possible interventions in Guyana.

The lesson appears to be that it is necessary to be flexible and pragmatic in applying regional or national approaches. Where there is a strong policy environment, a commitment to enabling environment reform, an institutional framework in place to take reform forward, a regional approach to policy reform may be possible. In some cases it may be possible to maximise the effectiveness of regional approaches by supporting them with appropriate national interventions. Support to successful trade negotiations for example is being approached by strengthening RNM at a regional level, but also providing support at the national level to enable individual countries to provide input to RNM. There is also a recognised need for the private sector’s voice (both regionally and nationally) to be more effectively heard in the negotiating process. Linkages between regional and national approaches may also be possible from the “bottom up”. For example, donor interventions in the area of micro-finance at a country level are linked with the development of a regional model of best practice and regulatory regime. 6.3 Opportunity to exploit linkages between interventions Constraints of different types (external/macro/meso/micro) are inter-linked and inter-dependant. Approaches which adopt an integrated approach have been recognised to be more effective than approaches which addresses individual constraints in isolation35. Legal and regulatory reform for example – a macro type constraint – is more likely to succeed if it is addressed in the light of constraints at the firm level. For example reporting requirements in a reformed Companies Act should not impose too great a burden on firms. The World Bank have recently addressed this kind of issue during their SME Mission to Guyana – noting for example that reformed procurement regulations should take into account the ability of individual firms to participate in the process. 6.4 Opportunity to mainstream enabling environment initiatives It has been a theme of this Review that many enabling environment initiatives do not form part of donor private sector programmes. This may have 2 effects –

• interventions may not maximise their opportunity to achieve enabling environment outcomes because of the failure to consider this issue at design stage; and

35 See for example Chapter 2 para 2.2.4 of Sida Evaluation Report 01/14



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• performance indicators may not be included in the project monitoring and evaluation framework which enable enabling environment outcomes to be assessed.(See box 6.1 above)

Therefore there may be opportunities for donors further to mainstream enabling environment initiatives and to conceptualise them as cross-cutting issues which may affect their governance, economic and environmental programming for example. A key example is donor public sector reform programmes, which some donors are now using as a vehicle to take forward the enabling environment agenda (eg in Grenada and Dominica). 6.5 Opportunity to promote pro-informal sector policies As has already been noted, most firms in the Caribbean are SMEs by global standards. It is therefore difficult to conceive of pro-private sector interventions having an anit-SME bias in the Caribbean context. There is however a divide in the Caribbean between firms operating in the formal sector and those operating in the informal sector. As has already been noted, even quite large firms can be informal – and operate outside government regulatory frameworks (in particular the tax and licensing regime). Informal firms in the Caribbean may be categorised as (1) “cottage industries” (eg jam and jelly making) which are generally not enterprise-minded or interested in growth; and (2) a vibrant and entrepreneurial informal sector – for example hucksters (regional traders). Donor initiatives currently tend to address the constraints faced by informal businesses at the micro level – by addressing access to finance and skill constrains in the main. Informal sector issues also need to be addressed in interventions at other levels – particularly in relation to legal and regulatory reforms, where the aim should be to encourage compliance. This is particularly an issue in Guyana where donor-supported tax reform is aimed at increasing the tax base, and enhancing the enforcement capability of the Revenue Authority. Such reforms, if carried through, could clearly have significant implications for informal sector operations. 6.6 Opportunity to move towards a more strategic approach There is scope in the Caribbean region for a strengthened strategic approach to donor interventions, and there are some encouraging signs that Governments are taking the lead in promoting such an approach. Interventions are more likely to be effective if they are prioritised and appropriately sequenced. This can occur around a Government strategy for private sector development, which is also likely to result in enhanced donor co-ordination. As box 5.4 shows, Guyana’s PRSP contains a significant raft of measures designed to promote private sector development. Grenada and Dominica are now also committed to the production of PRSPs- which if focused on achieving growth, as well as on social measures to reduce poverty - have the potential to set out Government’s enabling environment priorities. This Review concludes with a case study from Uganda – where such a strategic approach has been adopted. Uganda’s Medium Term Competitive Strategy for the Private Sector is in effect a private sector sector-wide approach. (Box 5.4).



