Draft Programme on Industrial Upgrading and Modernization in CARIFORUM 1 Countries

Transcription

1 DRAFT Competitiveness and Innovation Programme for CARIFORUM Countries The Annexes October 2008 Draft Programme on Industrial Upgrading and Modernization in CARIFORUM 1 Countries

2 Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 2

3 ANNEXES: TABLE OF CONTENTS ANNEX I: TERMS OF REFERENCE FOR THE PROGRAMME FORMULATION ANNEX II: LOGICAL FRAMEWORK OF THE PROGRAMME ANNEX III: PROGRAMME ACTIVITIES BY OUTPUTS ANNEX IV: PROGRAMME IMPLEMENTATION SCHEDULE ANNEX V: EXAMPLES OF TECHNICAL ASSISTANCE ACTIVITIES ANNEX VI: SUPPORT INFRASTRUCTURE LIST OF THE TECHNICAL SUPPORT INSTITUTIONS AND LABORATORIES EXISTING IN CARIFORUM REGION EXAMPLES OF EXISTING NATIONAL AND REGIONAL TECHNICAL SUPPORT CENTERS UNIDO S EXPERIENCE SURVEY OF TECHNICAL ASSISTANCE PROGRAMMES ANNEX VII: FIELD SURVEYS FIELD SURVEY METHODOLOGY RESULTS AND ANALYSIS ISSUES IDENTIFIED BY SURVEY REQUESTS FOR ASSISTANCE SUMMARY OF DATA COLLECTED BY SECTOR SUMMARY OF THE AGRICULTURAL SECTOR ANNEX VIII: COUNTRY REPORTS THE BAHAMAS BARBADOS BELIZE DOMINICAN REPUBLIC GUYANA HAITI JAMAICA OECS ANTIGUA AND BARBUDA DOMINICA GRENADA SAINT KITTS AND NEVIS SAINT LUCIA SAINT VINCENT AND THE GRENADINES SURINAME TRINIDAD AND TOBAGO ANNEX IX: BODIES AND PERSONS INTERVIEWED ANNEX X: SCENARIOS FOR INDICATIVE BUDGET OF THE PROGRAMME Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 3

4 Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 4

5 ANNEX I: TERMS OF REFERENCE FOR THE PROGRAMME FORMULATION. 1. CONTEXT The Cotonou Agreement, signed in 2000 by the Heads of States of all European Union (EU) and African, Caribbean and Pacific countries (ACP) countries, defines how the EU and ACP countries will cooperate on political, development and trade issues. Under this agreement, it was also decided that the EU would negotiate economic partnership agreements (EPAs) with each of the geographical groupings of the ACP. In April 2004, CARIFORUM and the EU have started negotiations of the EPA. The negotiations were divided into four phases and should be concluded by the end of An EPA, which gives development goals a central role in trade relations, is now being negotiated between the EU and CARIFORUM secretariat and is expected to enter into force in January The main objectives of the EPA for all ACP regions and countries are: The progressive establishment, within a transitional period starting from the 1st of January 2008, of free trade zones between ACP regions and the European Community, in accordance with WTO rules; Promotion of the deepening of the regional integration process and sustainable economic development. The EPA is a joint response to the challenges of globalization and development and will enable the CARIFORUM region and countries to become more competitive, to diversify their exports and to build a regional market with the uniform, transparent and stable rules needed to reinforce economic governance. The current Terms of reference are prepared for the needs assessment for submission to the Regional Preparatory Task force RPTF and covers the priority area of Competitiveness and Innovation. The attainment of enhanced competitiveness through increased productivity requires that concerted efforts are put in place to tackle the supply-side and conformity constraints - the problem of lack of effective trade and productive capacity, being faced by the majority of CARIFORUM member countries. The objective of the Programme is to develop Upgrading and Modernization of Trade and Productive capacities, to promote innovation and technological promotion and improving access on regional and international markets,. This comprehensive action Programme will enhance the benefit of CARIFORUM member countries so as to promote their economic, industrial and trade growth as well as facilitate their socio-economic integration. The present Terms of reference are also in line with the CARICORUM request received by UNIDO the 30 th January 2007 to assist in the formulation of a Productive and Trade Capacity Building Programme for removing supply-side constraints to foster regional integration in the frame of EPA EU-ACP countries. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 5

6 Following a joint CARICOM-CARIFORUM/UNIDO/CDE meeting in late April 2007 UNIDO/CDE confirmed interest and availability for providing technical assistance for the formulation of this Programme; the latter constitutes a major component of the Trade Capacity Building Initiative, launched by UNIDO as an approach to harmonization of industrial cooperation and to strengthening industrial production and competitiveness; it is also a natural follow up of the numerous CDE s initiatives taken in the last 10 years to strengthen the capacity of both ACP IOs and enterprises; as a matter of fact the CDE has accumulated a strong experience in assisting the ACP and more particularly the Caribbean private sector and i.e. the enterprises and IOs to upgrade their performance and modernize their facilities. The Support Programme to the Economic Partnership Agreement between the EU and the CARIFORUM region includes competitiveness and innovation as one of the EPA support activities. UNIDO, with its Industrial Modernization and Upgrading Programme under the Productive and Trade Capacity Building Initiative can effectively contribute to the achievement of the EPA EU-CARIFORUM objectives within the Caribbean region in this area. In recent years, UNIDO has implemented/is implementing similar pilot programmes in other regions in MEDA countries (Tunisia, Algeria, Morocco, Egypt, Palestinian Territories), in West Africa (Senegal and UEMOA) and in Central Africa (Cameroun, programme under finalization). Several other Trade Capacity Building programmes have also been implemented in East Africa ((Uganda, Tanzania, Kenya...), in Asia (Pakistan, Bangladesh...) and in Latin America (Colombia and Uruguay). The EU and OECD countries funded these programmes. Within this context it is important to mention that the notion of a Caribbean region without barriers, strengthened by its collective resources and opportunities, has been a shared vision among its members in recent years. CARIFORUM Member States are currently entering a most challenging stage of their integration processes, which are necessary for progressing towards the benefits of a single economy environment. Under this framework, the accumulated experience of both UNIDO and CDE could be effectively employed in assisting CARIFORUM in the formulation of a proposal for strengthening trade and productive capacities, thus enhancing and supporting competitiveness, modernization and innovation of productive sectors, supporting the necessity of removal of barriers to trade, facilitate the freer movement of regional services, goods and capital and opening up of new opportunities in terms of investment, employment, income and social development. 2. DESCRIPTION OF THE MISSION 2.1 Immediate objective The immediate objective is to enhance and support competitiveness, modernization and innovation of service and productive sectors 2.2 Specific objectives The specific objective of the study is to prepare and design EPA support activities in the field of competitiveness and innovation for the CARIFORUM region. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 6

7 This will cover: Identification of priority service and productive sectors in the CARIFORUM region bearing in mind the comparative advantages in the Caribbean region; Formulation for Capacity building in the field of modernization (at the level of CARIFORUM secretariat, Ministry of Industry and Trade in the CARIFORUM countries; chambers of commerce and industry, national experts, producer associations and service providers); Formulation for Upgrading/development of capacities of public and private technical support institutions (e.g. technical centres, laboratories, information systems, training centres, research and development in science and technology,); Formulation for Modernization/upgrading of selected SMEs (on pilot basis) in selected service and productive priority sectors (e.g.. agro industries or tourism), including innovation, process optimization and production planning, quality system/product certification etc... Formulation of national modernization and innovation programmes and financial mechanisms. 2.3 Specific steps and activities to be undertaken 1. Conduct an assessment of the needs of CARIFORUM in order to implement effectively the relevant commitments provided for under the EPA while taking into account the cooperation priorities set out in the draft EPA in the area of Competition and Innovation; The specific steps to be undertaken include: - Identify, collect and analyze information, studies and data related to the development, upgrading and innovation of service and productive sectors at the sub-regional level and national level, the number of enterprises, specification of the importance of productive sector per sub-sector and their contribution in the GDP, production value added, employment and export; - Visit 3 to 4 enterprises selected among priority sectors in selected countries and meet with representatives of chambers of commerce and industry/private sector associations and identify main strengths and weaknesses related to the development of the productive and trade capacities of enterprises and their needs for information regarding enterprise performance and investment trends in the region as well as on investment climate in the sub-regions; - Meet with national association of experts and consulting firms and identify the priority needs for capacity building in the field of technical assistance to ensure the upgrading and improvement of competitiveness and promotion of innovation of enterprises; - Identify the comparative advantages related to service and productive sectors in the sub-region (natural resources, geographical position, market, cost of production factors); - Conduct a succinct analysis of the production and transaction factors which affect competitiveness of service and productive sectors and compare the cost of these factors with those of other competitive subregion. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 7

8 2. Survey existing support activities in this area (self-financed or financed by the European Community, its Member States, or other donors), The specific steps to be undertaken include: - Review and take into consideration the work being undertaken by CARICOM secretariat, EU and CDE and UNIDO and other regional/international donors in the sub-region in the field of Competitiveness and Innovation; - Review the competitiveness and innovation framework programmes, specific programmes and other activities of the EC and its Member States with a view to providing a compendium of those programmes whose rules allow for access by entities from CARIFORUM States and those whose rules if amended in specified ways would allow access by CARIFORUM entities and contribute to the objectives of competitiveness and innovation of the EPA. 3. Set out a coherent overall programme for cooperation and support activities in the Competition and Innovation area as well as design and quantify the individual programmes and projects that would facilitate the proper implementation of the Chapter and deal with CARIFORUM needs that are not already being addressed; The specific steps to be undertaken include: - Analyse the different approaches and methodologies developed in other countries in the field of modernization and innovation and propose an harmonized approach for upgrading taking into consideration the specificity of the region and the enterprises, propose the criteria for the selection of the beneficiary enterprises; - Analyse the articulation of the programme at the regional and national levels. The following principles are recommended: ownership of the programme and political commitment at the regional and national level, harmonization of the modernization and innovation approaches and incentive policies, involvement of the private sector and financial institutions in decision-making, establishment of management and performance monitoring committee at both sub-regional and national levels;. 4. Draft a Financing Proposal for the funding of programmes and projects identified under 2), at the destination of any donors. The specific steps to be undertaken include: - Identify and analyze financial mechanisms for development and upgrading of service and productive sectors at the sub-regional and country level including possibility of funding through the European Investment Bank, and other national, regional and international organizations. The analysis could also include presentation of financial mechanisms developed in other countries, which implemented upgrading, and modernization programmes such as Tunisia, Algeria, Egypt, Morocco and Senegal, among others. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 8

9 2.4 Expected output Based on the analysis of the available data, information and studies undertaken at the level of CARIFORUM region, the EC, the CDE and UNIDO, interviews in the field with representatives of CARIFORUM, EPA technical negotiators and the RPTF cochairs, Ministries of Government with portfolio responsibility for commerce and industry, public and private institutions and representatives of the private sector at the regional and national level, the expected output would be a full-fledged programme document setting out the overall objectives in the area of competitiveness and innovation and a quantified financing proposal at the destination of the European Commission, activities and deliverables at regional and national level, including sectoral focus, as well as an overall programme implementation strategy. In general the document will cover the programme recommended for both the meso (IOs) and micro (SMEs) level. The programme should be prepared in accordance with the EU format. The draft programme should be presented, discussed and validated in a workshop to be organised in the CARIFORUM region. Representatives of CARIFORUM and of the member countries of CARIFORUM, representatives of the private sector and financial institutions in the region will be invited to the workshop. 2.5 Main beneficiaries - Productive enterprises: SMEs from selected CARIFORUM member countries will directly benefit from the UNIDO s/cde s approach and methodology and improve their productivity, quality management, export capacities, and competitiveness. - The regional and national productive support institutions in the CARIFORUM countries: These institutions shall receive assistance in the formulation of policy and procedures, in implementation of activities related to competitiveness and innovation. - The Ministries of Industry and Trade and SMEs: Will directly benefit from the technical assistance provided for implementation of the programme. This includes enhancing the capacities of the staff representing the ministries and the private sector associations and national consultants. 3. PROFILE OF EXPERTS 3.1 Background and experience requested for experts The UNIDO/CDE team will be composed of experts (engineers and/or industrial economists, quality and financial specialists) highly qualified in the areas of competitiveness improvement and innovation promotion. The experts should have extensive experience in the above-mentioned areas and good knowledge of the economy and industry development in the CARIFORUM region. The team leader should be familiar with the EU rules and format in the field of formulation of programmes. The UNIDO/CDE team will be composed of international and regional experts including the team leader. They will also be assisted by CDE s experts already under contract. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 9

10 3.2 Language of work The main working language will be English but the knowledge of one of the three other languages of CARIFORUM (Spanish, Dutch and French) would be beneficial. The reports and the programme should be prepared in English. The final version will be translated into French. 4. TIME FRAME AND ORGANISATION OF THE MISSION 4.1 Organisation of the mission - Briefing of the mission in UNIDO in Vienna and in Brussels with the offices of the EC in charge of CARIFORUM region and the UNIDO Office, with the Centre for Development of Enterprises (CDE) and the ACP secretariat; - Briefing in the Caribbean with the CDE and other programmes such as the CDE Technical Intervention Offices (TIOs) in the Caribbean region, and the Pro Invest Contact Office in Trinidad and Tobago for the whole of the Caribbean region. - Briefing in Greater Georgetown (Guyana) with the CARIFORUM and CARICOM secretariat and the EU delegation and donor community representatives; - Undertaking the programme of visits and interviews in the field prepared by UNIDO/CDE (HQ and offices in the region) in cooperation with the CARIFORUM, the EU delegations in the region and national authorities; - Organisation of the validation workshop; - Presentation by UNIDO/CDE of the results of the mission and the draft programme to the Regional Preparatory Task Force Secretariat. 4.2 Main actors The mission should meet with the following institutions (list not exhaustive): - In Brussels: Representatives of the EC offices in charge of CARIFORUM region and the UNIDO Office, the Centre for Development of Enterprises and the ACP secretariat; - In the field: Representatives of CARIFORUM and CARICOM secretariat, EC delegations and representatives of EC Member States in the CARIFORUM region, offices of the National Coordinator of the Economic Development Fund (EDF) in the CARIFORUM countries, the European Development Fund in CARIFORUM, representatives of UNIDO/CDE in the CARIFORUM region, representatives of Ministries of Governments with portfolio responsibility for commerce and industry, representatives of business community, chambers of commerce and industry and professional associations, heads of technical support institutions, representatives of the financial institutions, representatives of the relevant donor community in the CARIFORUM region : UNDP, World Bank, European Investment Bank, IADB, USAID, GTZ, AFD, KFW Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 10

11 4.3 Time frame of the mission The mission will be conducted during the period June to November REPORTS The mission should produce the following reports: - A progress/inception report at the end of September 2007: the report should present the approach and methodology adopted for the formulation of the programme, an overall overview of the economic situation in general and productive sectors particularly, the position and importance of productive sub-sectors, the main strengths and weaknesses related to national capacities, technical support institutions, financial capacities for productive sectors in the region; - A first draft of the programme by October 2007 including: context and justification, objectives, expected outputs by component, the logical framework, the approach and methodology for upgrading; - The final version of the programme including the budget and the planning of implementation in November This version should take into consideration the recommendations of the validation workshop and of the Regional Preparatory Task Force Secretariat. The venue for the validation workshop should be defined jointly with CARIFORUM. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 11

12 Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 12

13 ANNEX II: LOGICAL FRAMEWORK OF THE PROGRAMME Activity description Indicators Means of verification Assumptions Global Objective To contribute to the strengthening of capacities of productive and service enterprises in CARIFORUM countries to face the double-challenge of regional and world integration and, in particular, in the context of trade liberalization and economic diversification and, thus, to support efforts to reduce poverty. % of evolution of intra-regional and international trade and bilateral trade with EU. % of evolution of productive and service sectors contribution to GDP Enhancement of human development and poverty indicators. National bureaus of statistics Statistics of United Nations System agencies (UNIDO, WB, ADB, EU, UNDP ) Reports on macroeconomic and sectoral situation (governments, donors, development agencies ) Commitment to continued structural reforms to ensure sustainable economic growth Regular updating and on-going implementation of the Poverty Reduction Strategies CARIFORUM and EU Member States remain involved into the process of EPA negotiations and related market liberalization Specific Objectives Support the dynamics of improving competitiveness, overall economic growth and access to the national, regional and international markets. Development of the regional and national institutions for implementation and follow-up of the Programme on Industrial Competitiveness and Innovation. Strengthening industrial support institutions. Improving quality of business-climate and exports capacity. Improvement in competitiveness indicators of industries and related services and CARIFORUM national economies as a whole Increase of market share (at local, regional and international levels) of target industries and related services of the CARIFORUM region Number of jobs created or preserved Mid-term and final evaluation reports of the CARIFORUM Upgrading Programme implementation Annual reports of UNIDO, EC, WTO, Breton Wood Institutions, World Economic Forum, Doing Business, etc.) Reports on macro-economic situation Political goodwill to implement reforms and other arrangements related to the trade liberalization and economic diversification Commitments of all involved actors to ensure success of the Programme Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 13

