Tag Archives: Barbados

The Trump Presidency – Implications and Opportunities for Caribbean IFCs

Alicia Nicholls

On March 31, 2017 I was a panellist representing FRANHENDY ATTORNEYS at the Barbados International Business Association (BIBA) Barbados International Business Forum 2017 entitled “Is the Barbados International Business Sector Under Attack?” held at the Lloyd Erskine Sandiford Centre in Barbados.

I was on the second panel which discussed the topic “The Trump Presidency – Implications and Opportunities for IFCs“. My esteemed fellow panellists were Jeremy Stephen, Economist and UWI Lecturer, Lisa Cummins, Executive Director of UWIConsulting and Cadian Dummond, Attorney at Law. The discussion was expertly moderated by Melanie Jones, Partner at Lex Caribbean Attorneys-At-Law.

I spoke to the possible implications of the Trump Presidency in regards to de-risking, FATCA and visa restrictions.

For those who missed the panel discussion and have expressed interest in my remarks, please find a copy of same in powerpoint form here. Enjoy!

For more on past presentations I have done, please see news and announcements.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

 

 

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Happy 50th Anniversary of Independence Barbados! Tribute to Barbados at 50

Alicia Nicholls

I would like to take this opportunity to extend a happy 50th Anniversary of Independence to all my fellow Barbadians both at home and in the diaspora. Our country Barbados, with an area of just 166 sq miles and a population of around 280,000, may be little more than a small dot on the geographical map but it is hard to deny how far we have come from a small British colony prior to November 30, 1966.

Barbados lacks any real natural resources. But thanks to the steady hand of successive governments, we became a country that former UN Secretary General, Kofi Annan, once described as “punching above its weight”. We are known as the inventors of road tennis, home to the third oldest Parliament in the world, the birthplace of international superstar Rihanna, the greatest cricketer the world has ever seen Sir Garfield Sobers and the inventor of the precursor to the search engine Alan Emtage, just to name a few.

We cultivated a reputation both in the Caribbean and abroad as a country with an enviable level of social development, respect for the rule of law, good governance, a strong democratic tradition,  a 99% literacy rate, and a well-educated people who make our country proud wherever we roam. We punch above our weight on social indicators, ranking high on the Human Development Index. We are classified by the World Bank as a high income non-OECD country. In our 50 years of independence, we can boast of always having peaceful transitions of power. Political assassinations, coup d’etats, dictatorships and civil wars are alien to the Barbadian way and have never occurred in our country.

On the global stage we have earned the respect of fellow countries by joining with other developing countries to provide decisive leadership on international issues affecting small island developing states such as climate change, and on issues critical to small vulnerable economies in the World Trade Organisation (WTO).

Like every country, Barbados is not without its challenges. The post-Global Recession years have not been kind, exposing structural weaknesses which have festered for too long and need to be addressed by decisive leadership. There are things we need to improve upon to ensure that the gains our forefathers, like the late father of independence, Errol Walton Barrow, worked hard to build, will remain for future generations. Complacency will do us no favours.

However, despite the challenges, I have no doubt we have the skills and creativity to overcome them. We just need the will. When I saw the recent newspaper article which showed some 110 people became new Barbadian citizens at the latest citizenship ceremony, it reiterated to me why we Barbadians are so proud of our country. For all its faults, there is no place like the 246. No matter where we roam, the “Rock” will always be home.

Happy 50th Anniversary of Independence, Barbados!

Alicia Nicholls, B.Sc., M.Sc., LL.B., is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Evaluating Barbados’ WEF GCI Competitiveness Scorecard: Is Top of the Regional Class Good Enough?

Alicia Nicholls

Barbados made its grand reappearance on the World Economic Forum (WEF) Global Competitiveness Index (GCI) 2016-2017 after data shortages precluded its 2014-2015 inclusion. According to the WEF’s scorecard, the region’s star pupil topped its Latin American and Caribbean peers in the following subjects: infrastructure, labour market efficiency and technological readiness.