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Box 6.4: Uganda’s Medium Term Competitive Strategy for the Private Sector The Government of Uganda launched the Medium Term Competitive Strategy for the Private Sector (MTCS) in August 2000. The strategy recognises that while sustained, private sector led economic growth is a prerequisite for sustainable poverty reduction, the growth of the private sector is hindered by constraints on the competitiveness of the Ugandan economy. The strategy focuses on eliminating or reducing these constraints, to the extent that they are caused by institutional weaknesses within Uganda; the subtitle of the MTCS is Making Institutions Support Private Sector Growth. The strategy also identifies serious external constraints on growth, such as lack of access to international markets, but does not attempt to address these. The MTCS sets out a range of strategic interventions to address perceived constraints on competitiveness. These include “hard” infrastructure reforms affecting sectors such as transportation, power supply and telecommunications, “soft” infrastructure reforms in the financial sector and commercial justice system, and broader cross-cutting institutional challenges such as corruption and regulatory reform. Implementation of the MTCS has been supported by both Government and donor partners, and substantial progress with implementation has been made in several areas. However, there is a general recognition that more needs to be done to “mainstream” private sector competitiveness within GoU policy making, and ensure that the benefits – in terms of faster economic growth and opportunities to reduce poverty – are more widely recognised and reflected in key policy instruments such as the Poverty Eradication Action Plan (PRSP), the Medium Term Expenditure Framework and annual budget cycle.



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ANNEX A TERMS OF REFERENCE

Review of experience from interaction among donor agencies in small enterprise policy reform in the Caribbean

1. Introduction

.1 The Committee of Donor Agencies for Small Enterprise Development has

established a working group (WG) on SME enabling environment. The WG is chaired by the Netherlands and the following institutions have indicated interest in taking part in proceedings relating to SME policy and regulatory environment: ADB, AfDB, DFID, GTZ, IFAD, ILO, Norad, SDC, Sida, USAID and WB/IFC.

.2 Following discussions in London (August 2001) and Stockholm (September

2001), the Working Group has decided to undertake an inventory of recent experiences from the member agencies’ efforts to support national and local governments’ attempts to improve their policy environment for private sector development (PSD).

.3 The review of experiences from interaction among donor agencies in private

sector development policy reform in a few selected countries is expected to:

• Contribute to an understanding of the similarities and differences in agencies’ efforts to help countries improve their policy environments for enterprise development;

• Contribute to an overall stocktaking of the content, process and outcomes of

our efforts by assessing specific country experiences; and

• Contribute to the Donor Committee’s efforts to derive principles of Good Practice that could help guide future collaboration at the country level.

.4 The review consists of national reviews in four countries, Tanzania, Vietnam,

China and Peru, and one region, the Caribbean. The results of each review will be presented in a local workshop. An international consultant will then draft a summary report based on all national reviews. It is envisaged that both the local reviews and the international summary report will be presented and discussed at an International Workshop organized by the Working Group.

.5 The attached overall Terms of Reference provide further information on the scope

of this exercise and the specific procedures.

.6 In the Caribbean, DFID, on behalf of the Working Group, will hire the services of Law & Development Partnership Limited and coordinate the local review.

2. Background



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.1 The fourteen countries which make up the Caribbean Community (CARICOM) are a diverse group of countries each with their specific challenges and opportunities. With the exception of low income Haiti and high income Bahamas, they are classified as middle-income countries. They all face the common challenge of maximising the positive impact, and minimising the negative impact of globalisation. While each country must address this challenge to some degree on a national basis, the continued movement towards regional integration emphasises the importance of coordinating policies and responses at the regional level.