14 Activity description Indicators Means of verification Assumptions COMPONENT I: Support to strengthen competitiveness of industries and their use of innovation I.1 Strategic positioning study of priority and contributing products/sectors (e.g.: tourism, agro-food and fish, ICT, etc.) taking into account national specificities and capacities determining diversification. Studies accepted by counterparts Reports on Programme activities, study reports Commitment to structural reforms necessary for successful Programme implementation I.2 Thorough diagnosis and competitiveness strengthening plans for the companies eligible to the Programme (global approach and specific approach) Reports and correspondence from companies accepted Companies management, Competitiveness and Innovation Offices The companies are motivated I.3 Technical support and coaching of SMEs for the implementation of the competitiveness strengthening activities in the beneficiary companies (priority to business process improvement). Enterprises increase their market share Enterprise audits Enterprises provide reliable information I.4 Launch of the HACCP, ISO 17025, ISO 22000, ISO 14000, Green Globe, Blue Flag and OSHA certification for selected companies and institutions At least 20 % of participating enterprises ready for certification Reports on Programme activities, reports of consultants enterprise communications Owners and staff ready for implementation of QM systems I.5 Assist with the implementation of programmes of traceability for specific and priority products having high potential for export (e.g. meat, fish, fruits and vegetables, flowers, coffee, cocoa ). Traceability system for selected sectors in place Control reports of competent authority Stakeholders along selected supply chains are participating Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 14

15 Activity description Indicators Means of verification Assumptions I.6 Implementation of Quality Management Systems and their certification at beneficiary companies and institutions. At least 20 % of participating enterprises receive certification during project live cycle Certification reports Enterprises are participating actively I. 7 Networking of intermediary organizations from CARIFORUM region and EU and strengthening professional organizations. Each participating sector specific institution increased number of contact and cooperation partners by at least two Reports Readiness for cooperation among institutions I.8 Promotion of projects on industrial partnership/industrial coaching among the companies eligible to the Programme. Providing support to negotiating process (business-plan and fund-raising)/strategic coaching. All participating enterprises have their business plans and participated in trainings and other project activities Reports on Programme activities Willingness of enterprises given I.9 Conduct complementary study for formulation of the national Competiveness and Innovation Programme. Study ready. Final study Involvement and participation of companies and intermediary organizations. I.10 Strengthen cooperation in the area of competiveness and innovation at the institutional and enterprise level of the supported sectors. Increased cooperation between enterprise and institutions Reports on the se of the services offered by involved institutions and joint enterprise activities Entrepreneurs are ready to cooperate I.11 Design and implementation of the regional and national programmes of communication and promotion of the Programme and undertaking of CARIFORUM Competiveness and Innovation Tour for the managers of Website and promotional material available and active announced Reports on the use of the information Data regarding project implementation available Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 15

16 Activity description Indicators Means of verification Assumptions industries at the regional and national levels and organization of information and dissemination seminars on Programme s results for the different production. I.11 Setting-up a Monitoring Framework for Competiveness and Innovation Programme at national and regional levels Monitoring framework in place and in use Monitoring and evaluation reports COMPONENT II: Establishment/upgrading of the technical support institutions II.1 Thorough diagnostics, formulation and implementation of the upgrading plans for technical centres promoting priority and export potential sectors Upgrading plans for all participating centres are approved Reports Readiness of the institutions given II.2 Design and assistance to developing the legislative framework and procedures of the regional Competiveness and Innovation Programme at regional and national levels. Draft legal framework and procedures available Reports and documents Political support provided II.3 Feasibility study and assistance in establishment of financing schemes in order to facilitate access of the local SMEs to funding necessary to implement competiveness and innovation activities and to fulfill their investment plans. Feasibility studies for eligible enterprises ready Documents Enterprises are cooperating Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 16

17 Activity description Indicators Means of verification Assumptions II.4 Capacity building for the ministries in charge of industry and trade, competiveness and innovation centres, SME, employer associations, banks, experts/consultants and trainers for the implementation and follow-up of the Programme. Involved authorities, centres and SME s ready for independent actions Reports Targeted institutions adopted the Competiveness and Innovation programme II. 5 Promotion, establishment and assistance in launching and running the export consortia. Formulation of measures on institutional support and creation of favourable legislative framework for export consortia. At least one regional and one export consortium per country established/supported Existence of export consortium All involved counterparties and beneficiaries support establishment/ upgrading of the export consortia II.6 Strengthening capacities of investment promotion agencies and establishment of an investment platform in order to respond to the needs of investors and operators in the area of competiveness and innovation Services of the investment promotion agencies rated positive by 80% of participating enterprises Customer survey All involved counterparties and beneficiaries ready for cooperation II.7 Supporting industrial coaching for promoting of innovation, developing new products and promoting industrial diversification in the CARIFORUM region. Number of marketed products increased by 10%. Market surveys, data on turnover and external trade statistics Enterprises participating actively and ready for product diversification. II.8 Strengthening of the technical and professional training institutions at the regional level Involved institutions increased services offered to the business community. Programmes offered Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 17

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19 ANNEX III: PROGRAMME ACTIVITIES BY OUTPUTS. COMPONENT I: SUPPORT TO UPGRADING AND IMPROVING COMPETITIVENESS OF INDUSTRIES Output I.1 Success indicators UNIDO Service Module(s) Counterpart(s) Strategic positioning study of priority and contributing products/sectors (e.g.: tourism, agro-food and fish, ICT, etc.) taking into account national specificities and capacities determining diversification. Strategic positioning studies for priority sectors carried out and approved by the concerned parties PTC/AGR CARIFORUM Activities Parties involved Duration in months Start End Milestones I.1.a Analyze the structure of industrial and service sectors in the CARIFORUM region and Member States Analysis conducted I.1.b Set up the selection criteria for the sectors/products subject to the strategic positioning studies Criteria set up and approved I.1.c Determine the list of products/sectors subject of complementary studies on strategic positioning and identify their geographic extend (local, national or regional) I.1.d Develop the terms of reference and identify the experts/consultants to conduct the strategic positioning studies UNIDO, CDE, national and regional counterparts List of products/sector s approved Consultants recruited I.1.e Conduct the studies and elaborate reports to be communicated to potential beneficiaries Studies conducted I.1.f Organize dissemination seminars to communicate and discuss the results of studies Seminars organized Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 19

20 Output I.2 Success indicators UNIDO Service Module(s) Counterpart(s) Thorough diagnosis and competitiveness strengthening plans for the companies eligible to the Programme (global approach and specific approach) Diagnostics approved by the companies participating in the Competiveness Programme PTC/AGR, PTC/PSD CARIFORUM Activities Parties involved Duration in months Start End Milestones I.2.a On the basis of preliminary diagnostics, select the companies eligible to Competiveness Programmes according to the global and specific approaches. The priority is given to the companies affected the most by the EPA Companies selected I.2.b Elaborate the questionnaires for diagnostics according to the global and specific approaches I.2.c Conduct the thorough diagnostics (market research and strategic positioning, management skills, quality and technical skills, finances and financial structure, etc.) for the selected companies within the global approach and implement the competiveness plans UNIDO, CDE, national and regional counterparts Questionnaires drawn up according to the both approaches The thorough diagnostics accomplished and action plans worked out I.2.d Carry out the fine diagnostics (targeting the companies specific functions) for the selected companies within the specific approach and implement the competitiveness plans Fine diagnostics accomplished and action plans worked out Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 20

21 Output I.3 Success indicators UNIDO Service Module(s) Counterpart(s) Technical support and coaching of SMEs for the implementation of the competitiveness strengthening activities in the beneficiary companies (priority to business process improvement). Increase in sales of the beneficiary companies by up to 15% on average PTC/AGR CARIFORUM Activities Parties involved Duration in months Start End Milestones I.3.a Grouping the companies taking into consideration the approved action plans and the companies main features (area of activity, size, technical facilities and human resources, priorities in upgrading, etc.) Groups of companies formed and validated I.3.b Define the specific actions to be fulfilled for every group and develop the plans of intervention Specific actions defined and approved I.3.c Identify coaches to accomplish identified actions with possible further accompanying by the national consultants (with less experience) I.3.d Assist and coach the SMEs in implementing the material and immaterial investments activities UNIDO, CDE, national and regional counterparts Coaches recruited Actions implemented I.3.e Train the companies staff on various aspects subject of consultants intervention Concerned staff trained I.3.f Evaluate an impact of implemented actions on companies performance Evaluation forms filled in and submitted Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 21

22 Output I.4 Success indicators UNIDO Service Module(s) Counterpart(s) Launch of the HACCP, ISO 17025, ISO 22000, ISO 14000, Green Globe, Blue Flag and OSHA certification for selected companies and institutions. Up to 50% of the selected companies implemented HACCP, 25% implemented ISO and ISO 14000, 50% implemented Green Globe, Blue Flag and OSHA PTC/AGR CARIFORUM Activities Parties involved Duration in months Start End Milestones I.4.a Select companies to be assisted in introduction of HACCP, and one of the following certifications: ISO 22000, ISO 14000, Green Globe, Blue Flag and OSHA certification Companies selected I.4.b Constitute the teams for every stage of HACCP/ISO 22000/ ISO 14000/Green Globe/Blue Flag/OSHA implementation Teams constituted I.4.c Assist in sector specific risks assessments I.4.d Train and assist in preparation of plans and manuals UNIDO, CDE, national and regional counterparts Analysis accomplished and approved Plans prepared and approved I.4.e Train the staff on audit and verification of the system Staff trained I.4.f Assist in implementing other stages to qualify for relevant certification Plans elaborated and approved I.4.g Assist in organization and carrying out of preliminary audits and audits for relevant certification Pre-audits et audits carried out Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 22

23 Output I.5 Success indicators UNIDO Service Module(s) Counterpart(s) Assist with the implementation of programmes of traceability for specific and priority products having high potential for export (meats, fish, fruits and vegetables, flowers, coffee, cocoa ). At least 5 products benefitting from traceability program PTC/AGR CARIFORUM Activities Parties involved Duration in months Start End Milestones I.5.a Identify the priority agro-food/fish production/sectors with high market potential Sectors/ products identified I.5.b Analyze the production/distribution chain of selected products (logistics, conformity, value-added, customs clearance ) Analysis carried out I.5.c Organization of information seminars on traceability and access to European market Seminars organized I.5.d Development of manual on traceability and training of trainers I.5.e Select companies beneficiaries of the pilot activities UNIDO, CDE, national and regional counterparts Manuals and trainings provided Enterprises selected I.5.f Identify appropriate technologies (barcodes, computers ) and implement the (manual/automatic) traceability system at the selected pilot companies Pilot actions implemented I.5.g Verify effectiveness of the traceability systems performance insuring the follow-up of the product from its harvesting till the point of its delivery to the market (farm-to-fork) Empiric verification accomplished I.5.h Finalize and adapt procedures on establishment of the definitive version of traceability systems Procedures adapted Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 23

24 Output I.6 Success indicators UNIDO Service Module(s) Counterpart(s) Implementation of Quality Management Systems and their certification at beneficiary companies and institutions. At least 30% of the selected companies and institutions certified the selected QM System at the end of the project PTC/AGR CARIFORUM Activities Parties involved Duration in months Start End Milestones I.6.a Select companies to assist in introduction of Quality Managements Systems and their certification (e.g. ISO 9000 f.f.) Companies selected I.6.b Elaborate the terms of reference and indentify consultants to provide these activities Consultants recruited I.6.c Organize the training programme for internal auditors I.6.d Assist selected companies in QMS implementation UNIDO, CDE, national and regional counterparts Training provided Actions implemented I.6.e Assist in organizing and carrying out the preliminary audits and implementation of corrective actions Pre-audits carried out I.6.f Assist the companies in carrying out audits for QMS certification Audits conducted and certificates received Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 24

25 Output I.7 Networking of intermediary organizations from CARIFORUM region and EU and strengthening professional organizations. Success indicators UNIDO Service Module(s) Counterpart(s) Interregional network of intermediate organizations launched PTC/AGR CARIFORUM Activities Parties involved Duration in months Start End Milestones I.7.a Identification and selection of professional organizations in CARIFORUM countries and Europe, whose activities are directly related to development of partnership regarding innovation Professional organizations selected I.7.b Organize the promotion and information activities in favor of the staff of intermediary organizations operating in CARIFORUM with focus on innovation and strengthening competiveness. UNIDO, CDE, Chambers of Commerce in Europe, national and regional counterparts Activities implemented I.7.c Organize the meetings between representatives of intermediary organizations of CARIFORUM and Europe aiming at strengthening of cooperation and partnership Meetings organized Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 25

26 Output I.8 Success indicators UNIDO Service Module(s) Counterpart(s) Promotion of projects on industrial partnership/industrial coaching among the companies eligible to the Programme. Providing support to negotiating process (business-plan and fund-raising)/strategic coaching. Partnership projects identified, formulated and put on the platform; up to 50% of beneficiary companies involved into the partnership campaign PTC/AGR CARIFORUM Activities Parties involved Duration in months Start End Milestones I.8.a Identify market opportunities and related technological scenarios Scenarios elaborated I.8.b Analyze the capacities of existing companies to build partnership Analysis carries out I.8.c Select beneficiary companies and develop a partnership and investment strategy Companies selected I.8.d Identify and recruit the coaches to provide support to partnership development I.8.e Train the companies staff on negotiating skills and formulation of cooperation agreements I.8.f Formulation of the partnership and investment projects and putting them on the platform UNIDO, CDE, Chambers of Commerce, national and regional counterparts Coaches recruited Staff trained Projects formulated I.8.g Development of promotional materials necessary to communicate the partnership policies Promotion campaign fulfilled I.8.h Organize abroad promotional and mobilization seminars and identify the potential partners Seminars organized I.8.i Organize meetings between potential partners Meetings organized I.8.j Provide support in negotiating (joint ventures, subcontracting exchanges, ties between the foreign investors and local industries) Activities implemented Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 26

27 I.8.k Implement the plans of the joint activities with partners Plans elaborated I.8.l Assist in searching the financing partners Partners identified I.8.m Accompany enterprises in effective realization of the partnership agreements Agreements concluded Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 27

28 Output I.9 Success indicators UNIDO Service Module(s) Counterpart(s) Conduct complementary study for formulation of the national Competiveness and Innovation Programme. National Competiveness and Innovation Programmes launched in every beneficiary country and national Programme coordination units operational PTC/AGR CARIFORUM Activities Parties involved Duration in months Start End Milestones I.9.a Analyze the existing programmes and formal texts related to industrial competiveness strengthening and innovation promotion Analysis conducted I.9.b Conduct a study on existing innovation support programmes in the EPA partner countries Study finalised I.9.c Elaborate a compendium of existing competiveness and innovation programmes in the EPA partner countries and communities including rules and regulations an guidelines for participating in these programmes and frameworks I.9.d Using results of this analysis for developing the national Competiveness and Innovation Programmes for all beneficiary countries and the region UNIDO, CDE, national and regional counterparts Compendium prepared National and regional programme ready I.9.d Establish the guidelines and regulations for a national and regional innovation award Award created I.9.e Organize validation seminars to adopt the legislative framework and procedures for each beneficiary country and the region At least two seminars per country held I.9.f Organize seminars dedicated to official launch of the national Programmes National Programmes launched Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 28

29 Output I.10 Success indicators UNIDO Service Module(s) Counterpart(s) Strengthen cooperation in the area of competiveness and innovation at the institutional and enterprise level of the supported sectors. Involved institutions and enterprises are linked to national and international innovation networks and participate in the international market with new products PTC/AGR, PTC/PSD, PTC/ITP CARIFORUM Activities Parties involved Duration in months Start End Milestones I.10.a Establish the innovation support team involving institutions and other stakeholders already involved in activities related to innovation Team operative I.10.b Develop the work plan and mission of the innovation support team Work plan ready I.10.c Linking innovation teams of the EPA partner countries to exchange experience in the promotion of innovation, product diversification, product development and improving business process quality Links established I.10.d Institutionalize dialogue and common activities like conferences and seminars, exchange visits and networking among economic operators and institutions at the regional and the EPA partner level I.10.e Establish joint research networks at the regional and EPA partner level in the field of innovation UNIDO, CDE, national and regional counterparts Conferences and seminars held at international level Research networks operating independently I.10.f Exchange of researchers and experts aiming on participation in research programmes and for the development of further programmes in the framework of the 7 th framework for Research and Technological Development Continuous exchange I.10.g Conduct conferences to increase the policy dialogue and exchange of scientific and technological information and experience at the regional level Conferences established on half yearly base Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 29