Barbados is a 166 sq  miles (431 sq km) island nation with a population of about 280,000, a GDP of US4.4 billion and a GDP per capita of US$15,773, which puts us in the high income non-OECD range according to the World Bank. On the surface Barbados’ scorecard is commendable, particularly for a small island developing state (SIDS) whose recovery from the 2008/2009 global economic and financial crisis has been slow and protracted. Personally for me as a Barbadian I am proud of the achievements my country has made since our independence from the UK just shy of 50 years ago.

But before we uncork the champagne, several things should give us pause. First, Barbados’ current rank of 72nd out of 138 economies marks a precipitous drop from its ranking in the GCI 2012-2013 where it was ranked 44th place out of 144 economies. Second, contrast this slide with the performance of another small island developing state (SIDS), Mauritius, which was ranked 54th in GCI 2012-2013 and has risen slowly but surely up the ranks to reach 45th place out of 138 economies in GCI 2016-2017. Third, only three other Caribbean economies were included on the index this year. While Barbados and Trinidad & Tobago lost ground, the other two Caribbean economies, Jamaica and the Dominican Republic, improved their rankings. Fourth, Barbados’ performance on eleven of the twelve pillars has been on a downward slope since 2012-2013.

The Good

Barbados’ top scores were in higher education and training, and infrastructure, where it ranked 29th and 30th respectively. For example, it ranks 6th in fixed-telephone lines /100 population and 25th in overall quality of infrastructure.  These have for a long time been among the island’s competitive advantages despite its small size. However, while the gross tertiary education enrolment rate is 36%, this is likely to decline given the removal of tuition-free tertiary education in 2014.

Barbados also ranks 31st in technological readiness which is the only one of the twelve pillars on which the island’s performance remains on an upward trajectory. It ranks a commendable 10th in internet bandwidth kb/s/user. Unlike the other three Caribbean economies included, corruption was not seen as a major problem in Barbados.

The Bad

The GCI is a useful tool for policy makers to benchmark their economy’s current against its historical performance across over 100 competitiveness indicators. Factors which, according to the WEF GCI, affect doing business in Barbados are: poor work ethic in the national labour force, inefficient government bureaucracy, tax rates, restrictive labour regulations and access to financing.

Not surprisingly, market size and the macroeconomic environment are the island’s Achilles heel and are a drag on the island’s competitiveness. The Central Bank of Barbados reports economic growth of 1.3% for the first half of 2016 but the island’s fiscal deficit and public debt remain unsustainably high. The island’s economic fragility is reflected in the low rankings on indicators such as government budget balance as % of GDP (122nd), gross national savings (127th) and government debt (127th). The island is rated 72 out of 100 for country credit rating, reflecting the successive downgrades since 2009 and could decline as the downgrades continue. Under the market size pillar, the country ranked 135th out of 136 on GDP (PPP).

The Way Forward

The GCI is an important scorecard showing the areas in which an economy is doing well, and those in which remedial attention is needed. Barbados remains a preferred jurisdiction in the Caribbean for doing business and the report shows that the island has clear competitive advantages in some areas that policymakers and the private sector should continue to build on and leverage in our investment promotions.

However, I believe that while Barbados remains top of the class in the Caribbean, the island’s continued slippage in the rankings, including in areas which are our competitive advantage, is a concern. I dare say that top of the class in this case is not good enough. Discerning investors consult several indices, including the GCI, when considering potential investment locations. Barbados’ previous A-class performance on these indices was one of its selling points and this would carry less weight if the island continues to decline in its rankings.

A useful feature of the GCI is that it allows for benchmarking against other economies and is a good tool for identifying best practices. Singapore, a small island developing state, currently ranks second place overall on the index and there may be some areas in which Barbados can learn from the reforms they have made. Besides Singapore, we can examine another top 50-rated SIDS, Mauritius, to see what best practices we can consider. We may also be able to learn from the Dominican Republic and Jamaica which, while ranked below us, saw improvements in their rankings.We have strong rankings in our technological and infrastructure capacity. Let us build on these strengths by improving the incorporation of ICTs for improving the ease of doing business and reducing some of the inefficiencies.