.2 Economic performance has been impeded in most CARICOM countries by a

reliance on a narrow, primary commodity-orientated export base, leaving these economies vulnerable to changing market conditions. This is not purely an external factor, since the failure to diversify is partly the result of internal economic policies and an unwillingness of the state to let the market determine production. In many CARICOM countries the private sector’s low level of competitiveness has contributed to low or negative growth. This in turn is partly caused not only by Governments’ mismanagement of the macro economy in some countries, but also by Governments’ inability to provide the appropriate legal, regulatory and institutional environment for private investment.

.3 Due to their small size and limited domestic market, with the exception of Haiti

and possibly Jamaica, CARICOM countries are classified as open economies, depending on exports to sustain economic growth and imports to satisfy consumer demand. The vulnerability of these countries is compounded by a high degree of dependence on exports of a limited number of natural resource products and tourism. In addition, the preferential access enjoyed by the region for their primary exports to the EU and US, while shielding the region from adverse external conditions in the short to medium term, has tended to encourage inefficiencies, rent seeking behaviours and discouraged Governments from creating environments which facilitate investment and production.

.4 Many of the problems associated with small size and limited capacity can best be

overcome by the countries themselves adopting a regional approach. The Caribbean Single Market and Economy (CSME) is the main current example of the region seeking to benefit from economies of scale in enhancing the region’s international competitiveness. The CSME is designed to increase regional output for exports on a sustained basis. The aim is to maximise the benefits of increased regional and international trade, leading to sustained economic growth, for the region as a whole, and for each member state. CARICOM, with DFID and CDB support, is currently undertaking a study to assess progress to date, the key priority areas and the capacity needs in the region for implementing these priorities. A draft report is due mid July 2002.

.5 The enabling environment for PSD can be framed at more or less broadly.

Broader definitions include the macro-economic policy, social capital, infrastructure etc. This study is intended to focus on how PSD is enabled or disabled by:

• Local, national and regional policy and legislation • Enactment of policy and law in practise (eg functioning of commercial justice)

and the delivery to the private sector of public goods (eg investment promotion, business registration, taxation collection) by government and quasi-governmental bodies

• Specific macro-economic and infrastructure issues cited by the private sector in the course of data collection



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.6 The scope of this study is the enabling environment for the private sector as a

whole rather than merely the SME sector. The rationale is that much enabling environment work encompasses all levels of business. However, it is also recognised that research elsewhere suggests systematic anti-SME bias. Accordingly where such an anti SME bias is detected it should be mapped and analysed.

3. Overall Objective for the Caribbean Review

.1 The objective for the Caribbean contribution to the review is to increase understanding of how donor agencies support policy environment reforms aimed at stimulating private sector development in a region of small states. The analysis will identify the approaches which have been more successful, and why as well as recommending future action.

4. Scope of Work

.1 Geographical scope:

• Institutions covering the Caribbean as a whole

• Country enabling environment regimes in Guyana, Jamaica & the Windward Islands (focussing on Grenada and Dominica).

.2 Scope of data collection:

Secondary sources: all elements within geographical scope above

Primary sources:

• Regional institutions (based in Barbados, Guyana, or Jamaica)

• Sources in Guyana, or Jamaica

.3 Liaise with international agencies and donors who have been active in enterprise development in the Caribbean36, and analyse their current and recent activity.

.4 Interview officials of the agencies and donors as well as relevant national and regional Government and private sector agencies to obtain information about their experiences with donor intervention, using the attached list of guideline questions.

.5 Obtain and analyse written reports and policy documents, containing information on the policy reform and implementation processes as well as about the donor agencies’ activities.

.6 Draft a report summarizing the findings for the Caribbean and providing answers to the attached guideline questions

36 Predominantly IFC, FIAS, IADB, EU, ILO, CDB, USAID, CIDA and DFID



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.7 Validate the draft report with participants from the concerned Government, private sector and international agencies and donors active in the Caribbean. This may be achieved through local workshop(s). The appropriateness of workshop(s) will be reviewed and amended as necessary by the consultants and DFID C in the course of the work.

.8 Finalise the report, incorporating the results from the local workshop, submitted to the international consultant and the lead agency in hard copy and in electronic form.