30 I.10.h Link national and/or regional institutions actively involved in the promotion and sustaining innovation to Knowledge and Innovation Communities of the European Institute of Innovation and Technology Institutions are cooperating independently I.10.i Promotion of human capacity building regarding innovation and technology exchange Pool of experts created I.10.j Strengthening the capacities in terms of ICT research and development as well as networking and exchange of training specialists Continuous exchange of human resources I.10.i Fostering public private partnership in order to strengthen eco-innovation networks Networks established Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 30

31 Output I.11 Success indicators UNIDO Service Module(s) Counterpart(s) Design and implementation of the regional and national programmes of communication and promotion of the Programme (development of promotional materials and thematic website for the CARIFORUM Secretariat and each country) and undertaking of CARIFORUM Competiveness and Innovation Tour for the managers of industries at the regional and national levels and organization of information and dissemination seminars on Programme s results for the different production. Communication strategy elaborated and promotional materials (CD, films, guides, websites ) developed and at least one information and dissemination seminar organized for each product and country PTC/AGR, PTC/PSD, PTC/ITP CARIFORUM Activities Parties involved Duration in months Start End Milestones I.11.a Elaborate a strategy for Programme communication and promotion at the regional and national levels targeting concerned parties (companies, banks and other donors, support institutions and consulting agencies) Strategy developed I.11.b Prepare promotional materials and realize: - Brochure introducing the Programme on upgrading and modernization; - Unified guide describing procedures on upgrading and modernization as well as tools and support aiming at encouraging companies to join the Programme; - Websites for the regional and national Programmes; - CD/DVD representing the Programme and operation procedures UNIDO, CDE, national and regional counterparts Promotional materials available I.11.c Conduct awareness raising and information tours in beneficiary countries involved in the Programme Tours organized I.11.d Appraise various implemented actions and develop a synthesized report on these appraisals Evaluation reports submitted I.11.e Prepare informational materials (brochures, prospectus, posters, etc.) to communicate the obtained results Materials developed I.11.f Identify the target audience of these seminars Audience identified. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 31

32 I.11.g Schedule different seminars and include them into the global campaign for the general expansion of Competiveness and Innovation Programme Schedule fixed I.11.h Organize information and dissemination seminars according to the approved schedule Seminars organized I.11.i Analyze recommendations and suggestions of participants and carry out appropriate conclusions for the general Programme Summary of conclusions prepared Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 32

33 Output I.12 Setting-up of a Monitoring Framework for Competiveness and Innovation Programme at national and regional levels. Success indicators UNIDO Service Module(s) Counterpart(s) Information systems operational and Monitoring Framework developed and regularly updated PTC/ITP, PTC/AGR CARIFORUM Activities Parties involved Duration in months Start End Milestones I.12.a Specify needs in information/data through carrying out surveys among potential users (companies, authorities) in every beneficiary country Inquiries carried out I.12.b Introduce typical conditions for development of integrated information systems covering regional and national programmes Conditions developed I.12.c Develop information systems (including investments platform) and specify the technical and legislative conditions and the terms of use UNIDO, CDE, national and regional counterparts Information systems accepted I.12.d Elaborate a users manual and provide training for potential users Manual available and trainings provided I.12.e Develop guidelines for collection and updating the data for the Monitoring Framework making it constantly actualized and realistic Guidelines set up Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 33

34 COMPONENT II: ESTABLISHMENT/UPGRADING OF THE TECHNICAL SUPPORT INSTITUTIONS Output II.1 Success indicators UNIDO Service Module(s) Counterpart(s) Thorough diagnostics, formulation and implementation of the upgrading plans for technical centres promoting priority and export potential sectors (sectoral technical centres, research institutions, export promotion agencies, test and analysis laboratories, specialized institutions for vocational training, national technical expertise, networks and information systems). Diagnostics of upgrading plans for the technical support institutions approved and the degree of industries satisfaction with the quality of services provided by selected institutions increased PTC/AGR, PTC/PSD CARIFORUM Activities Parties involved Duration in months Start End Milestones II.1.a Conduct analysis of technical support institutions throughout the selected sectors at the regional and national levels Analysis carried out II.1.b Identify the key technical support institutions providing assistance to priority and contributing sectors (sectoral centres, research and development institutions, export promotion agencies, analysis and testing laboratories, professional education institutions specialized in technical expertise, information systems and networks). II.1.c Elaborate detailed action plans for at least three selected institutions on the basis of diagnostics on upgrading UNIDO, CDE, national and regional counterparts Institutions selected Action plans elaborated II.1.d Elaborate the terms of reference and indentify consultants to develop and implement these activities Consultants recruited II.1.e Assessment of the current situation in support institutions (questionnaires, onsite visits, etc.) through conducting diagnosis study Diagnostics by institution conducted II.1.f Identification of needs in technical assistance and preparation of upgrading plans for selected institutions Upgrading plans adopted Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 34

35 II.1.g Implement activities scheduled by the action plan Actions implemented II.1.h Organize internship programmes providing exchange in know-how and experience between the national support institutions and analogous centres throughout the region and worldwide Internships organized II.1.i Assist different institutions in developing the new services, especially related to innovation, better adapted to the needs of the local industries of the selected sectors Services developed II.1.j Develop joint activities aiming at strengthening capacities of the technical support institutions (innovation, networking, communication systems ) Activities carried out II.1.k Evaluate an impact of these actions and conduct inquiry on satisfaction degree among industrials in order to measure this impact Inquiry conducted Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 35

36 Output II.2 Success indicators UNIDO Service Module(s) Counterpart(s) Design and assistance to developing the legislative framework and procedures of the regional Competiveness and Innovation Programme at regional and national levels. Various procedures developed and approved and the Steering Committee operational PTC/AGR CARIFORUM Activities Parties involved Duration in months Start End Milestones II.2.a Determine the mission and operating procedures of the Competitiveness and Innovation Committee Mission identified II.2.b Identify the representatives of every beneficiary country to the Committee s meetings List approved II.2.d Adapt and harmonize the legislative framework directly relating it with competitiveness and innovation companies at regional level II.2.e Develop management guidelines and determine the terms of eligibility and advantages to adjust in the framework of this Programme UNIDO, CDE, national and regional counterparts Legislative framework adopted Rules and criteria developed and adopted II.2.g Organize validation seminars to adopt the legislative framework and predetermined procedures Legislative framework and procedures adopted II.2.h Conduct the training seminar on competiveness and innovation for the members of Steering Committee Seminar organized and Programme launched Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 36

37 Output II.3 Success indicators UNIDO Service Module(s) Counterpart(s) Feasibility study and assistance in establishment of financing schemes in order to facilitate access of the local SMEs to funding necessary to implement competiveness and innovation activities and to fulfil their investment plans. Procedures and mechanism of financing set up for the local SMEs PTC/ITP CARIFORUM Activities Parties involved Duration in months Start End Milestones II.3.a Assess the needs of local companies in financing modernization activities and investments, and analyze the existing obstacles to access financing Analysis conducted II.3.b Conduct inventory of studies related to the impact on bank sector in CARIFORUM and competiveness and innovation activities. If necessary, conduct specific study on this issue Inventory accomplished II.3.c Carry out a feasibility study on development of various financial products to finance competiveness strengthening and innovation activities using the best practices and existing models Study realized II.3.d Explore and propose various options to develop the Programme s performance and its role as an instrument to mobilize the financial support of banking sector to upgrading activities. UNIDO, CDE, national and regional counterparts Options of funding identified II.3.e Design a proposal on architecture of such financial products (sources of financial injections, organization of operations, management structure) Architecture identified and approved II.3.f Promote links with regional and international financial institutions Action implemented II.3.g Conduct awareness raising and training programmes as needed for the national and regional financial institutions on management and lending procedures Training programme organized II.3.h Promote a common methodology in risk assessment and handling applications on funding Methodology unified Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 37

38 II.3.i Encourage the dialogue and exchange of information between the local companies and financial institutions Action implemented Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 38

39 Output II.4 Success indicators Capacity building for the ministries in charge of industry and trade, competiveness and innovation centres, SME, employer associations, banks, experts/consultants and trainers for the implementation and follow-up of the Programme. The capacities of different institutions strengthened UNIDO Service Module(s) PTC/AGR, PTC/PSD, PTC/ITP Counterpart(s) CARIFORUM Activities Parties involved Duration in months Start End Milestones II.4.a Indentify the needs in training in the area of competiveness and innovation for the persons in charge and staff of the ministries and other institutions (agencies, general directorates) in charge of industries, sectoral and professional associations Needs identified II.4.b Preparation of the information and training programmes on competiveness and innovation approach II.4.c Identify the participants of the regional and national seminars according to the predetermined terms of reference II.4.d Organize the trainings and information seminars for the persons in charge and staff of the ministries and banks, as well as institutions in charge of SMEs, sectoral organizations and associations UNIDO, CDE, Chambers of Commerce, national and regional counterparts Programme prepared Participants identified Staff trained and sensibilized II.4.e Organize internship programmes for the selected staff members of the regional and national institutions to acquire the best practices Internship programmes organized Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 39

40 Output II.5 Success indicators UNIDO Service Module(s) Counterpart(s) Promotion, establishment and assistance in launching and running the export consortia. Formulation of measures on institutional support and creation of favourable legislative framework for export consortia. Increase in sales of the beneficiary companies by up to 15% on average PTC/PSD CARIFORUM Activities Parties involved Duration in months Start End Milestones II.5.a Organize several promotional seminars to introduce the concept of export consortia/business associations network, chambers of commerce and industry; associations of exporters, etc Seminars organized II.5.b Conduct inquiry to identify among the priority sectors the companies and groupings of companies potential exporters which desire to join the exports consortia/formal promotion networks Companies and groups identified II.5.c Conduct analysis of legislative framework on creation of exports consortia/networks Report prepared II.5.d Legally formalize the export consortia/networks II.5.e Assist the export consortia/networks in implementing the pilot activities of the business plan UNIDO, CDE, national and regional counterparts Consortia legally established Pilot activities implemented II.5.f Review and adapt to the local context the UNIDO tools/guide for the exports consortia promotion UNIDO tools/guide modified II.5.g Identify candidates to participate in trainings from the public and private organizations/ associations, including consultants Participants of trainings identified II.5.h Organize at least two training courses training courses organized II.5.i Organize the study tour for the national counterparts, consultants and the leaders of support groups to Morocco and/or Tunisia (countries possessing consolidated experience in consortia development) Study tour(s) organized Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 40

41 II.5.j Consult authorities on adopting the legal framework and support measures in order to facilitate establishment of the export consortia/networks and insure their success Legal advice provided II.5.k Group the companies taking into consideration the approved action plans and the companies features, assign the specific activities to be undertaken by each group and develop an intervention plan Groups of companies organized and validated II.5.l Identify the coaches to implement the predetermined activities with possible further accompanying by the national consultants (with less experience) Coaches recruited II.5.m Evaluate an impact of implemented actions on the companies performance Evaluation questionnaires filled in and submitted Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 41

42 Output II.6 Success indicators UNIDO Service Module(s) Counterpart(s) Strengthening capacities of investment promotion agencies and establishment of an investment platform in order to respond to the needs of investors and operators in the area of competiveness and innovation Investment platform established and common investment promotion policy elaborated. PTC/ITP CARIFORUM Activities Parties involved Duration in months Start End Milestones II.6.a Review existing studies on potential investors and priority sectors of their activities, identify, and close existing gaps 06 9 Review conducted II.6.b Revise and update investment strategies which include proactive measures on FDI promotion and the results of the study Strategies updated II.6.c Update current priorities in investment promotion strategies and, more generally, in national investment policies Current situation updated II.6.d Assist and train representatives of the national institutions in order to improve the services of the IPAs in the region II.6.e Promote networking between national institutions for the establishment of a Regional Platform for Investment Promotion UNIDO, CDE, national and regional counterparts Training done Promotion activities done II.6.f Assist national and regional actors in reaching consensus in formulation of the common investment promotion policy Policy formulated II.6.g Establish Investment Platform and ensure access of economic operators to this platform Regional Platform established and operational II.6.h Assist and train representatives of the national institutions and local enterprises on how to use and benefit from the platform and conduct the database analysis and policy evaluation Assistance and training provided Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 42

43 Output II.7 Success indicators UNIDO Service Module(s) Counterpart(s) Supporting industrial coaching for promoting of innovation, developing new products and promoting industrial diversification in the CARIFORUM region. Number of new products developed and commercialized at the national and regional levels PTC/AGR CARIFORUM Activities Parties involved Duration in months Start End Milestones II.7.a Provision of training of trainers on innovation, product development and diversification and their mechanisms Trainers trained. II.7.b Identify the list of the new products and services, which can be produced and commercialized locally or at regional level on the basis of complementary studies on the strategic positioning of the sectors and products and other available strategic and marketing studies Studies implemented, list of goods available II.7.c Prepare the concept papers for the development of these goods and services (pre-feasibility studies, etc.) II.7.d Organize promotional seminars in cooperation with concerned professional associations, the chambers of commerce and industry, industrial and exports promotion agencies UNIDO, CDE, national and regional counterparts Proposals available Seminars organized II.7.e Accompany persons or companies interested in developing and commercialization of the new goods (feasibility studies, market forecast, identification of partners, creating new businesses) Assistance provided Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 43

44 Output II.8 Strengthening of the technical and professional training institutions at the regional level. Success indicators UNIDO Service Module(s) Counterpart(s) New services provided by upgraded support institutions. Number of persons trained PTC/AGR, PTC/PSD, PTC/ITP CARIFORUM Activities Parties involved Duration in months Start End Milestones II.8.a Identify and proceed to analysis of the needs and supply capacities in providing technical and professional training for educational institutions Major indicators and trends identified II.8.b Develop training materials and manuals adapted to the region s specificities II.8.c Reinforce capacities of professional education institutions through delivery of computer equipment and the training kits UNIDO, CDE, national and regional counterparts Adapted materials and manuals available Equipment et kits delivered II.8.d Organize the training-of-trainers sessions Training sessions implemented II.8.e Assist in organizing the training sessions Assistance provided Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 44

45 ANNEX IV: PROGRAMME IMPLEMENTATION SCHEDULE Programme Implementation Planning by Output Year 1 Trimesters Year 2 Trimesters Year 3 Trimesters COMPONENT I: Support to upgrading and improving competitiveness of industries I.1 Strategic positioning study of priority and contributing products/sectors (e.g.: tourism, agro-food and fish, ICT, etc.) taking into account national specificities and capacities determining diversification.. I.2 Thorough diagnosis and competitiveness strengthening plans for the companies eligible to the Programme (global approach and specific approach) I.3 Technical support and coaching of SMEs for the implementation of the competitiveness strengthening activities in the beneficiary companies (priority to business process improvement). I.4 Launch of the HACCP, ISO 17025, ISO 22000, ISO 14000, Green Globe, Blue Flag and OSHA certification for selected companies and institutions. I.5 Assist with the implementation of programmes of traceability for specific and priority products having high potential for export (meats, fish, fruits and vegetables, flowers, coffee, cocoa ). I.6 Implementation of Quality Management Systems and their certification at beneficiary companies and institutions. I.7 Networking of intermediary organizations from CARIFORUM region and EU and strengthening professional organizations. I.8 Promotion of projects on industrial partnership/industrial coaching among the companies eligible to the Programme. Providing support to negotiating process (business-plan and fund-raising)/strategic coaching. I.9 Conduct complementary study for formulation of the national Competiveness and Innovation Programme. I.10 Strengthen cooperation in the area of competiveness and innovation at the institutional and enterprise level of the supported sectors. I.11 Design and implementation of the regional and national programmes of communication and promotion of the Programme (development of promotional materials and thematic website for the CARIFORUM Secretariat and each country) and undertaking of CARIFORUM Competiveness and Innovation Tour for the managers of industries at the regional and national levels and organization of information and dissemination seminars on Programme s results for the different production. I.12 Setting-up of a Monitoring Framework for Competiveness and Innovation Programme at national and regional levels. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 45

46 Programme Implementation Planning by Output Year 1 Trimesters Year 2 Trimesters Year 3 Trimesters COMPONENT II: Establishment/upgrading of the technical support institutions II.1 Thorough diagnostics, formulation and implementation of the upgrading plans for technical centres promoting priority and export potential sectors (sectoral technical centres, research institutions, export promotion agencies, test and analysis laboratories, specialized institutions for vocational training, national technical expertise, networks and information systems). II.2 Design and assistance to developing the legislative framework and procedures of the regional Competiveness and Innovation Programme at regional and national levels. II.3 II.4 II.5 II.6 II.7 II.8 Feasibility study and assistant in establishment of financing schemes in order to facilitate access of the local SMEs to funding necessary to implement competiveness and innovation activities and to fulfil their investment plans. Capacity building for the ministries in charge of industry and trade, competiveness and innovation centres, SME, employer associations, banks, experts/consultants and trainers for the implementation and follow-up of the Programme. Promotion, establishment and assistance in launching and running the export consortia. Formulation of measures on institutional support and creation of favourable legislative framework for export consortia. Strengthening capacities of investment promotion agencies and establishment of an investment platform in order to respond to the needs of investors and operators in the area of competiveness and innovation Supporting industrial coaching for promoting of innovation, developing new products and promoting industrial diversification in the CARIFORUM region. Strengthening of the technical and professional training institutions at the regional level. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 46