Perhaps the best utility of the GCI is that it provides empirical evidence for identifying policy priorities as countries craft and evaluate their national competitiveness policies. As any eager pupil would, Barbados should take these findings to heart. Several competitiveness reforms have been on-going aimed at tackling some of the weaknesses which the GCI 2016 has again brought to light. For example, the $50 million fund for SMEs announced in the August budget should assist SMEs’ access to finance. The island also received a loan from the Inter-American Development Bank for competitiveness improvement called the Barbados Competitiveness Programme. These are good strides. However, if Barbados wants an A-grade and to be truly at the top of the global class, the island needs to quicken and deepen the pace of its competitiveness reforms, strengthening those things it is good at, working on those which it is not, while also putting mechanisms for monitoring and evaluation of their performance.

Nonetheless, the responsibility for ensuring long-term and sustainable competitiveness does not rest with government alone but requires strong collaboration, honest dialogue and feedback among all national stakeholders, including for instance, through the social partnership.

Private sector involvement is key for ensuring Barbados’ obtains a score card each year. A few years ago, I was part of the survey team which administered the WEF Executive Opinion Survey in Barbados, the main instrument used for gathering the data utilised in a whole suite of WEF reports, including the Global Competitiveness Report. While in each instance our team was able to meet our quota, the biggest challenge we found was the unwillingness of some business executives either to participate in the survey, or to complete it satisfactorily and in a timely manner. If insufficient businesses complete the survey, the country will not be included in the index. To encourage greater private sector participation in the survey, I suggest there be closer collaboration between the country partner institute and the various private sector bodies in the country.

 Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Ranking Caribbean Countries’ Competitiveness: WEF Global Competitiveness Index 2016-2017

business-561388_960_720Alicia Nicholls

A few days ago, the World Economic Forum (WEF) released its Global Competitiveness Report 2016-2017. Two things immediately struck me as I perused the list of 138 economies which made the GCI 2016. The first was that because of data shortages only 4 Caribbean countries (Barbados, Jamaica, Dominican Republic and Trinidad & Tobago in order of rank) were included in this year’s index. The second was that all four of these economies were in the bottom 50 per cent of the survey sample, with the highest ranked (Barbados) at only 72nd place.

The WEF in its Global Competitiveness Report defines competitiveness as “the set of institutions, policies, and factors that determine the level of productivity of an economy which in turn sets the level of prosperity that the country can achieve”.The GCI’s 114 indicators are grouped into 12 pillars which are further grouped into 3 sub-indices.  Collectively they measure an economy’s performance on a variety of concepts which impact on productivity and prosperity. Some of these include basic requirements such as institutions, infrastructure and macroeconomic environment to more sophisticated indicators dealing with business sophistication and innovation.

In the preface to this year’s report, the World Economic Forum team highlighted that “many of the competitiveness challenges we see today stem from the aftermath of the financial crisis”.  Productivity and GDP growth in advanced economies and increasingly emerging economies remain subdued. This equally applies to Caribbean countries whose small open economies enhanced their vulnerability to the effects of global financial and economic crisis of 2008, and face many competitiveness disadvantages inherent in their smallness. However, not all of the region’s competitiveness challenges are structural and many are within our power to address.

Caribbean Countries’ WEF GCI Performance 2016-2017

So how did the region fare on the GCI this time around?  Barbados, whose economic recovery remains fragile, topped the CARIFORUM rankings with a rank of 72. Due to data shortages, the island had not been included in the 2015-2016 index but has dropped several places since its rank of 55 out of 144 economies on the 2014-2015 index.

Barbados commendably tops the Latin America and Caribbean region in infrastructure, labour market efficiency and technology. However, the island’s most problematic factors for doing business are as follows: poor work ethic in national labour force, inefficient government bureaucracy, tax rates, restrictive labour regulations and access to financing. Unlike the other three Caribbean economies included, corruption was not seen as a major problem in Barbados.