5. Expected Outcomes and Deliverables

.1 A comprehensive report containing the findings from the review, to be delivered to the lead international consultant and DFIDC.

.2 An inventory of lessons learned on enabling environment work in the Caribbean of relevance (a) to actors in the region (b) globally

.3 Recommendations for further work in this area by DFID C and other actors

DFID Caribbean, May 2002



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ANNEX B INTERVIEWS CONDUCTED

Organisation Name and

position Address Phone contact/e-mail

BARBADOS Caribbean Association of Industry and Commerce (CAIC)

Gary Voss President Sean Ifill Executive Director of CAIC

C/o Lever Bros WI Ltd, PO Box 295, Port of Spain, Trinidad CAIC, Port of Spain, Trinidad

(868) 637 7719 [email protected] (868) 623 4830

Canadian International Development Agency (CIDA)

Jean McCardle Senior Development Officer, Second Secretary Development, Canadian High Commission, Barbados

PO Box 404, Bridgetown, Barbados

(246) 429 3550 x3456 [email protected]

Caribbean Development Bank

Alan Slusher Director, Economics and Programming Dept Kelvin Dalrymple Chief Country Economist Anne Bramble

CDB, PO Box 408, Wildey, St Michael, Barbados

(246) 431 1660 [email protected] (246) 431 1600 [email protected] [email protected]



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Project Review Officer, Project Review Dept

Caribbean Centre for Development Administration (CARICAD)

PI Gomes ICB Building, Roebuck Street, Bridgetown

[email protected] [email protected]

Caribbean Regional Technical Assistance Centre CARTAC

Jim Stevenson Public Expenditure Management Adviser Karlis Adamsons Banking Supervision Aviser

First Floor, Weymouth Corporate Centre, Roebuck Street, Bridgetown, Barbados

(246) 437 3087 [email protected] [email protected]

Department for International Development (DFID)

Kate English Deputy Programme Manager Andrew Hall Economic Adviser John Piper Economist Kevin Quinlan Private Sector Development Adviser

Chelsea House, Chelsea Road, PO Box 167, Bridgetown, Barbados

(246) 430 7900 (246) 430 7973 [email protected]

EU/ACP Business Assistance Scheme (EBAS), Caribbean Office

Ronald Dubrisingh Regional Director

Hastings Main Road, P.O. Box 34B, Brittons Hill, St. Michael, Barbados

(246) 436 0578 [email protected]

Inter-America Development Bank (I-ADB)

Ancile Brewster Sector Specialist,

PO Box 402, Christ Church, Barbados




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Infrastructure and Engineering

Ministry of Economic Development

Ethelbert Haynes Chief Economist Fabian Griffin Economist

United Nations Development Programme (UNDP)

Rosina Wiltshire Resident Representative and UN Resident Coordinator Bartholmew Nyarko-Mensah Deputy Resident Representative Paula Mohamed Programme Manager Institutional Development & Governance Monica Williams Microfinance Specialist

UN House, P.O. Box 635C, Marine Gardens, Hastings, Christ Church, Barbados

(246) 467 6000 [email protected] (246) 429 2521 (246) 467 6009 [email protected] (246) 429 2521 [email protected]

US Agency for International Development (USAID)

Peter Weisel Manager, Caribbean Regional Program Office – Barbados

PO Box 302, Bridgetown, Barbados




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GUYANA CARICOM Byron Blake

Evelyn Wade, Economic Intelligence and Policy Unit

Caricom Secretariat, Bank of Guyana Building, Georgetown, Guyana


CIDA France Asselin First Secretary (Development)

Canadian High Commission, High & Young Streets, PO Box 10880, Georgetown, Guyana

(592) 2 72081

DFID Lana Wade British High Commission, 44 Main Street Georgetown, Guyana

(592) 2 265 881

EU Marcia Velloza 11 Sendall Road, Stabroek, Georgetown, Guyana

Georgetown Chamber of Commerce and Industry

Edward Boyer, President Dev Sharma, Executive Director James Bovell, member and MD, The Business Training School