47 ANNEX V: EXAMPLES OF TECHNICAL ASSISTANCE ACTIVITIES. Corporative strategy and management Company assessment Management tools and internal strategy Strategic monitoring and follow-up Quality management and standardization Consulting on quality management Certification of Quality Management Systems Standards, norms and specification of goods, raw materials and other inputs Information systems and organization Data management systems, ICT Finance and accounting Consulting on financial management Fiscal advice Consulting on legislation Investment management Elaboration of investment proposals Consulting on investment financing Design of tender applications Production process management Metrology services Testing of raw materials and other inputs Consulting on production delivery Manufacturing process Organization of manufacturing cycle (methods and planning of production) Assistance in equipment choice Engineering or re-engineering Logistics Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 47

48 Maintenance Organization and management of preventive or curative maintenance Product development and innovation Consulting and services on product design Testing of ready-made production Products probation and certification Industrial design Consulting on technical design of production Human resources Consulting on HR management Professional competence and performance evaluation systems Introduction of results-based management Professional development and advanced training for the top and middle management and employees Consulting on marketing and communications Marketing, distribution cycle and sales mode Products promotion, advertisement and communications Subscribing to electronic news services and thematic media Training on intercultural communication Consulting and training on export and foreign trade Consulting and assistance in development of international networking and partnership Environment Certification of Environmental Management Systems Consulting on environmental management Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 48

49 ANNEX VI: SUPPORT INFRASTRUCTURE This Survey presents a rough overview of existing national and regional technical support institutions and laboratories currently providing support to manufacturing companies in CARIFORUM Countries (Part I). The list does not reflect 100% of institutions. It covers national standards setting institutions that review the compliance of merchandise products on sale within each jurisdiction with national requirements. In addition to the standardization issues, national standards bureaus are responsible for metrology which requires the verification and calibration of all weighing and measuring devices used for trading purposes. The National Productive Support Institutions of CARIFORUM typically are not restricted to a single sector but provide services to a range of sectors. Generally, research is conducted in universities, national and regional publicly funded special research institutions and, to a limited extent, in the private sector. Examples of national research institutes are the Scientific Research Council in Jamaica, the National Agriculture Research Institute in Guyana and the Institute of Marine Affairs in Trinidad & Tobago. There are three regional scientific organizations in existence 1 : the Caribbean Academy of Sciences; Cariscience; and the Caribbean Council of Science and Technology. One of the first accomplishments of the Caribbean Council of Science and Technology was the development of a Science and Technology policy review for the Caribbean. Proposals have not as yet been implemented. This Survey comprises also the summaries of activities and services offered by several national support institutions, which could serve as examples or basis for establishment of the regional centers of support to industrial enterprises (Part II). The present Programme offers a quick diagnosis followed by technical assistance to be provided to the national technical centers operating in the priority industrial sectors. 1 Ishenkumba Kawha and Harold Ramkissoon Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 49

50 PART I. LIST OF THE TECHNICAL SUPPORT INSTITUTIONS AND LABORATORIES EXISTING IN CARIFORUM REGION Antigua & Barbuda Antigua and Barbuda Chamber of Commerce and Industry Crystal Business Solutions Antigua and Barbuda Agro-Processors Association Antigua and Barbuda Bureau of Standards Gilbert Agriculture & Rural Development Centre The Bahamas Bahamas Agricultural & Industrial Corp. Bahamas Chamber of Commerce and Industry Bahamas Agricultural and Industrial Corporation (BAIC) Food Safety and Technology Laboratory Barbados Barbados Chamber of Commerce & Industry Copyright Society of Composers, Authors & Publishers Inc. (COSCAP) Barbados AgriculturalMarketing Cooperation - BADMC SBA Enterprises Inc Barbados Coalition of Service Industries Belize Belize Trade & Investment Development Service (BELTRAIDE) Belize Chamber of Commerce and Industry Belize Agricultural Health Authority (BAHA) Belize Trade and Investment Development Service, Beltraide National Fishermen Producers Cooperative Society Ltd. Dominica Dominican Republic Dominica Export Import Agency National Development Foundation of Dominica Agro processors Association Invest Dominica Dominica Bureau of Standards Dominican Centre for Export & Investment (CEI-RD) Dominican Exporters Assn ADOEXPO National Competitiveness Council Santiago Chamber of Commerce Dirección General de Normas y Sistemas de Calidad, DIGENOR Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 50

51 Instituto Dominicano de Investigaciones Agropecuarias y Forestales Instituto de Innovación en Biotecnología e Industria IIBI- Export and Investment Centre CEI-RD Junta Agroempresarial Dominicana JAD Grenada Guyana Haiti Grenada Industrial Development Corporation Grenada Chamber of Industry and Commerce Grenada Bureau of Standards Guyana Manufacturing and Services Association Ltd. Private Sector Commission of Guyana Guyana Office for Investment (GOINVEST) The Guyana Marketing Corporation (GMC) Haitian Canadian Chamber of Commerce and Industries CCIHC Asociación Hispano-Haitiana Para El Desarrollo Industrial y Comerc PROMOCOM (Centre D Appui a La Promotion Du Commerce) National Association of Fruits Transformation ANATRAF Jamaica St. Kitts and Nevis Jamaica Manufacturers' Association Ltd. Jamaica Promotion Corporation (JAMPRO) Small Business Association of Jamaica St Kitts - Nevis Chamber of Commerce St. Kitts-Nevis Multipurpose Laboratory / Bureau of Standards Nevis Agro-processors Cooperative St. Lucia St. Vincent & the Grenadines Office of Private Sector Relations St. Lucia Coalition of Service Industries National Development Corporation Saint Lucia Bureau of Standards St. Vincent & The Grenadines Chamber of Industry and Commerce Private Sector Organisation St Vincent & the Grenadines Centre for Enterprise Development Inc. Cassava Association National Investment Promotions Inc Eastern Caribbean Trading Agriculture and Development Organisation ECTAD Chamber Of Commerce And Industry Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 51

52 Suriname Suriname Trade & Industry Association (VSB) Vereniging Surinaams Bedrijfsleven Women in Business Suriname Standards Bureau SBS ADEK University of Suriname Trinidad & Tobago Business Development Company Ltd. Trinidad & Tobago Chamber of Industry & Commerce Caribbean Industrial Research Institute - CARIRI Evolving Technologies and Enterprise Development Company Limited etech Trinidad and Tobago Agribusiness Association TTABA Caribbean Association of Small & Medium Enterprises AT THE REGIONAL LEVEL CARICOM Regional Organization for Standards & Quality (CROSQ) OECS Export Development Unit Caribbean Agricultural Research and Development Institute (CARDI) Caribbean Technological Consultancy Services (CTCS) Caribbean Agribusiness Association (CABA) Caribbean Agricultural Science and Technology Networking System (PROCARIBE) Caribbean Agro-Economic Society (CAES) Caribbean Food Crops Society Caribbean Food and Nutrition Institute (CFNI) The Caribbean Poultry Association (CPA) Caribbean Export Development Agency (Caribbean Export) The Caribbean Business and Investment Support Network (CARIBISNET) Interamerican Institute for Cooperation on Agriculture IICA Caribbean Development Bank Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 52

53 PART II. EXAMPLES OF EXISTING NATIONAL AND REGIONAL TECHNICAL SUPPORT CENTERS THE BAHAMAS Bahamas Agricultural and Industrial Corporation (BAIC) The Bahamas Agricultural & Industrial Corporation is a quasi-government agency that was established through an Act of Parliament in 1981 and became operational in Its mission is to stimulate and encourage the creation, expansion and promotion of small and medium sized businesses, thereby facilitating employment and import substitution. BAIC is structured to meet the Government's goal of economic diversification and job creation through the development of small and medium-sized enterprises (SME's) in the Bahamas and has following departments: PROJECT DEVELOPMENT This Department is responsible for developing business ideas into viable projects. BUSINESS ADVISORY SERVICES This Department is responsible for providing consulting services to all Bahamian businesses TECHNICAL ASSISTANCE Through BAIC, enterprising Bahamians can access technical assistance from the following international organizations: Caribbean Technological Consultancy Services (CTSC) which is a network operated by the Private Sector Development Division (PSDD) of the CDB (Caribbean Development Bank) in cooperation with regional and National institutions, laboratories, industrial enterprises and consultants. CTCS contributes to strengthening private sector capabilities by linking people who have business and technical experience with business that need consulting advice and assistance. Interventions are carried out under three (3) principal modes: 1. Direct Technical Assistance (facilitated by consultants), 2. Workshops, 3. Job Attachments. Caribbean Export Development Agency (CEDA) MARKETING RESEARCH/STATISTICS This Department is responsible for assisting small and medium sized businesses with marketing and merchandising consultation. HANDICRAFT DEVELOPMENT This Department is responsible for the facilitation of handicraft development throughout the Bahamas. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 53

54 MICRO LENDING FACILITY This is a short term loan program which is designed as a lending facility for Bahamian manufacturers who have been awarded contracts but need to access additional monies to purchase raw materials for the completion of the contracted goods. DOMINICAN REPUBLIC Institute of Innovation in Biotechnology and Industry (IIBI) IIBI is a Government sponsored institution which promotes technology development in areas such as biotechnology and capacity building, in order to strengthen the local capability to allow competitive participation in the international market. The services that the IIBI is providing are aiming on the satisfaction of the demand of the productive sector regarding increased competiveness. Support is provided through technical assistance and consultancies. IIBI is offering energy and environment related services; runs a training centre in renewable energy; technical training, documentation and information; analytical laboratory services are additional services offered. In relation to agro-industry, IIBI is providing research and development services for new or improved food products, analytical services like shelf life determination, microbiological analysis, etc., as well as training and technical assistance in food safety matters. IIBI has a R&D laboratory and experts to support technology transfer to the productive units. The experts assist micro, small and medium enterprises and support the technology transfer with training and implementation of managerial skills. The laboratory facility also has a pilot plant to conduct trials in semi-commercial scale and to provide training in food processing matters. This Research institute seems to be unique in its kind in Central America and the Caribbean, especially for the pragmatic operation and real linkages with the productive sector in the Dominican Republic. IIBI is interested are willing to support entrepreneurs and governments neighboring countries. GUYANA Guyana Marketing Corporation (GMC) The Guyana Marketing Corporation (GMC) is a government corporation established under section 46 of the Public Corporations Act. GMC has been working over the years to promote the cultivation and export of Guyana s non-traditional agricultural crops to Regional and Extra-Regional markets. In 1985 the policy of the Guyana Marketing Corporation was changed. There was a total cessation of all buying and selling operations, and a mandate to provide market facilitation services to the private sector for the export of non-traditional agricultural produce, facilitate local market development, develop and disseminate post-harvest technology, conduct market research and provide market intelligence services to farmers was adopted. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 54

55 In 1997, the GMC resumed the buying of farmers' produce and processed agricultural products and other locally manufactured items, but at prices that were negotiated directly with farmers and manufacturers. Moreover, only quality produce, for which there was a ready demand, was bought. This was part of GMC s effort to make Guyanese produce and products more accessible to consumers. In 1999, to compliment the efforts of creating a greater awareness for Guyanese products, GMC launched a Made in Guyana, Grown in Guyana campaign. This campaign was taken to all parts of Guyana and the highlight of the campaign are the Guyana Nights that are held in various regions. Apart from these activities, GMC is also charged with the responsibility for overseeing developments in the non-traditional agricultural sector. The GMC assists exporters of non-traditional agricultural products with technical advice, assistance for sourcing supplies, harvesting, cleaning, packaging and facilitating logistical arrangements for exports. Mission statement Facilitating and coordinating the development of quality non-traditional agricultural produce for export. Objectives Provide market information on crops to agricultural producers and exporters Provide market extension services to producers and exporters for all markets Make recommendations to Government on domestic agricultural policy and on measures to deliberately stimulate the export of Guyana s non-traditional export products Provide specialized services at a reasonable cost to exporters. In its Marketing activities, the GMC Provides market and marketing information, advises on the availability of produce, freight and other marketing matters Provides a one-stop desk for export documentation of non-traditional agricultural produce Conducts market studies for local and overseas markets Participates in trade fairs, and expositions to promote Guyana s fresh fruits and vegetables and also processed products Advises on the availability of trade and business opportunities Advises on kinds of produce that are being exported Facilitates the registration of exporters with the US Food and Drugs Administration (FDA) Bioterrorism Legislation registration In its Technical work, the GMC: Provides information on Post-Harvest technology of horticultural crops Facilitates training programs for farmers, Agricultural Technicians, exporters etc Monitors daily wholesale and retail prices from local markets Assists in supply sourcing for exporters Conducts field visits to assess farmers readiness for export. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 55

56 HAITI The national Association of Fruit Processors (ANATRAF) Anatraf, Association Nationale des Transformateurs de Fruits (The national Association of Fruit Processors) is an association of over 40 small fruit and food processing groups throughout Haiti. The members are food processors of jams, wine, liquors, peanut butter and others. Anatraf vision is to congregate marketing activities in one corporate like structure where purchases of supplies, such as manufacturing tools, and packaging inputs such as; jars, bottles and labels will be purchased by the cooperative. In addition they would like to market and sell the members products under one label, and/or just coordinate marketing activities, promote marketing efforts, domestically and internationally. The cooperative is very active in educating its members as to product processing, standards and development, so the members will succeed in the market place. SURINAME The Anton de Kom University of Suriname (UVS) The University of Suriname was founded on November 1, The UVS has the following faculties: the Faculty of Medical Sciences, the Faculty of Social Sciences and the Faculty of Technological Sciences and offers among others following programmes: Law; Economics, main subjects General Economics and Business Economics; Management of Education and the Study of Social Changes within Society; Public Administration; Sociology; Business Management Agricultural Production, main subjects Soil Sciences, Forestry, Agriculture, Animal Husbandry; Mineral Production, main subjects Geology, Mining; Electric Engineering, Energy Technique, Information Technique; Infrastructure, main subjects Building and Construction, Civil Engineering, Land and Water Management; Environmental Sciences, main subjects Management of Aquatic Resources, Management of Environmental and Natural Resources, Mechanical Engineering. TRINIDAD AND TOBAGO Caribbean Industrial Research Institute (CARIRI) January 1st 1970 is an historic date for CARIRI and, we trust, heralded a critical milestone in the growth of industry in Trinidad and Tobago and the Caribbean. CARIRI was established via an Act of Parliament providing for the incorporation of the Caribbean Industrial Research Institute under the laws of Trinidad and Tobago. The role of CARIRI then, and now, is spelled out in the Act as follows: Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 56

57 a) To provide technical and industrial services to public and private industrial enterprises; b) To collect and disseminate technical information, including applicable industrial enterprises; c) To undertake chemical analytic work, particularly in connection with quality control testing in food industries and other local industries; d) To provide physical (measurements) and materials testing services; e) To provide engineering services, including assistance with establishing production lines, prototype designs, and maintenance and repair problems; f) To undertake economic and technical feasibility studies, including market surveys, with a view to identifying bankable projects; g) To advise the Government of Trinidad and Tobago on the formulation of specifications, the promulgation and application of industrial processes and practices and the preparation of industrial standards; h) To engage in industrial research programmes related to the needs of Trinidad and Tobago and of the Caribbean region. CARIRI has been helping food and beverage manufacturers across the Caribbean develop unique, high quality products for more than 30 years. Our highly trained team of food technologists, food technicians and chemical engineers can advise manufacturers on process development and optimisation, provide in-plant training for small agribusiness enterprises and supply restaurants and food businesses with comprehensive food safety and quality services. With our state-of-the-art food, sensory evaluation and biotechnology laboratories and fully equipped pilot plant - we can analyze and solve any problem, formulate and commercialize products to international quality standards, test market products and conduct technical and feasibility studies. Whatever you need to do - improve an existing product, create something entirely new, make your manufacturing process more cost effective, resolve a contamination problem, set up routine preventative assessments of your products or establishment, develop a nutritional label or train employees in food processing and safety; CARIRI's Biotechnology Unit can help you. REGIONAL INSTITUTIONS Caribbean Agribusiness Association (CABA) The Caribbean Agribusiness Association shall: Coordinate the efforts of agribusiness throughout the region for the purpose of promoting a common interest through collective action and be an effective advocate of agribusiness interests before governments of the region. Promote and advance the social and economic conditions of those engaged in agricultural pursuits and to render such services to them as conditions may justify. Assist in the formulation and promotion of regional agricultural policies to meet changing national and international economic conditions; and to collaborate and cooperate with organized groups to further this objective. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 57