Trinidad & Tobago, which is currently in recession, has also lost ground, ranking 94 out of 138 economies in 2016-2017, compared to 89 out 140 in 2015-2016. The top 5 problem areas for Trinidad & Tobago for doing business were poor work ethic in national labour force, corruption, inefficient government bureaucracy, crime and theft and foreign currency regulations. But there is a silver lining. The WEF GCI identifies three stages of development: Stage 1 (Factor-driven), Stage 2 (Efficiency-driven) and Stage 3 (Innovation-driven). Trinidad was the only Caribbean country listed as a stage 3 economy (innovation-driven). Barbados was ranked as transitioning between stages 2 and 3. Jamaica and the Dominican Republic were classified as stage 2.

Some more good news is that Jamaica saw forward movement on the index, moving to 75 out of 138 in 2016-2017 from 86 out of 140 in 2015-2016, as well as the Dominican Republic which ranked 92 out of 138 countries in 2016-2017 compared to 98 out of 140 countries in 2015-2016. The Dominican Republic’s reforms were mentioned in the report.

Importance of Country Competitiveness Indices

The WEF GCI is the most comprehensive benchmark of national competitiveness of economies worldwide. This year’s index comprised 98% of the global economy. It is, therefore, quite disappointing that not only does no Caribbean country currently rank among the top 50, but that so few Caribbean countries are included in the 2016-2017 index compared to previous indices as a result of data shortages.

These rankings are important for several reasons.The GCI is a useful tool for policy makers not only  for benchmarking the economy’s current performance  across over 100 competitiveness indicators against its historical performance, but also against other economies in the same bracket. As such, it provides good empirical evidence for setting policy priorities and interventions as national competitiveness strategies are crafted and refined.

Secondly, and importantly for small economies which depend significantly on foreign direct investment inflows, the WEF GCI is one of several indices, along with the World Bank’s Doing Business Index, which discerning investors consult when considering potential investment locations. For this reason, it is not uncommon for investment promotion agencies to reference their country’s favourable performance on these indices when marketing to prospective investors.

The Way Forward

It is axiomatic for any economy that  competitiveness should not only be long-term but sustainable. What the current WEF GCI makes clear is that economies in the Caribbean region have a lot of room for improvement, particularly in these problem areas: inefficient government bureaucracy, work ethic in the national labor force and corruption. Improving our competitiveness, however, is not a government responsibility alone. It requires continued strategic and enhanced  public-private sector collaboration and partnership.

Governments, the private sector and other stakeholders including trade unions and other civil society actors, therefore, need to closely examine the causes and solutions for these problematic areas. For example, what are the factors which contribute to the perception of “poor work ethic”? What country-level and firm-level productivity enhancing reforms are working and which need revising or implementing? What can we do improve the vexing issue of “inefficient government bureaucracy”? This year’s Global Competitiveness Report focused heavily on the Fourth Industrial Revolution. What role can ICTs play in improving our weak areas?

We can also take lessons from those economies which consistently rank as the most competitive economies and those which saw tremendous improvement. The top five economies in this year’s GCI were in order of ranking: Switzerland, Singapore, United States, Netherlands and Germany. What best practices can we learn from these countries? How about those countries like India, which made the biggest leap of any country in this year’s index by climbing 16 places? Or Mauritius, a SIDS, ranks 45th , having climbed two places? Even our own Jamaica and the Dominican Republic which saw improved rankings may hold valuable lessons.

Businesses also need to play their part. It is unacceptable that the region is so poorly represented on the GCI year after year. A few years ago, I was part of the survey team which administered the WEF  Executive Opinion Survey in Barbados, the main instrument used for gathering the data utilised in a whole suite of WEF reports, including the Global Competitiveness Report. While in each instance our team was able to meet our quota, one of the challenges we found was the unwillingness of some business executives either to participate in the survey, or to complete it properly and in a timely manner. This is after repeated attempts to impress upon them the importance of the data collected in the survey for judging Barbados’ competitiveness and to ensuring Barbados was ranked on this important index. If insufficient businesses answer the survey, the country will not be included in the index. To encourage greater private sector participation in the survey in each country, I suggest there be closer collaboration between the country partner institutes and the various private sector bodies in the countries.