156 Waterloo St, Georgetown, Guyana

(592) 2 27 0097 [email protected]

Guyana Land Administration Support Project

Clive English C/o British High Commission,



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Go-Invest Jeff Da Silva Chief Executive Officer

190 Camp Street, Lacytown, Georgetown, Guyana

Industrial Engineering Ltd

George Jardim Managing Director

Inter-American Development Bank

Bill Grisley Sector Specialist

47, High Street, Kingston, Georgetown, Guyana


Institute of Private Enterprise Development

Yesu Persaud, Chairman Leslie Chin, Director

IPED Building, 253-254 South Rd, Bourda, Georgetown, Guyana

226 8949 [email protected]

Ministry of Tourism, Industry and Commerce

Sonia Roopnauth Permanent Secretary

The NGO Forum

David Yhann

The Private Sector Commission of Guyana Ltd

Brian James, Chairman David Yankana, Director Don McIver, Chief Economist

157 Waterloo St, G/town, Guyana

225 5332 [email protected]

USAID Daniel Wallace 283 Earls Ave, Subyranville Georgetown, Guyana

World Bank James Droop

UNDP Building, 42

(592) 223 5037



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Guyana County Coordinator, Caribbean Country Management Unit

Brickdam & UN Place , Stabroek, Georgetown, Guyana

[email protected]

JAMAICA Ministry of Industry Commerce & Technology

Reginald Budhan Director of Policy, Planning and Projects Beverly Rose Forbes Director of Industry

36 Trafalgar Road, Kingston 10, Jamaica, W.I.

(876) 926 3349 [email protected] (876) 929 8990-9 [email protected]

Shipping Association of Jamaica (SAJ)

Pauline R. Gray General Manager

4 Fourth Avenue, Newport West, P.O. Box 40, Kingston 15, Jamaica, W.I.


U.S. Agency for International Development Kingston, Jamaica (USAID)

Jimmy Burrowes, Business Development Specialist Mansfield Blackwood, Project Management Specialist Cheryl Thompson

2 Haining Road, Kingston 5, Jamaica, W.I.

(876) 926 3645 [email protected] [email protected] [email protected]

Jamaica Trade Dr. Rosalea Ministry of (876) 926 4522



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and Adjustment Team (JTAT)

Hamilton Consultant

Foreign Affairs, 21 Dominica Drive, Kingston 5, Jamaica, W.I.

[email protected] [email protected]

Jamaica Promotions Corporation (JAMPRO)

Patricia Francis President Burletta Forrester

18 Trafalgar Road, Kingston 10, Jamaica, W.I.

(876) 978 7755, 978 3337 [email protected]

Inter-American Development Bank (IDB)

Marco Nicola Financial Specialist

6th Floor, Dyoll Building, 40-46 Knutsford Boulevard, Kingston 5, Jamaica, W.I.


Ministry of Finance & Planning

Devon Rowe Deputy Financial Secretary Courtney Williams Senior Fiscal Economist

30 National Heroes Circle, Kingston 4, Jamaica, W.I.

(876) 932 5416 [email protected] (876) 922 8600-9

Planning Institute of Jamaica (PIOJ)

Barbara Scott Manager, Project Development

10-16 Grenada Way, P.O. Box 634, Kingston, Jamaica, W.I.

(876) 906 4463-4 [email protected]

Canadian International Development Agency (CIDA)

Vivian A. Monteith First Secretary Development, Canadian High

3 West King’s House Road, P.O. Box 1500, Kingston 10,




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Commission Jamaica, W.I.

European Union Adebayo Babajide First Secretary (Economic Affairs)

8 Olivier Road, P.O. Box 463, Kingston 8, Jamaica, W.I.


Department for International Development (DFID)

Gordon Saggers British High Commission


ST. LUCIA Caribbean Regional HRD Program for Economic Competitiveness (CPEC)

Melvin Edwards Project Manager

(758) 481 1117

Organization of American States (OAS)

Alphonsus Antione Resident Representative for St. Lucia

Vigie, Castries, St. Lucia, W.I.