58 Forge and foster linkages with other relevant sectors such as transportation, banking and tourism. Assist in creating a favourable investment climate in agriculture. To provide technical and commercial support to the agribusiness sector, including international competitiveness in agro-processing. Caribbean Agro-Economic Society (CAES) The Caribbean Agro-Economic Society was formally launched on April 8, 1974 at the Ninth West Indies Agricultural Economics Conference in Jamaica. The major activity of the Society has been the organization of the Annual West Indies Agricultural Economics Conferences. This conference series started in February 1966 at the University of the West Indies. The Society has the following objectives: a) To provide a forum for the examination of all agricultural institutions, policies, systems and practices in the Region; b) To focus attention on the economic problems of agricultural production and marketing with a view to improving economic efficiency; c) To facilitate exchange and flow of ideas between universities, regional and government institutions and the private sector with respect to matters related to the economics of agricultural production and related industries; d) To disseminate agricultural information throughout the Region; e) To adopt a regional approach to the collection, collation and analysis of agricultural data; f) To establish a closer working relationship between the public and private sectors in agricultural production; g) To publish available material for the benefit of the whole region. Participants: Conferences over the years have attracted a wide range of participants including economists and sectoral planners, agrologists, teachers, agricultural economist, farmers and other social scientists. Delegates have come from Africa, Latin America, North America, Europe and most importantly, the Caribbean, both English and non- English speaking. These Conferences have informed agricultural policy throughout the Region. Ministries of Agriculture in the Commonwealth Caribbean have found them so useful that they have been supporting theses Conferences as co-sponsors. The Conferences have attracted the support of international and Caribbean institutions such as: The Ford Foundation, The British Overseas Development Agency, The Inter-American Institute for Cooperation on Agriculture, The Caribbean Food and Nutrition Institute., The Caricom Secretariat, International Development Research Centre, Ministries of Governments and other public sector agencies and private sector organizations throughout the Region. More recently, the Society has been publishing a Newsletter for circulation to members. The Newsletter is meant to keep members informed on events and issues of interests. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 58

59 Some Activities of the Society: The Society also uses its membership as a resource pool from which it can select individuals with appropriate expertise to conduct specific studies for which funding/grants have been obtained. For example, a Special Study on "Incentives and Support Systems for Food and Agriculture" in the Caribbean LDC's and Belize was commissioned by the Society. For this exercise the Society drew on the services of about twelve of its members from the various countries. Caribbean Agricultural Research and Development Institute (CARDI) Over the years, the Caribbean agricultural agenda has continued to be guided/driven by the sequence of initiatives/reports following the declaration of the Treaty of Chaguaramas, July, These include the Regional Transformation Programme for Agriculture (RTP), and The Jagdeo Initiative, which was conceptualised to hasten its implementation. Some highlights of the regional agricultural strategy are captured by Norman Girvan s priorities for regional action that are summarised as follows: The upgrading of facilities for intra-regional agricultural trade and transport; The strengthening of regional collaboration in agricultural Research & Development as well as increased funding for regional bodies; Evaluation of investment opportunities; Market intelligence-sharing of information with respect to the demand and supply of agricultural commodities. The implementation of these actions places emphasis on the generation of appropriate technology products and services in areas of: Post harvest (including cleaning, storage, sorting, packaging); Improved/state of the art analytical and (germplasm) storage equipment, capacity building etc.; Information management and distribution. The above actions are defining a major role of CARDI in support of the attainment of regional food security and the overall development of Caribbean people. In addition to this CARDI is responsible for the implementation of an efficient Technology and Innovation System (TIS) in the region. Until now CARDI is sole regional R & D institution amongst CARICOM member countries acting in this area. This is in compliance with the objectives set out in Article 3 of the Agreement Establishing CARDI as follows: 1. to provide for the research and development needs of the agriculture of the Region as identified in national plans and policies; 2. to provide an appropriate research and development service to the agricultural sector of Member States; 3. to provide and extend the application of new technologies in production, processing, storage and distribution of agricultural products of Member States; 4. to pursue for specified periods long-term research in pertinent areas; 5. to provide for the co-ordination and integration of the research and development efforts of Member States where this is possible and desirable Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 59

60 Over the last 5-10 years, many events have singularly and collectively contributed to a renewed sense of urgency and importance to the agricultural sector. Some of the more demanding factors include material disasters as occasioned by climate change, increased demand for food, especially by the rapidly developing Asian countries, increasing use of agricultural products for food and non-food items, such as, fuel and fibre. Indeed, initiatives at the global, hemispheric and regional level unequivocally link performance of the agricultural sector to food security, poverty alleviation, economic and rural development. In the Caribbean, the highest political Forum, the Conference of Heads of Government now recognises Agriculture as a major economic driver in its Development Agenda particularly with respect to ameliorating food prices/cost of living, poverty and hunger. However, this requires a New Agriculture that: Spans the entire value (food and non-food) chains; Develops direct and indirect linkages with the other productive sectors and, is market oriented; Requires significant quantum of human capital that is technologically trained; Is significantly influenced by appropriate technological processes and measures. As expressed in the Jagdeo Initiative (The Initiative), for the New Agriculture to be developed, a properly functional and integrated regional Technology and Innovation Systems (TIS) is needed. It is in this context, the Caribbean Agricultural Research and Development Institute (CARDI), as the only regional agricultural institution identified in the Revised Treaty of Chaguaramas (Chapter 12), has a key role to play in the implementation and coordination of the TIS. The approach adopted by CARDI for the fulfilment of its vision and mission is based on three pillars; bottom up/client led, working together, transparency and accountability. The Caribbean Agricultural Science and Technology Networking System - PROCICARIBE PROCICARIBE is the Caribbean Agricultural Science and Technology Networking System. It is designed to provide an institutional framework by which the region can design and implement strategies for the integration and coordination of agricultural research at the national and regional levels with linkages to international organisations. In 1996, the Caribbean Agricultural Research and Development Institute (CARDI) was mandated by the Caribbean Heads of Government to develop an agricultural science and technology system for the region. Now termed PROCICARIBE, the Caribbean Agricultural Science and Technology Networking System is designed as the mechanism to implement the sub-programme on technology generation, validation and transfer under the Regional Transformation Programme (RTP). Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 60

61 PROCICARIBE provides the institutional framework within which Caribbean governments, R&D institutions; the private sector, NGOs, farmer groups and other stakeholders design and implement strategies for the integration and co-ordination of agricultural research and development efforts at both the national and regional levels with linkages to international organisations. The key strategies of integration and coordination involve agreeing on research priorities and designing and operating research and development networks to implement projects based on these priorities. PROCICARIBE s mission is to contribute to the development of competitive agricultural business systems and enterprises for the sustainable development of the Caribbean's agricultural sector by the co-ordination of science and technology programmes among the public and private sectors, NGOs, and other agricultural R&D entities". The goal of PROCICARIBE is to develop an integrated science and technology networking system, among the public and private sectors, NGOs and other agricultural entities in support of agriculturally based industries in the Caribbean region for the attainment of international competitiveness. The organisation is aiming on the sustainable development of the Caribbean's agricultural sector while ensuring food security, poverty alleviation and environmental protection. In order to achieve its objectives, PROCICARIBE will organise and facilitate the coordination and operation of the following Industry and Thematic Networks: Caribbean Rice Industry Development Network (CRIDNET); Caribbean Fruit Network (CARIFRUIT); Caribbean Integrated Pest Management Network (CIPMNET); Caribbean Plant Genetic Resources Network (CAPGERNET); Caribbean Biosystematics Network (CARINET); Caribbean Small Ruminants Network (CASRUNET); Caribbean Land and Water Resources Network (CLAWRENET); Caribbean Post-harvest Technology Network (CAPHNET); Caribbean Agri-business and Marketing Network (CAMID); Caribbean Roots and Tubers Network (CAROT); Caribbean Vegetable Network (CARIVEG). Their focus is on the generation, validation and transfer of technology and information, nationally and regionally with links to regional and international strategic alliance partners. The aim of the networks is to improve the productivity and marketability of the agricultural sector so as to increase the competitiveness of the region's priority commodities while sustaining the natural resource base. PROCICARIBE concentrates its efforts in the following areas: Research policy harmonisation and priority analyses. Co-ordination and harmonisation of agricultural research policy and planning at the national and regional levels through National Coordinating Committees (NCCs). Agricultural R&D in areas of regional priority will be coordinated within Thematic and Commodity networks to reduce the duplication of efforts, while maximising the work of others in the region. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 61

62 Collaboration and networking amongst members of the public and private sectors, NGOs, farmers groups, etc. and provide an interface between the region and the CGIAR and other international systems concerned with sustainable development and will have strong relationships with other relevant entities. Promote the generation, publication and exchange of scientific information important to the region. Caribbean Food Crops Society The Caribbean Food Crops Society is an independent professional organization with interdisciplinary orientation and membership. It was constituted in San Juan, Puerto Rico, on May 3rd, It is not affiliated with any public or private institution. It is a non-profit organization, which fosters communication between persons capable of contributing to the development of science, technology, and production of food crops and animals in the countries of the Caribbean Basin. Objectives: The objectives of the Society are to advance and foster Caribbean food production, processing and distribution in all aspects, so as to help improve the quality of life for the people of the Caribbean. It brings together scholars, researchers, extensionists, growers, and other professionals associated with food production, distribution, and policy. It seeks to involve members from all four main language groups of the region (English, Spanish, French, and Dutch). Caribbean Food and Nutrition Institute (CFNI) CFNI is a specialized Centre of the Pan American Health Organization/World Health Organization (PAHO/WHO), which was established in 1967 to forge a regional approach to solving the nutrition problems of the Caribbean. It serves a total population of about six (6) million, a third of who live in Jamaica. The institute aims to attain food security and achieve optimal nutritional health for all peoples of the Caribbean through collaboration with Caribbean countries to enhance, describe, manage and prevent the key nutritional problems and to increase their capacity in providing effective nutritional services. Mission Statement The Mission of CFNI is to co-operate technically with member countries to strengthen their ability to analyze, manage and prevent the key nutritional problems and to enhance the quality of life of the people through the promotion of good nutrition and healthy lifestyle behaviours. The Caribbean Poultry Association (CPA) The Caribbean Poultry Association (CPA) was established in 1999 to promote the development of the Caribbean broiler and table egg industries. Its activities revolve around the pursuit of four main objectives: To improve the competitiveness of the industry; To collaborate with Governments to improve public sector services to the industry; Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 62

63 To promote trade & domestic policy supportive of the industry's development; To promote and represent the industry in national, regional and international for a. The CPA was formally incorporated in Jamaica in April 2000 and is recognized by the CARICOM Council on Trade and Economic Development (COTED) as the voice of the regional industry. There are currently 18 members, 15 poultry companies and three national associations from nine CARICOM countries which altogether account for over 70% of the region's production. The CPA is also committed to the development of the regional agro industry and in this regard is a member of the following: Caribbean Agri-business Association (CABA); Caribbean Association of Industry and Commerce (CAIC); Latin American Poultry Association (ALA). The CPA recognizes the imperative of collaborating with national governments in this new globalized environment and seeks to work closely with our colleagues in the public sector to develop all our projects. We are also resolved to maximize the use of the resources available to the regional agro food sector to implement the Industry Development Strategy being pursued by our members. In this regard, we have sought support from technical and financing agencies such as CDB, CEDP, UWI, IICA, CPEC, CDE, EBAS, and the FAO. Caribbean Export The Caribbean Export Development Agency (Caribbean Export) was established by an Intergovernmental Agreement signed by Member States of the CARIFORUM on January 1, Caribbean Export is a regional trade and investment development and promotion organisation of the CARIFORUM Member States. Its vision is to be recognised as the premier regional organisation for trade and investment development and promotion. Its mission is to increase the competitiveness of Caribbean countries by providing quality trade and investment development and promotion services through effective programme execution and strategic partnerships. Caribbean Export is committed to the achievement of the following four strategic goals: 1. Greater integration of CARIFORUM countries into the multilateral, regional and bilateral trade and investment arrangements - Facilitation of public/private sector dialogue, information exchange and implementation of trade agreements. 2. Enhanced competitiveness of firms - Targeted assistance with trade financing, innovation, trade information, marketing management and promotion in new markets. 3. Strengthened institutional capacities Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 63

64 - Support for capacity development of selected business support organisations, including technical assistance & training. - Assistance with the development and implementation of national and sector strategies. 4. Coordination/Strengthening of regional networks - Hosting Caribbean Business and Investment Support Network (CARIBISNET) - Hosting Secretariat for Caribbean Association of Investment Promotion Agencies (CAIPA) - Hosting Database of Business Support Initiatives - Coordinating Meetings of the CARIFORUM Regional Preparatory Task Force (RPTF) Task Force for Trade and Investment Caribbean Business and Investment Support Network, CARIBISNET The Caribbean Business and Investment Support Network (CARIBISNET) was established at a Regional Workshop for Business Support Organizations (BSOs) sponsored by the European Union (EU) under the 9th Caribbean Trade and Private Sector Development Programme (CTPSDP) in July CARIBISNET is a network of established Caribbean Private and Public sector nonfinancial Business Support Organizations (BSOs), whose primary goal is to improve collaboration, information exchange and the development of common services among members. CARIBISNET provides a mechanism for BSOs to: Share and exchange ideas and learning experiences as well as best practices, Build Relationships, Create Synergies, Develop and support export, investment and trade related capacities within BSOs, to increase the level of service to their clients, Coordinate joint activities, Realise economies of scale in the sharing of training capacities, Keep BSOs abreast of Trade Development Issues, Strengthening Regional Integration, Increase competitiveness of firms. Members are benefitting from: Sharing and exchanging of ideas, learning experiences as well as best practices. Developing a strong use of ICT to strengthen communication-ability engage in virtual discussions and blogs on relevant topics pertaining to the private sector and the importance of SME development. Developing and supporting export, investment and trade related capacities/resources to increase the level of service to clients. Strengthening regional integration by building and maintaining relationships as well as creating synergies. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 64

65 Realising economies of scale by sharing training capacities. Sharing a database, market intelligence and experiences on funding and technical assistance opportunities by international and regional donor institutions. Continuous maintenance and updating of the network through promotional activities showing the benefits of being a member in order to increase membership of CARIBISNET. Exchanging trade investment opportunities. The University of the West Indies UWI s mission is to unlock West Indian potential for economic and cultural growth by high quality teaching and research aimed at meeting critical regional needs, by providing West Indian society with an active intellectual centre and by linking the West Indian community with distinguished centres of research and teaching in the Caribbean and overseas. UWI recognises that as a regional university supported by the West Indian peoples, and as the sole local organ equipped to meet local requirements and to relate its own developmental programmes to them, it should give priority to regional needs. The University of the West Indies has campuses at Cave Hill in Barbados, St. Augustine in Trinidad and Tobago and Mona in Jamaica. The total student body, which is approximately 38,000, is distributed among the Faculties of Law, Humanities, Science and Technology, Social Sciences and the School of Clinical Medicine & Research at Cave Hill; Arts & Education, Medical Sciences, Social Sciences and Pure & Applied Sciences at Mona; and Science & Agriculture, Engineering, Humanities & Education, Medical Sciences and Social Sciences at St. Augustine. UNIDO S EXPERIENCE Agriculture in developing countries employs about 80 per cent of the active population and about 90 per cent of the rural population. Although in developing countries per cent of manufacturing value is generated by agro-processing industries and these products represent the major export share, only 30 per cent of agricultural production undergoes industrial processing as compared to 98 per cent in high-income countries. Beginning in 2000, UNIDO introduced the "Food Processing Pilot Centre (FPPC)" approach to its integrated programmes in Africa as part of its effort to close this gap. The Food Processing Pilot Centres function as commercial operations linking agricultural production to markets and provide a venue for demonstration and training for technology transfer and the dissemination of good farm and food processing practices. For some of the centres the provision of training and consulting services is an income-generating activity. Since it was introduced to UNIDO's Integrated Programmes in 2000 the "Food Processing Pilot Centre" approach has been applied to upgrade 27 existing food processing facilities in six African countries: Burkina Faso (4); Cameroon (2); Mali Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 65

