By Kimberly Ramkhalawan
October 26, 2021
With the United Nations expected to spend over US$1.2M in the coming year on building Blue Economies in the Caribbean, regional leaders are calling for greater equity in ensuring sustainable development of these resources are maintained.
Speaking at ‘Harnessing Blue Economy Finance for SIDS Donor’ Meeting, Kirk Humphrey, Barbados’ Maritime Affairs and the Blue Economy Minister says while the region continues to be pushed toward developing its Blue Economies, financing must become more easily available. He says the use of GDP as indicators to the health and wealth of a nation without its vulnerability to climate change is misleading. Currently Barbados is the co-chair of the Commonwealth’s blue charter on marine protected areas action group along with the Seychelles. Humphrey says Barbados has faced a number of harsh realities is getting its blue economy going. He adds that while success is on the horizon for its joint policy with the Food and Agriculture Organization on its Tuna Value chain project that aims to make a difference in the livelihood of Fishermen in Barbados, accessing blue economy funding has been challenging.
Noting that while only two percent of all Official Development Assistance, ODA, goes to the entire world for its oceans, consider how much is truly set aside for the Caribbean, and this added on to the current challenges faced by nations in accessing funding. He says such policies can actually work against blue economies in the region when accessing funding, as SIDS might hit targets set by international financing agencies, they risk missing the points of visional development, without considering the necessities of Caribbean People.
Furthermore, policies that allow for larger countries to subsidize its fishing vessels actually work against Small Island states, and lessons have been learnt such as the case of Illegal Unreported Unregulated (IUUs) fishing in Barbados waters. Nevertheless, subsidies are still needed, at least in helping repair small engines, and calls for these policies to be revised especially when it comes to Caribbean Countries.
And while financing involves debt swaps and blue bonds, there is need for adaption or mitigation financing in the Caribbean. Humphrey notes many nations in the region are watching their beaches disappear, coral reefs bleached and dying, species of fish in the region at their maximum thermal capacity while the world discusses the increase in 1.5 degrees in temperature. He says these discussions need to be had at international level as it is the reality of the lives of Caribbean nationals, and if not met, the region stands to lose lives and livelihoods.
He pledged his continued work to ensure proper ocean governance at the national and regional level within a wider international framework, as the region must work together and not as competitors as blue economies go way beyond tourism.
At the moment most blue economy financing comes from international agencies, however, one regional bank has ventured into investing in this area. Ray Klein, Head of investment banking division at Republic Bank Financial Holdings Limited says his institution has taken the steps to align itself with the sustainable goals outlined by the United Nations, as in the past year the bank became the first signatory to the UN’s principle for responsible banking and remains the only bank that has made that global commitment within the region.
Klein says the bank has outlined an ambitious US$200M finance goal where it would seek to finance infrastructure and renewable energy and energy efficient projects within the Caribbean.
He says with this the bank hopes to promote confidence that it is able to finance infrastructure, and innovation while funding businesses which would encourage sustainable and resilient sectors of the economy.
However, he says these projects must be ‘bankable’ and therefore his institution will be mindful of honouring its fiduciary commitments to its investors, and clients through proper risk management. With that he notes that projects must ensure proven technology and operators that can mitigate risks, while detailed market feasibility and factored environment risk are considered, along with futuristic cash flow goals.
While the UN’s funding is major part in pushing this goal, Klein says another factor critical to the investment is the role governments play in clearing bureaucratic setbacks pivotal to laying the ground work across the region.
He describes this as currently being the biggest hurdle in establishing the blue economy in the region. In listing interesting opportunities for financing, the bank sees the shipping industry, establishing greater ports, drydocking, offshore renewable energy such as wind all as potential for industries in the Caribbean.
According to the United Nations’ Joint Programme , the Blue Economy Strategies will support three governments in the Eastern Caribbean: Barbados, Grenada and Saint Vincent and the Grenadines, in their efforts to develop Blue Economy financing while creating an enabling framework for Sustainable Development Goal (SDG) investment. Emphasis will be on the development of an enabling and supporting environment for financing the Blue Economy, through different measures: the identification of policy and regulation gaps, a methodology to identify key Blue Economy opportunities, and the definition of specific financing mechanisms to achieve resilient growth. The three countries will benefit from upscaling the UN’s existing initiatives with the private sector, through the establishment of a public-private consortium which will leverage substantial resources from the private sector.