The full WEF GCI 2016-2017 Report may be accessed here.

 Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Barbados’ Upcoming CFATF Mutual Evaluation: What’s at stake?

Alicia Nicholls

A robust regime for anti-money laundering and combating the financing of terrorism (AML/CFT) is critical for the integrity and stability of a jurisdiction’s financial sector. This is doubly critical in Barbados where the international business and financial services sector is the second largest foreign exchange earner. Any perceived gaps in Barbados’ AML/CFT framework could sully its international reputation as a place for doing legitimate business, with repercussions for local employment, foreign exchange inflows and tax earnings.

Barbados will shortly undergo its 4th Mutual Evaluation by the Trinidad-based Caribbean Financial Action Task Force (CFATF), the Caribbean regional associate member of the Financial Action Task Force (FATF). An intergovernmental body established in 1989, the FATF is the international standard-setter for AML/CFT and combatting the financing of proliferation. Last revised in February 2012, the FATF’s 40 recommendations plus its 9 special recommendations on Terrorist Financing and the Interpretive Notes are the internationally accepted standards for AML/CFT.

Read more of my article at the Broad Street Street Journal here.

What the debate on the Panama Papers forgets

Alicia Nicholls

No two words have evoked as much emotion and debate internationally in recent weeks as have the so-called “Panama Papers”. The moniker refers to the cache of over 11 million emails, invoices and other documents leaked by a whistle-blower and originating from the Panamanian international law firm Mossack Fonseca.The files reveal the firm’s use of offshore vehicles registered in several offshore financial centres (OFCs) around the world to help thousands of international celebrity, public official and otherwise wealthy clients worldwide in their tax and asset management. The potential fall-out of the Panama Papers for Barbados was one of the topics of discussion by a panel at the Barbados International Business Association’s very informative Update Seminar last week Thursday.

Read my full article in the Broad Street Journal here.

Barbados passport tops Caribbean passports in ease of visa-free travel

Alicia Nicholls

Barbados has the best passport among Caribbean countries. This is according to Henley & Partners’ recently published Visa Restrictions Index 2016 in which Barbados has topped Caribbean countries in the ease of which its citizens/passport holders can cross international borders.

Barbadian citizenship/passport ranked 26 out of the 199 nationalities (passports) evaluated with its passport holders enjoying visa-free access to 141 countries. Last year Barbados ranked 24 on the Index with visa-free access to 138 countries.

Henley & Partners is the global leader in residence and citizenship planning and produces its Visa Restriction Index in cooperation with the International Air Transport Association (IATA). The index, which it has produced for the last ten years, ranks countries’ citizenship/passport according to the total number of other countries which they can access visa-free.

Besides Barbados, the other Caribbean countries whose citizenship/passports ranked in the top 50 are the Bahamas (27), Antigua & Barbuda (30), St. Kitts & Nevis (32), Trinidad & Tobago (34), St. Lucia and St. Vincent & the Grenadines tied (37), Grenada (39) and Dominica (41). Some of these tied in ranking with other countries.

Some other Caribbean countries’ rankings are as follows: Belize (55), Guyana (57), Jamaica (61), Suriname (64), Cuba (78), the Dominican Republic (83). The lowest ranked among Caribbean passports was Haiti (89) with a score of 48 countries to which visa-free travel is granted to Haitian citizens/passport holders.

Internationally, Germany topped the index again this year with a score of 177 countries to which visa-free travel is granted to German citizens/passport holders, while the worst was Afghanistan which ranked 109 with its citizens enjoying visa-free travel to only 25 countries.

For further information and access to the full Index 2016, please visit Henley & Partners‘s website.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

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