66 (3); Morocco (3); Senegal (3); and Uganda (12). Of these countries, a number are expecting to establish additional centres during the next two years (Uganda (5-6), Morocco (10-20), Burkina Faso (4-5)). Additional countries interested in the FPPC approach are Madagascar (1 FPPC has recently been established) and Rwanda (at least two FPPC are planned). Project proposals are in the pipeline for several other countries as well. The 27 FPPCs established so far in Africa have increased the income of thousands of families along the food production chain. They have a total production capacity of more than 300 metric tonnes monthly (3,600 MT yearly). They have trained 1,882 people and increased the income of 5,500 people, improving the life of around 35,000 family members. These figures do not include jobs created along the food chain, particularly in the distribution and marketing. Each FPPC food processing facility, whose managers are qualified from both the the technical and business management viewpoint, is linked to a number of farmers and market outlets. By linking the production to the market through processing facilities, each pilot centre represents in itself a micro food value chain. The FPPCs assess market needs, decide on the products to be produced and produce them. They assist farmers (training and advisory services) to supply raw materials that conform to set specifications. In most cases the farmers are shareholders in the FPPC. Due to their small capacity, FPPCs organize themselves according to their joint commercial interests (trading company, export consortia or any other economic or commercial structure). Each FPPC established under UNIDO signs a 3-5 year Memorandum of Understanding (MOU), where it commits itself to function as a demonstration and training facility for the FPPC approach. In Burkina Faso, the four FPPCs established in the fruit and vegetable drying sector have led to an overall technology improvement in more than 25 drying units. Two additional FPPCs are being established for sheanuts and dairy processing. In Uganda (with already 12 well established FPPCs), the demand from the private sector for the establishment of FPPCs has been increasing. In 2005, five new FPPCs were established with self - financing for equipment and technical support from UNIDO. Three additional FPPCs were established in The Norweigan Development Agency NORAD and the World Food Programme (WFP) appraised the FPPC approach as the appropriate solution to support the WFP initiative Food for Assets in northern Uganda. A joint WFP-UNIDO programme is under preparation for the establishment of more than 40 FPPCs under NORAD funding. In Cameroon, after the installation of the two first FPPCs, the government has taken ownership of the approach and plans to work with UNIDO in the establishment of 50 FPPCs throughout the country. In Morocco, the counterpart appraised the approach applied through the establishment of three FPPCs (a fourth FPPC will soon start operation). The Ministry of Industry expressed its willingness to further refine the approach and use it extensively within phase II of the IP to support the National Initiative for Human Development aiming at increasing the living conditions of rural populations through employment and income generation. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 66

67 In Mali, where three FPPCs are being established, requests for further FPPCs have been received from associations of rural entrepreneurs and donor interest in the approach has been expressed. In Madagascar, where at least five FPPCs will be established within the next two years, the counterparts/beneficiaries see this approach as a means to develop agrobased commercial activities in rural areas to fight poverty and food insecurity. The FPPC approach revealed itself to be appropriate in the rural African environment and is ready for replication in other regions and countries. SURVEY OF TECHNICAL ASSISTANCE PROGRAMMES This Survey seeks an understanding of the existing technical assistance programmes in the Caribbean region in support of private sector development. It includes regional and national programmes but is only a sample of the existing programmes of technical assistance in support of private sector development. The main source of information on the programmes implemented by technical assistance providers was their official websites. Once summaries were prepared, an attempt was made to verify the information presented in the summary, clarify information and gather performance information where possible. The following programmes were identified: Regional b. The Caribbean Export Development Agency (Caribbean Trade and Private Sector Support programme (CTPSDP)); c. CTCS Network/ Caribbean Development Bank; d. Caribbean Development Bank (Unified) Special Development Fund (CDB- SDF) e. IADB (Technical Cooperation/Technical assistance); f. Multilateral Investment Fund (MIF); g. Department for International Development (DFID); h. CARICOM Trade Support (CTS) Programme; i. Centre for Development of Enterprises (CDE); j. PROINVEST; k. European Commission -European Development Fund; l. USAID. National 1. Enterprise Growth Fund Limited (EGFL), Barbados; 2. Private Sector Development Programme(PSDP), Jamaica; 3. Integrated Business Reinforcing Programme in Haïti/(Programme de renforcement intégré du milieu des affaires en Haïti) (PRIMA); Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 67

68 4. Business Development Company Limited (BDC) Research and Development Facility (RDF), Trinidad and Tobago. Key Findings 1. There is a wide range of technical assistance funds operating in the CARIFORUM region; 2. Based on the information obtained, each of the factors under the pillars of competitiveness is covered by at least one of the Funds. However, in the case of Higher Education and Training, support available may be limited. See Fishbone Diagram; 3. In monetary terms, a larger allocation of funding is available for technical assistance to address the business environment and for the public sector programmes; 4. Direct assistance to the private sector, companies and private sector associations although provided by a number of funds including, Caribbean Export, CDE, PROINVEST, MIF, CTCS Network, CARICOM trade Support and national programmes such as Enterprise Growth Fund, PRIMA, PSDP, BDC and others not included in the survey, are relatively small when considered among all funds. TECHNICAL ASSISTANCE FUNDS AVAILABLE IN THE CARIBBEAN Source Funds for technical assistance to companies and private sector organisations Caribbean Export Development Agency (Caribbean Export) 435,000 Size of Fund or Amounts Disbursed in a particular Year Phase 1 grant component out of programme of 2,000, % to the maximum of Euro 35,000 per project CTCS Network Not available Up to 3 weeks consulting time (15 working days) CDE (for the period 2002 to 2007) 3,800,000 Maximum of 50,000 and 2/3 of the total eligible project expenses. Funded by the Government of Trinidad and CARICOM Trade Support Tobago. Support is provided by way of interest 10,000,000 Programme free loans not grants to CARICOM states except Trinidad and Tobago PROINVEST amount to date(2003- Programme extended April March ,774, ) MIF, Latin America and the Country level approval: US$150,000 but grants go Not available Caribbean up to US$2 million EGF, Barbados Not available Funded by Government of Barbados Equity and technical assistance Private Sector Development Programme(PSDP), Jamaica PRIMA, Haiti 7,990,000 BDC, Trinidad and Tobago 20,000,000 Funded by EDF Not available Funded by EDF Amount awarded per project is between and , max. 90% of project cost. Maximum of TTD$100,000 per company annually, representing two thirds (2/3) of the research and development proposal cost. Maximum grant facility to a cluster is TTD$200,000. Grant Facilities of a Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 68

69 Source Funds for technical assistance primarily for public sector programmes CDB, SDF (grant component) 2006, 9,885,333 US$14,828, 000 IADB, 2007, US$64, 655,000 43,103,333 Size of Fund or Amounts Disbursed in a particular Year maximum of TTD$50,000 are also available for funding patent registration. DFID (2005/06), 37,661,000 53,801,429 USAID (2006),US $218,982,000, 145,988,000 European Union - European Development Fund (EDF) To be finalised PRIVATE SECTOR DEVELOPMENT PROJECTS/PROGRAMMES IN THE EASTERN CARIBBEAN FUNDED BY THE EUROPEAN DEVELOPMENT FUND Implementing agency Country and/or project title National Projects/Programmes St. Lucia Dominica Office of Private Sector Relations (OPSR), Office of the Prime Minister, St. Lucia 17 th December 2007 to 16 th June 2009 Amount Funding 1,861,863 Special Framework of Assistance (SFA), ,981,414 SFA 2004 SEQUA GmbH, Germany Start- up activities underway To be selected 1,000,000 SFA 2005 To be selected 1,350,000 SFA 2006 To be selected 800,000 (service SFA 2007 contract) 3.4M service, works and supplies contract St. Lucia Coalition of Service Industries 166,114 STABEX th January th January Central ICT and Electronic Policy Unit, Office of 335, STABEX 94 the Prime Minister: Public Sector Information and Communications Technology (ICT) and Electronic Government Project Envelope A: Private Sector Development: 6.885M 10 TH EDF CSP/ NIP, DEXIA 1,000,000 SFA 2004 From 28 th December 2007 ICT Development Programme 4.51 M SFA 2005 (see regional programme below) Ministry of Tourism TA: 450,000 and SFA 2006 Tourism Development Programme Start in 2008 estimate: Waitikibuli National Trail Programme 14 th December 2006 to 31 st December ,250,000 4,400,000 SFA 2003 Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 69

70 Country Grenada St. Vincent and the Grenadines Implementing agency and/or project title Dominica Hotel & Tourism Association (DHTA) / Society for Heritage, Architectural Preservation & Enhancement (SHAPE) Institutional Strengthening 1 March 2005 to 29 February Now in final stages. Service contract: Landell Mills, UK Business Gateway Project Ends in 2008 ICT Development Programme (see regional programme below) Ministry of Telecommunications, Science, Technology and Industry Project Implementation Unit No. 2 National Information, Communication, Technology Training Project 16 th November 2007 to 15 th November 2008 Ministry of Telecommunications, Science, Technology and Industry Project Implementation Unit No.1 Private Sector Development Programme 25 th October th July 2008 Ministry of Tourism, Youth and Sports Tourism Development Project (TDP) ICT Development Programme (see regional programme below) Business Gateway Centre for Enterprise Development (CED) Investment Promotion National Investment Promotion Inc.(NIPI) Economic Diversification through Private Sector Development EDF PMCU Private Sector Stimulation Ministry of Tourism, Youth and Sports Tourism Development REGIONAL PROJECTS/PROGRAMMES Amount 250,000 + budget under current work programme of 89,840. Funding STABEX 96/97 479,640 SFA M SFA 2005 XCD1,775,756 STABEX 1994 XCD2, 907,298 STABEX 1996/97 EU contribution: 5,000,000 + Government of St. Vincent & the Grenadines: 740,000 STABEX /97+ Government of St. Vincent & the Grenadines 4.53M SFA 2005 CED - 3,841,188 NIPI - 1,100,000 SFA ,000 SFA 2006 TA, Service Contract: 1,200,000; Programme estimate: 100,000 SFA 2006 St. Vincent, Grenada & Dominica ICT Development Programme for St, Vincent, 9.54M SFA 2005 Grenada and Dominica End of implementation: 28 February 2010 Caribbean Export Development Agency and 7.9M 9 th EDF the OECS - EDU Caribbean Trade and Private Sector Development Programme (CTPSDP), Phase II West Indies Rum and Spirits Producers 70.0M 8 th EDF Association (WIRSPA) Integrated Development Programme for the Caribbean Rum Sector (IDPCRS) End 30 th June 2010 Caribbean Tourism Organisation (CTO), 8.0M 8 th EDF Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 70

71 Country Implementing agency and/or project title Caribbean Hotel Association (CHA) and the Pontificia Universidad Catolica Madre Y Meastra (PUCMM) Caribbean Regional Sustainable Tourism Development Programme (CRSTDP) End 30 th June 2008 Amount Funding Findings continued 1. In addition to technical assistance funding, the MIF, EGFL and other investment funds not included in the survey such as the EIB and DEVCAP (DFL Caribbean Holdings Group) invest equity directly in enterprises. 2. Programmes targeting the Government sector appear to offer more long-term programme assistance based on country strategies. 3. Where as, with the exception of CDE which works within programmes, assistance to the private sector is more demand driven/ ad-hoc. Support activities in the European Union This review was also required to identify support activities within the EU in which CARIFORUM entities may be able to participate. Within Its Directorate of Enterprise and Industry, the European Commission administers The Competitiveness and Innovation Framework Programme (CIP). The CIP aims to encourage the competitiveness of EU SMEs, and is designed to run from 2007 to It supports innovation activities (including eco-innovation), provides better access to finance, and delivers business support services in the regions. It encourages a better take up and use of ICT to help develop the information society. It also promotes the increased use of renewable energies and energy efficiency. According to its website, though the programme is for EU member states, other third countries may participate when agreements so allow. Third countries wishing to participate should express their interest to the relevant Member of the European Commission. The CIP is divided into three operational programmes: The Entrepreneurship and Innovation Programme. The ICT policy Support Programme. Intelligent Energy Europe. A brief description of these programmes now follow. a. The Entrepreneurship and Innovation Programme This programme seeks to achieve its objectives through the following actions: Access to finance for SMEs through EU Financial Instruments targets SMEs in different phases of their lifecycle; seed, start up, expansion and business transfer. It supports investments in technological development, innovation (including eco-innovation), technology transfer and the cross border expansion of business activities. The instruments are managed by the European Investment fund in cooperation with financial institutions. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 71

72 Enterprise Europe Network is a network of regional centres providing integrated business and innovation support services. Support for initiatives to foster entrepreneurship and innovation encourages the trans-national networking of innovative companies and all other actors in the innovation process, including benchmarking initiatives and the exchange of best practice. Eco-innovation supports the development of innovative products, processes and services aiming at reducing environmental impacts, preventing pollution or achieving a more efficient and responsible use of natural resources. Support for policy making will support the organisation of conferences to assemble and publicise sectoral knowledge, inform policy makers, and make policy suggestions to increase the coherence and cooperation between member states. b. ICT Policy Support Programme This programme seeks to stimulate innovation and competitiveness through the wider uptake and best use of ICT by citizens, governments and businesses. Its objectives are: Developing a single European information space. Strengthening the European internal markets for ICT and ICT based products and services. Encouraging innovation through the wider adoption and investment in ICT. Developing an inclusive information society and more efficient and effective services in the areas of public interest. Improving the quality of life. It is executed through annual work programmes that emphasise selected themes. The themes for the 2008 Work programme are: ICT for user-friendly administrations, public services and inclusion. ICT for Energy Efficiency and Sustainability in urban areas. c. Intelligent Energy Europe This programme has the following objectives: Fostering energy efficiency and the rational use of energy sources. Promoting new and renewable energy sources and energy diversification. Promoting energy efficiency and new energy sources in transport. It is executed through the disbursements of grants in support of eligible projects. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 72

73 ANNEX VII: FIELD SURVEYS. FIELD SURVEY METHODOLOGY A field survey of entities in and directly associated with the private sector was conducted in order to identify the issues that impinge on competitiveness and innovation from their perspective. The survey was carried out through the administration of standard questionnaires in interviews as well as less formal interviews. The questionnaires were designed to relate to the entity being interviewed: Manufacturing Sector; Services Sector; Intermediary Organizations; and Government Departments and Agencies. The questions were largely based on the Global Competitiveness Report and the The Standardization of Indicators of Technological Innovation in Latin American and Caribbean Countries or the Bogota manual (Jaramillo et al, 2001). With the assistance of local facilitators in each country, respondents were selected on the basis of their involvement in the sector, and their availability and willingness to contribute. Additional opinions and views supplied out of the framework of the questionnaire were also noted. Respondents from the manufacturing sector included food and beverage processors, furniture manufacturers, construction materials and boat building. Service sector respondents included hotels, tour operators, building contractors and ICT Consultants. Government departments and agencies included ministries of agriculture, health, trade, investment and tourism promotion agencies and standards bureaux as well as food safety authorities and laboratories. Intermediary organizations included national and regional chambers of commerce, hotel associations and manufacturers associations. In addition, interviews were held with commercial and development banks and international agencies involved in development. The results were summarized based on the twelve pillars utilized by the Global Competitiveness Report including: Basic Requirements (Government Institutions/Governance, Private Institutions, Infrastructure, Financial Market Sophistication, Macroeconomic Environments and Health and Primary Education), Efficiency Enhancers (Higher Education and Training, Labour Market and Market Efficiency), Technological Readiness), and Business Sophistication and Innovation. The chart below shows the distribution of the 280 bodies and persons who were interviewed. Meetings Held 22% 7% 5% 5% 30% 31% Enterprises Government Associations Financial Ins Technical Ins Other Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 73

74 RESULTS AND ANALYSIS Summary of observations: Except for two manufacturing enterprises (each with 100% foreign ownership) and one service provider (75% foreign ownership), all the enterprises surveyed were 100% locally owned with no foreign participation. Certification to formal standards in the areas of quality, environment and safety was non-existent or extremely low, particularly in the case of manufacturing enterprises. Eighty-six percent (86%) of the enterprises surveyed reported being successful in their domestic markets. Participation in export markets, particularly extra-regional markets was low for all 3 types of enterprises studied. The enterprises listed reasons for not participating in foreign markets such as inability to meet regulatory requirements of the target markets, lack of testing facilities within their countries, lack of supplies, lack of capacity, quality problems, financial constraints and lack of capacity for product development and marketing. The level of technical staff was low, at seven percent (7%) in the case of agricultural enterprises, fifteen percent (15%) in the case of manufacturing enterprises and twenty-five percent (25%) in the case of service providers. Most of the enterprises indicated human resources were needed in the case of technicians, marketing personnel and supervisory/management personnel. Enterprises reported developing new products and processes internally, primarily based on ideas generated internally or based on wide traditional need. Solutions to problems with products and processes were found internally, with a small percent of enterprises making use of local or foreign consultants. The main source of inputs for agricultural enterprises was extra-regional, for manufacturing enterprises local and for the service providers, regional. In all instances, enterprises indicated that improvements were needed to enhance internal capacity in the areas of Marketing, Managerial, Technical, Quality, Processes, Production, ICT and Financial. All categories of enterprises believed that government support was inadequate and stated the areas in which further intervention was needed. While a small number of enterprises reported on the assistance they received from local and foreign technical institutions, all categories of enterprises believed that additional support was necessary. Enterprises varied widely on their opinion of the support received from membership organizations. Enterprises believed that additional support was needed from financial institutions, primarily in the range and cost of services offered. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 74