Organization of Eastern Caribbean States (OECS)

Beverly Best Programme Officer

Morne Fortune, P.O. 179, Castries, St. Lucia, W.I.

(758) 452 2537 Ex1125 [email protected]

TELPHONE CONVERSATIONS CIDA, Canada Nick Adams

Aston

Tel 1 819 997 0926

IFC Jessica Schnabel SME Department

Tel 1 202 458 1490

FCO, London Peter Cook Tel 7270 1500 ICL Limited Richard Banks Tel 020 8747 4518



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World Bank Camille Nuamah Country Economist, Caribbean Country Management Unit

[email protected] tel 202 473 2195

World Bank Sanjay Katharia Senior Country Economist

202 4588155



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ANNEX C DOCUMENTS CONSIDERED Donor documents Canadian International Development Agency Program in the Eastern Caribbean, August 2001 CDB – Working Paper on a new Private Sector Development Strategy DFID Guyana Country Strategy Paper , Sept 1999 DFID Windward Islands Strategy Paper, August 2001 DFID: Logical Framework for Phase II Guyana Land Administration Support Project, Nov 2001 DFID Dominica Fiscal and Economic Recovery Project: Scoping Study for Strengthening the Enabling Environment in Dominica: Oxford Policy Management, December 2001 DFID Caribbean Country Programme Report for Guyana, March 2002 DFID Project Memorandum for Grenada Public Service Management Improvement Project, April 2002 DFID Project Concept Note for Caribbean Centre for Development Administration Project (CARICAD), May 2002 DFID Caribbean Regional Aid Framework, June 2002 DFID Caribbean Country Programme Report, June 2002 DFID Draft Regional Strategy Paper –DFID Caribbean, June 2002 DFID Study of the Enabling Environment for Private Sector Development in Grenada, June 2002 EU Caribbean Perspectives on Trade, Regional Integration and Strategic Global Positioning – Summary of Interim Report – ECORYS-NEI, June 2002



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I-ADB: Entrepreneurship in Emerging Economies: The Creation and Development of New Firms in Latin America and East Asia (Summary Report), March 2002 USAID, Caribbean Regional Program Assistance Strategy FY 2000-2005, July 1999 USAID Jamaica Business Roadmap – reducing business constraints. Final Phase I Report, prepared by Booz Allen & Hamilton and Shiman Projects, January 2001 Organization of Eastern Caribbean States OECS: 1999–2001 External Financial Assistance Indicative Commitments, Disbursements and Projections, The World Bank, November 2001 World Bank, Global Economic Prospects and the Developing Countries, 2002 World Bank, Guyana Country Note, 2002 World Bank, OECS County Note, 2002 World Bank/IFC SME Mission to Guyana: Summary of Findings and Recommendations, Feb 2002 World Bank, Implementation of the Caribbean Single Market and Economy (Work in Progress Report): prepared by Havelock Brewster, Thomas Dolan and Taimoon Stewart, June 2002 Private sector documents Guyana: Institute of Private Enterprise Development, Annual Report, 2000 Jamaica Ports Handbook, 2001-2002 Public sector documents CARICOM Caricom Single Market and Economy Economic and Enterprise Competitiveness Programme 1998-2003, Caricom Secretariat July 1998 (Executive Summary) Eastern Caribbean Central Bank – Policy Paper – Fiscal Machinery of the ECCU “The Road to Public Sector Reform” – June 2002 Government of Guyana: Guyana Poverty Reduction Strategy Paper, November 2001



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Concept Note for Discussion: High Level Coordination between the Government of the Co-operative Republic Of Guyana and the Bilateral and Multilateral Donors: May 2002 Government of Jamaica Draft White Paper on Public Sector Modernisation Vision and Strategy, 2010, Cabinet Office, June 2002



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ANNEX D DONOR ENABLING ENVIRONMENTS INITIATIVES IN THE CARIBBEAN