75 ISSUES IDENTIFIED BY SURVEY The issues affecting competitiveness and innovation according to the participants in the survey were categorized under the 12 pillars used in the compilation of the Global Competitiveness Index (GCI) published by the World Economic Forum in their Global Competitiveness Report. Three of the pillars were not included in the questionnaires and are not covered in the summary. They are the Macroeconomy, and Health and Primary Education, and Higher Education and training. A third pillar Market Size though identified as an issue was not listed as it is widely accepted as a constraint in the Regional context. The GCI groups the pillars into headings related to stages in economic development which have also been used to group and summarize the major issues identified as follows: Basic requirements Institutions Respondents reported problems with the quality of service from Government departments. Obtaining licenses and permits and other transaction processing was found to be slow. There were reports that treatment of applicants for concessions was found to be inconsistent for reasons that were not transparent. In some countries respondents were of the view that preferential treatment was given to foreigners for contracts that could be performed competitively by local suppliers. Dealing with customs and immigration departments in particular was reported to be problematic. This impacted negatively on businesses that relied on significant imports as well as enterprises in the tourism sector that believed that first impressions created at points of entry significantly affected the overall impressions of visitors. Weak law enforcement on crime and illegal imports of goods was seen as a disincentive for business growth and expansion. Institutions involved in the regulation of trade were seen to be ineffective and weak. Standards bureau and testing laboratories suffered from shortages of staff and equipment, and many of them are unable to enforce the regulations that would protect the markets of local producers from unfair competition by imports that do not meet the required standards. Infrastructure Most respondents found that transport difficulties constricted their ability to expand and export. In the tourism sector, the lack of airlift and the price of tickets negatively placed local operators at a disadvantage when compared with international competitors. In the productive sectors, the cost of sea freight in the smaller regional economies that were served by feeder operators was reported to be higher than the costs in the larger regional economies that are served by regular lines. Frequency was also reported to be a problem. This placed producers in the Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 75

76 smaller economies at a cost disadvantage when compared with their competitors from the larger economies. With the exception of Trinidad and Tobago, the cost of electric power and fuel had a negative impact on cost competitiveness. National statistical systems are not sufficiently developed to provide all of the information required to understand trends in the marketplace. Efficiency Enhancers Financial Market Sophistication Many respondents found that the range of financing products available was narrow and did not meet their needs. Equity financing in particular was difficult if not impossible to obtain. In some countries, medium and long term loans to finance acquisitions other than property are not readily available. There was a general perception that lending interest rates are to high throughout the region. This was often combined with the short term of loan products that are available making the servicing of loans onerous. Respondents also found the collateral requirements were excessive and made it impossible to obtain credit. They felt that banks did not understand the productive sectors and were not prepared to take the risks in financing them. Labour Market Respondents reported skill shortages in both middle management and supervision, and technical operations. The region suffers from both a lower rate of skill formation than is needed, and a high rate of skill loss due to migration. There were problems with attitudes and productivity of existing staff, as well as their willingness and ability to think critically; all important in moving up the scale of value creation. Local staff are considered expensive in relation to their productivity. There were still barriers to the movement of labour within the region, although the extensive use of Chinese labour on construction contracts suggests a lack of consistency in the treatment of requests for foreign workers by the authorities. There is a perception that Chinese workers are required to work longer hours for less compensation than local workers, and that their conditions of employment are significantly below normal market conditions in the region. Companies using Chinese labour are seen as having an unfair cost advantage over companies using local labour. Goods Market Efficiency Respondents were of the view that the market for finished goods was very efficient, as there was deep market penetration by imports in all areas. The markets for intermediate products used by local producers was considered inefficient as producers are not able to readily access inputs at internationally competitive prices. In the smaller economies, the supply of raw and packaging materials is irregular and expensive, as a result of shipping, port and customs inefficiencies. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 76

77 Respondents also reported barriers to intra regional trade, especially in the area of perishable food products. Technological Readiness Small market sizes and limited financial products discouraged most respondents from investing in state of the art technology. While the use of computers was wide spread, minimal use was made of productivity enhancing software. That said, smaller hotel properties depended extensively on the internet for their international marketing presence and bookings. Innovation and Sophistication Factors Business Sophistication The internal business processes in most respondents were undeveloped if the absence of certification is taken as a measure of development. In the tourism industry, respondents did not make use of reservations yield management systems, or even understand their utility. Respondents did not have access to sources of detailed market intelligence to guide their responses to market forces. Many owner managed respondents faced issues of succession, and there were no take out strategies for when current owner managers are unable to continue working. Though there is collaboration within sectors especially with regard to advocacy and lobbying, this has not developed into clusters of collaboration along and within value chains. Support to intermediary associations did not go beyond the level necessary for advocacy and the organization of basic training courses. Innovation Broadly speaking, the technology utilized in the private sector is imported rather than the result of indigenous innovation. This is not unexpected, as much of the productive capacity arose from a response to external markets or substitution of previously imported products. Undeveloped business processes affected the process of innovation as well. Although some innovation was carried out, the enterprises responding did not have formal research and development resources. The more sophisticated enterprises put together multidisciplinary teams to respond to particular challenges or needs. Their efforts can be regarded as reactive to the existing demands of the marketplace rather than proactively and systematically attempting to identify new opportunities that did not exist before, and developing marketable products and solutions. The more sophisticated companies also were involved in reverse engineering of competitors products. Some outsourced product development activity to external consultants with an industry specialization. Many pursued innovation in labeling and packaging. None of the activities pursued led to sustainable competitive advantage. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 77

78 REQUESTS FOR ASSISTANCE Requests from the 15 countries were summarized with the six (6) countries of the OECS regions being summarized together. The most popular request was that of increased efficiency of State Departments such as Customs, Ports, Immigration, Town and Country Planning and Ministries (8). This was followed by a tie for Productivity Enhancement and the implementation of Quality Management Systems with certification specifically to the ISO 9001:2000 standard (7 each). Next on the list was another tie with for assistance with gaining chemists/laboratory staff, and managers (6 countries each requested these). Table 1 summarizes the most frequent requests made while Table 2 shows the countries making the requests. Requests for Assistance Trade/Technology Exposure PR and Advertising Efficient State Depts QMS/ISO Certification Productivity Enhancement ICT Training and exposure Re-tooling of plant 2 0 Chemists/Standards Electrical and Mechanical Technicians Coordinated Institutions Management Management Training Low interest loans Land Issues Cheaper Utilities Table 1: Frequency of Requests for Assistance by Type Description Frequency Government Institutions /Governance Increased efficiency of Customs, Ports, Immigration, T&C, Ministries 8 Land/Industrial Areas/Lower Rents/Land Development Plans/Squatter 5 Regularization National Security crime fighting, anti-smuggling, coast guard resue capacity 4 Revision and Enforcement of government legislation 3 Transparency in awarding government contracts 3 Infrastructure Cheaper electricity, utilities, fuel 5 Financial Market Sophistication Lower interest loans 5 Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 78

79 Description Frequency Higher Education and Training Management Training 5 Technical and vocational training 4 Marketing Training 3 Quality Training 3 Alignment of educational system and employer needs. 3 Labour Market Chemists/Standards 6 Electrical and Mechanical Technician 6 Management 6 Computer Skills 3 Construction Trades 3 Economics/Finance 3 Market Efficiency (Business Environment) Coordinated institutional network 5 Elimination of trade barriers for intra Caribbean Trade 3 Promotion of regional programmes/public awareness campaign 3 SME Capacity Building 3 Technological Readiness Modernizing and Re-tooling of plant 5 ICT Training and exposure 5 ICT Redesign & Upgrade 4 System Implementation 4 Business Sophistication Implementation of QMS/ISO Certification 7 Productivity enhancement 7 Exposure 5 PR and Advertising 5 Environmental Management System/Recycling 4 Food Safety Training/Certification/HACCP 4 Market Intelligence/Surveys 4 Bureau of Standards development 3 Uncompetitive pricing 3 Identification of new business opportunities/contacts 3 Market Development 3 Innovation Research & Development 4 Product Development/Differentiation 3 STI support for the agricultural and manufacturing sectors 3 Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 79

80 Bahamas Barbados Belize DRep Guyana Haiti Jamaica OECS Suriname TT Table 2: Frequently Requested Forms of Assistance Government Institutions /Governance Increased efficiency of Customs, Ports, Immigration, T&C, Ministries Land/Industrial Areas/Lower Rents/Land Development Plans/Squatter Regularization National Security crime fighting, antismuggling, coast guard rescue capacity Revision and Enforcement of government legislation Transparency in awarding government contracts X X X X X X X X X X X X X X X X X X X X X X X Infrastructure Cheaper electricity, utilities, fuel X X X X X Financial Market Sophistication Lower interest loans X X X X X Higher Education and Training Management Training X X X X X Technical and vocational training X X X X Marketing Training X X X Quality Training X X X Alignment of educational system and employer needs. X X X Labour Market Chemists/Standards X X X X X X Electrical and Mechanical Technician X X X X X X Management X X X X X X Computer Skills X X X Construction Trades X X X Economics/Finance X X X Market Efficiency (Business Environment Coordinated institutional network X X X X X Elimination of trade barriers for intra Caribbean Trade X X X Promotion of regional programmes/public awareness campaign X X X SME Capacity Building X X X Technological Readiness Modernizing and Re-tooling of plant X X X X X ICT Training and exposure X X X X X ICT Redesign & Upgrade X X X X Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 80

81 Bahamas Barbados Belize DRep Guyana Haiti Jamaica OECS Suriname TT System Implementation X X X X Business Sophistication Implementation of QMS/ISO Certification X X X X X X X Productivity enhancement X X X X X X X Exposure X X X X X PR and Advertising X X X X X Environmental Management System/Recycling X X X X Food Safety Training/Certification/HACCP X X X X Market Intelligence/Surveys X X X X Bureau of Standards development X X X Uncompetitive pricing X X X Identification of new business contacts X X X Market Development X X X Innovation Research & Development X X X X Product Development/Differentiation X X X STI support for the agro and manufacturing sectors X X X Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 81

82 SUMMARY OF DATA COLLECTED BY SECTOR Agro-Industry Sector Interviews from agro-industry enterprises in all CARIFORUM countries were studied. Enterprises assessed were older than 20 years. Share of Foreign Investor All of the enterprises were completely locally owned. Financial Information The capital of enterprises surveyed averaged US$3M and investment averaged US$3.3M. 31% of the enterprises reported annual turnovers of less than US$50, % reported turnovers of US$100,001, to US$500,000 and 31% reported turnovers of more than US$1,000,000. There was no response from 15% of the enterprises interviewed. Annual Turnover of Agro-industry Enterprises No Response 15% Less than US$50,000 31% More than US$1,000,000 31% US$100,001 - US$500,000 23% Formal Systems None of the enterprises interviewed were certified to the ISO 9001:2000 quality management standard. Performance in Domestic Market Ten (10) enterprises reported being successful in the domestic market. Export Markets Eight (8) enterprises currently export regionally as well as to the French and Dutch Caribbean (Curacao, Aruba, St Martin and Martinique), Central America (El Salvador, Guatemala, Honduras) USA, Mexico, Canada, Japan and Europe (Germany, Holland, England). The average output percent exported by the enterprises was forty-three percent (43%). Six (6) of the thirteen (13) enterprises desired to operate in new markets within the countries listed above in addition to Belgium, France and China. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 82

83 Reasons for not participating in export markets The main reasons were inability to meet regulatory requirements of the target markets, lack of testing facilities within their countries, lack of supplies, lack of capacity, quality problems, lack of certification to ISO Quality Management Standards, financial constraints and lack of capacity for product development and marketing. Internal Capacity Approximately fifty percent (50%) of the enterprises reported that improvement was needed in the managerial, technical, quality, systems, ICT and financial areas and this is also reflected in the areas that were identified as requiring assistance. Internal Capacity of Agro-industry Enterprises No. of Enterprises Managerial Technical Quality Systems ICT Financial Adequate Could Improve Inadequate Agro-industry - Areas for Assistance Financial Marketing Managerial ICT Quality Production Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 83

84 Sources of Input Although a considerable amount of the raw material and consumable inputs were obtained locally, the main suppliers of inputs were extra-regional. Respondents were generally satisfied with the reliability of their suppliers. Agro- industry - Sources of Inputs No. of Enterprises 80% 70% 60% 50% 40% 30% Domestic % Regional % EU % Rest of the World % 20% 10% 0% Raw Material Consumable Inputs Agro-industry: Reliability of Suppliers No. of Enterprises Raw Material Consumable Inputs Excellent Very reliable Satisfactory Fairly Reliable Poor Human Resources The average number of employees was 90 with 7% being technical staff. Enterprises indicated the need for additional capacity in the areas of food safety, plc programming, electrical technicians, machinery operators, laboratory technicians, export sales personnel, maintenance technicians, and production technologists. Use of Consultants Thirty-one percent of the enterprises studied indicated they used consultants. Consultants were hired in the areas of project implementation, OSHA, HACCP, marketing, business planning, quality control and technology advice. Ratings of the performance of local consultants was evenly split above and below satisfactory, with most rating price less than satisfactory. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 84

85 Agro-industry: Rating of Local Consultant Services No. of Enterprises Excellent Very Reliable Satisfactory Fair Poor Quality Price Government Support 31% of the enterprises reported on government support they had received but only 8% felt the government support was adequate. Institutional Support Thirty one percent (31%) reported receiving support from local technical institutions and 85% believed that additional support from technical institutions was required. Support from Financial Institutions Seventy seven percent (77%) of enterprises surveyed indicated that additional support from financial institutions was required. Manufacturing Sector Interviews from sixteen (16) manufacturing enterprises in countries including Belize, Guyana, Suriname, St. Vincent, Antigua, Jamaica and Dominican Republic were assessed. Enterprises assessed were in operation for an average of twenty-nine (29) years. Share of Foreign Investor Fourteen (14) enterprises were 100% locally owned while the other two had no local ownership. Financial Information The capital of enterprises assessed averaged US$5.6M and investment averaged US$4.3M. Thirteen percent (13%) reported annual turnovers of US$100,001- US$500,000, twenty-five percent (25%) reported turnovers of US$500,001- US$1,000,000 and sixty-two percent (62%) reported turnovers of more than US$1,000,000. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 85

86 Annual Turnover of Manufacturing Enterprises US$100,001 - US$500,000 13% More than US$1,000,000 62% US$500,001 - US$1,000,000 25% Eleven (11) of the companies reported that their competitive advantage was based on product quality while three (3) companies based their competitive advantage on price. Formal Systems Of the enterprises, only one reported certification to ISO 9001:2000. In addition, none of the enterprises were certified to ISO 14000, Green Globe or OSH. Performance in Domestic Market All the enterprises reported being successful in the domestic market. Export Markets Thirty-nine percent (39%) of the enterprises reported that they exported regionally and twenty-four percent (24%), extra-regionally (Canada, El Salvador, Guatemala, Honduras, Italy, Mexico, USA, UK). The average output percent exported by the enterprises was forty-three percent (43%). Six (6) of the thirteen (13) enterprises desired to operate in new markets within the countries listed above in addition to Belgium, France and China. Reasons for not participating in export markets Chief among the reasons not operating in export markets were inability to meet regulatory requirements of the target markets, lack of testing facilities within their countries, lack of supplies, lack of capacity, quality problems, lack of certification to ISO Quality Management Standards, financial constraints and lack of capacity for product development and marketing. Human Resources The average number of employees was one hundred and twelve (112) with fifteen percent (15%) being technical staff. Internal Capacity Enterprises indicated the areas in which they felt improvement was needed. The major areas indicated were technical, quality and financial. The areas identified for assistance were mainly in the areas of business systems for production and quality management. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 86

87 No. of Enterprises Internal Capacity of Manufacturing Enterprises Managerial Technical Quality Systems ICT Financial Adequate Could Improve Inadequate Manufacturing Sector: Areas for Assistance Marketing 8 6 Financial Managerial ICT Quality Production Stage in Technology Life Cycle Nineteen percent (19%) of the enterprises believed themselves to be ahead of their competition with respect to use of technology, thirty-one percent (31%) reported using standard technology (average), thirty-one percent (31%) either declined to respond or did not know and nineteen percent (19%) believed themselves to be behind. Manufacturing Sector: Technology Life Cycle Stage No Response 31% Ahead 19% Behind 19% Average 31% Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 87

88 New Product Innovation Of the enterprises interviewed, forty-two percent (42%) reported developing ideas in response to wide traditional need, thirty-two percent (32%) said it was internally motivated and twenty-six percent (26%) reported that ideas were copied from elsewhere for development. Innovation in Manufacturing Enterprises Internally innovated 32% Response to wide traditional need 42% Copied from elsewhere 26% Enterprises reported that product development was mainly internal (41%) or done with the assistance of external consultants (29%). Eighteen percent (18%) admitted that their products were copied; a more rigorous examination may increase this percentage at the expense of internal product development. Product Development in Manufacturing Enterprises Internally developed or modified 41% Suppliers of equipment or input 12% Copied from similar producers 18% External consultants 29% Problem solution Solutions for problems with products or processes were mainly internally found (67%). Twenty percent (20%) of the companies reported using foreign consultants and thirteen percent (13%) used local consultants. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 88

89 Sources of Solutions for Problems with Products or Processes: Manufacturing Sector Foreign Consultants 20% Local Consultants 13% Internally 67% Sources of Input The most important source of inputs for the enterprises was domestic, and the second most important source was extra-regional. The performance of suppliers was generally satisfactory or better. Manufacturing Sector: Sources of Inputs 70% 60% 50% 40% 30% Domestic % Regional % EU % Rest of the World % 20% 10% 0% Raw Material Consumable Inputs Manufacturing sector: Reliability of Inputs No. of Enterprises Excellent Very reliable Satisfactory Fairly Reliable Poor 1 0 Raw Material Consumable Inputs Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 89

90 The most importance area in which improvement was needed was reported as production followed by quality. Improvements in marketing and management were also desired by the enterprises under study. Government Support Twenty-five percent (25%) of the enterprises reported on government support they had received but only thirteen percent (13%) felt the government support was adequate. Institutional Support Six percent (6%) reported receiving support from local technical institutions and twenty-five (25%) from foreign institutions. Thirty-one percent (31%) believed that support from technical institutions was adequate. Support from Financial Institutions Fifty percent (50%) of the enterprises interviewed believed that additional support was necessary from financial institutions. Business Membership Organizations Thirty-eight percent (38%) of the manufacturing enterprises indicated that additional support was needed from membership organizations. Service Sector Interviews from twenty-seven (27) enterprises within the service industry were assessed. These enterprises existed in Antigua(4), Bahamas(2), Barbados(3), Belize(3), Dominica(2), Grenada(2), Guyana(1), St. Kitts(2), St. Lucia(2), St. Vincent(2), Suriname(2) and Trinidad and Tobago(2). Share of Foreign Investor Enterprises assessed had existed for an average of twenty-five (25) years. Surveyed enterprises were all indigenous to the countries in which they existed. Financial Information Investment for the sample averaged US$1.5M. Of the enterprises that chose to disclose annual turnover information, eleven (11) indicated annual turnovers of more than US$1,000,000, one (1) indicated a turnover of US$50,001-US$100,000, and two (2) each indicated turnovers within the ranges of US$100,001 to US$500,000 and $500,001 to $1,000,000 respectively. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 90

91 Annual Turnover - Service Enterprises No. of Enterprises US$50,001- US$100,000 US$100,001- US$500,000 US$500,001- US$1,000,000 More than US$1,000,000 Services were provided at both the location of the enterprise (50%) as well as customers premises (50%). Sixty-eight percent (68%) of companies surveyed said their competitive advantage was based on quality while twenty-percent (20%) based theirs on price. Service Sector: Basis of Competitive Advantage No Response 12% Price 20% Quality 68% Performance in Domestic Market Eighty-one percent (81%) of the enterprises stated that they were successful in the domestic market. Export Markets Sixty-four percent (64%) currently operate in regional markets while forty percent (40%) operate extra-regionally in countries such as Canada and the United States. Thirty-six percent (36%) enjoy European Union markets including Belgium, France, Germany, Holland, Italy and the United Kingdom. Reasons for not participating in export markets The enterprises listed reasons for not participating in foreign markets such as limited technical resources, lack of capacity, lack of interest and inability to win contracts. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 91

92 Innovation Thirty-six percent (36%) of the enterprises stated that they developed ideas in response to wide traditional need, forty percent (40% developed ideas that originated within their enterprises and eight percent (8%) copied ideas from elsewhere. Service delivery process development was done internally by more than half of the enterprises (52%). Service Sector: Idea Management No Response 16% Response to wide traditional need 36% Internally innovated 40% Copied from elsewhere 8% Service Sector Process Development Suppliers of equipment or No Response input 12% 12% Copied from similar producers 8% Internally developed or modified 52% External consultants 16% Sixty percent (60%) of the enterprises solved problems with services or processes internally with no external assistance while sixteen percent (16%) used local consultants and twelve percent (12%) used foreign consultants. Sources of Solutions for Problems Service Sector Foreign Consultants 12% No Response 12% Local Consultants 16% Internally 60% Use of Consultants Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 92

93 Thirty-two percent (32%) of enterprises surveyed reported purchasing services from local consultants such as training, business plan preparation, programming, feasibility studies, project management, engineering services, accounting, auditing, environmental management, and surveys. Use of Technology In relation to their competitors, forty-four percent (44%) of enterprises interviewed believed themselves to be ahead in terms of technology use, twenty-four percent (24%) said that their technology was standard (average), and eight percent (8%) said that they were behind. Twenty-four percent (24%) of the respondents either close not to answer or were not aware of their position in the technology life cycle. Service Sector: Technology Life Cycle Position No Response 24% Ahead 44% Behind 8% Average 24% Sources of Input Consumable inputs were primarily attained regionally or extra-regionally. However, the majority of enterprises chose not to respond when asked about the reliability of their suppliers. Service Sector: Sources of Consumable Inputs Input % 60% 50% 40% 30% 20% 10% 0% Domestic % Regional % EU % Rest of the World % Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 93

94 Service Sector: Reliability of Suppliers No. of Enterprises Very reliable Satisfactory Fairly Reliable Poor No Response Formal Systems Three (3) enterprises each were certified to the ISO 9000:2000 quality management standard and the Green Globe standard respectively while one (1) enterprise each was certified to the ISO environmental management standard and OSHA respectively. Certification of Service Sector Enterprises No. of Enterprises ISO 9001 ISO Green Globe OSHA Human Resources The average number of employees was 157 with twenty-five percent (25%) being technical staff. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 94

95 Internal Capacity The enterprises studied reported that improvements were needed in the managerial, technical, systems, ICT and financial areas. The majority reported, however, that their internal capacity in the area of quality was adequate. Assistance was required in the areas of marketing and product development. Internal Capacity of Service Enterprises No. of Enterprises Managerial Technical Quality Systems ICT Financial Adequate Could Improve Inadequate Service Sector: Areas for Assistance Financial Marketing Processes Quality ICT Managerial Government Support Twenty percent (20%) of the enterprises reported on government support they had received but only 12% felt that government support was adequate. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 95

96 Institutional Support 12% reported receiving support from local technical institutions 8% from foreign institutions. Only 8% of respondents felt that the support from technical institutions was adequate. Support from Financial Institutions Forty percent of the enterprises (40%) believed that additional support from financial organizations was required. Business Membership Organizations Half of the enterprises (48%) believed that business membership organizations should offer additional support. Intermediary Organizations Fifty-three (53) intermediary organizations were interviewed. They consisted of Bahamas (3), Barbados (3), Belize (2), Dominican Republic (2), OECS (21), Guyana (3), Haiti (4), Jamaica (2), Surinam (6) and Trinidad (7). The issues that they identified were summarised in the following chart: Challenges of Intermediary Organizations Ability to develop and execute strategic plans Delivery of benchmarking services Market Intelligence Limited research capacity Limited financial resources Limited capacity to assist members with gaining financing and/or technical assistance Lack of collaboration with regional and local stakeholders Programmes available to members Government support Institutions Governemnt support institutions interviewed numbered sixty-six (66) with Bahamas (3), Barbados (4), Belize (5), Dominican Republic (4), Guyana (5), Haiti (6), Jamaica (3), OECS (26), Suriname (6), and Trinidad and Tobago (4). The issues that they identified were summarised in the following chart: Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 96

97 Challenges for Government Support Institutions Investment Promotion Staff for BoS Investment projects Private sector input Bureaucracy Collaboration Regulatory reform Implementation Market Research Funding - trade fairs Funding - shells, incubators BoS equipment BDS Skills BoS certification status BoS = Bureau of Standards Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 97

98 SUMMARY OF THE AGRICULTURAL SECTOR Problems and challenges For a region where the countries are dissimilar in size, characteristics and stage of development, it is difficult to generalize without being unfair to one country. But in an effort to analyse the situation of the agro-food-processing sector in the Caribbean, the findings could be drafted as follows. The agro-food-processing sector in the Caribbean region is in general very weak. With the exception of Jamaica, St. Vincent, Dominican Republic and Guyana, the agriculture is a sector in decline, mainly because educated young people are no longer interested in farming but rather turn to other sectors such as tourism and financing, both generating better incomes. As a result, manpower available to agriculture is reduced and became very expensive. As a consequence, agriculture has become in all countries a limited resource that must be exploited in a wise way in order to obtain the best possible profit. Nature is another factor of influence, with hurricanes and tropical torments affecting crops every year. In addition, poor post-harvest practices, lack of adequate storage facilities, absence of boundaries between agriculture and agro-industry, and unstructured supply chains increasing the raw material supply problem, result in high amounts of post-harvest losses, unsupplied agro-industries and high prices of raw materials available. Due to this, some entrepreneurs imports raw materials in large quantities or accumulate when available seriously affecting cash flow. Business environment doesn t help since in most of the islands there is no comprehensive agro-food-processing development/promotion policy and/or strategy from the governmental side. There are some initiatives and efforts dispersed and very partial; but a global view oriented to real positive change of the actual situation in the sector in order to improve economy, employment and environment does not yet exist at the national levels. In relation with this problem, there is a worrying lack of trustworthy, regularly-updated industrial statistical system diminishing severely the capacity to formulate, implement and monitor such kind of policy. The financing is reduced or absent for small and medium enterprises resulting in low investment in technology, lack of capital to grow and severe damaged cash flow enterprises. In addition, obsolete or inexistent norms and regulations related to food quality/safety, absence of a quality system and infrastructure and absence of a reliable food safety system in place, hamper entrepreneurs to access new and bigger markets overseas making hard to industrial business to aspire to grow and further develop. However, there are some countries and sectors which products are been exported to United States and European Union with all the food safety/quality implications. National and private tests as well as research and development laboratories are inexistent, under funded, understaffed or bad equipped to give proper service to the productive units. Against supposition, there are many small entrepreneurs interested in starting a food industry. Also many have attempted to start the industry in a small way. While there Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 98

99 are large industries with the technical capability, it was noticed that the small entrepreneurs lack the technical knowledge and many are doing the trial and error method which costs money, health risk and ultimate economic loss and/or close downs. The problem gets increased because of the non-existence or reduced number of specialized technicians to give assistance to the small entrepreneurs. With exception to the Dominican Republic, there is no food processing formal education; some islands do not even have a University or technical education institutions to offer, and in many cases, both manufacturing as well as agriculture are no popular careers. For those without local appropriate training in place, it became very expensive to go abroad looking for training even going to other countries in the region. Another major problem is the unavailability and the high cost of packaging materials. The glass jars, cans and even plastic bags or bottles are unavailable in smaller islands because they are not produced locally; the entrepreneurs must thus import packaging materials from abroad. The large manufacturers are able to bargain the price on large quantities as it is common in this industry all over the world, but unless some way is found to obtain the packaging materials at realistic price it is not possible to develop the food Industry in the small-scale sector. To all this, the following facts must be added: the poor managerial skills of the small and medium entrepreneurs, the absence of knowledge or proper training to enable them to take good directive decisions, the difficulties with book keeping and other issues that would enable them to formalize their financial situation and even access some funds available. Regarding the food safety matters, there are three types of industries concerned with the possibility of enforcing the food safety programmes: Large Industries that have their own programmes, developed, implemented and audited by themselves without external verification and risk of bypassing the systems and having compromises. Medium scale food industries, with limited facilities for implementing systems and thus in need of assistance, since many of them may not be able to afford certification because it is a costly process. Small manufacturers and new entrants that are unable to even imagine what is a food safety system, their production techniques being primitive, having insufficient technical background, and needing the support of an experienced person in the food safety and hygiene system available as and when necessary so that these industries can be brought up to the level of international standards in a slow and steady way. The great amount of imported food products coming into the region from different countries with good quality and competitive prices due to scale production represent an additional challenges; this strong competition makes it even more difficult to local producers to introduce and maintain products in the market. In general, imports came from extra-regional commerce, even when there are some countries in the region with capacity to supply processed food products to the rest of the CARIFORUM countries; but it gets difficult or impossible to do so mainly due to intra-regional transport problems. Finally, it is worth mentioning that some regional bodies and initiatives related to technical assistance and expertise in food processing already exist (such as CrosQ, CARIRI and CAHFSA) and include human and technological capacity to enforce Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 99

100 sectoral promotion; but mainly because of lack of funding this bodies and initiatives are weak or in-operant and different countries do not feel the advantages of being a member. In other cases, countries resent being left behind because of their impossibility to participate in meetings mainly because they cannot afford travel expenses. As a summary, the common problems encountered by the Caribbean Islands as regards to the competitiveness of their small and medium enterprises are the following: External problems: A. Absence of agro-food-processing development/promotion policy and strategy. B. Absence of trustworthy, regularly-updated industrial statistical system C. Obsolete or inexistent norms and regulations related to food quality/safety. D. Lack of quality system and infrastructure. E. Week regional bodies F. Strong competition from extra-regional commerce. Sectoral problems: A. Lack of consistent supply and quality of raw materials. B. Lack of know how C. Lack of processing technology to improve quality and productivity (equipment, facilities design, layout, etc.) D. Absence of a reliable food safety system in place (awareness on importance, norms and regulations, certification, trained auditors, etc.) E. Unavailability of financing for SME F. Lack of research and development in agro food sector due to absence of know how or proper facilities. G. Problems with inputs (cost and availability of packaging, labeling and raw material) H. High cost of energy. I. Trouble with laboratory analysis (unavailability, inconsistency, lack of response, high cost, etc.). Enterprise problems: A. Difficulties to meet standards mainly regarding with food safety, labelling and packaging B. Trouble to extent or define products shelf life C. Problems to standardize products D. Lack of managerial skills E. Non-competitive pricing F. High cost for quality certification G. Limited access to market H. Scale production unavailability I. Inefficient operation J. Accounting trouble K. Lack of know how. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 100

101 Recommendations Following recommendations are drawn from the meetings and discussions held with representatives of the Government, institutions and enterprises: Supporting the improvement of competitiveness of local producers and processors in order to enable better market access and competition in the global arena but especially with the imported products in the local market; Improving post harvest treatment of local produce; Improving infrastructure; Support cluster development and cooperation between enterprises; Development of common brands; Improving access to financing and attraction of venture capital; Supporting skills development at all levels (managerial and workers); Increase and promote technology transfer; Upgrading/Setting up of regulatory authorities (food safety, standards bureau); Strengthening local and regional acting support institutions in terms of technical expertise, scientific analysis and R&D as well as pilot plants; Activation of small loan programs; Increase the local expertise to provide consultancy services, especially related to food safety; Supporting skills development at all levels (managerial and workers); Strengthening the food safety and technology laboratories. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 101

102 ANNEX VIII: COUNTRY REPORTS. THE BAHAMAS Structure and recent performance of the Private Sector The economy of the Bahamas continues to be service oriented, dominated by tourism with financial services and construction being important additional contributors. There is some light manufacturing in New Providence and Grand Bahama where Freeport is one of the largest container ports in the world. Table 1: 2005 Gross Output by Industrial Origin, Current Prices Sectors BAH$000 s % Agriculture, Hunting, Forestry & Fishing 178,352 2 Mining, Quarrying, Electricity, Gas & Water 532,205 6 Manufacturing 602,838 6 Construction 908,470 9 Wholesale & Retail 1,094, Hotels & Restaurants 1,177, Transport, Storage & Communication 991, Financial Intermediation 959, Real Estate, Rent & Other Business Services 1,457, Public Administration & Defense 549,248 6 Education & Health 586,628 6 Community, Social & Personal Services 616,400 6 TOTAL 9,655, Source: The Central Bank of Bahamas National Accounts 2006 The tourism industry is dominated by foreign owned enterprises, the largest being the Atlantis Paradise Island Resort just off of New Providence, considered the largest hotel in Latin America and the Caribbean, and followed by the Four Seasons Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 102

103 Emerald Bay Resort on Great Exuma. Smaller properties tend to be locally owned. The development of the tourism industry has stimulated the service sector in areas such as restaurants, transportation, tours and entertainment. The distribution sector has also been stimulated to provide duty free shopping and a wider range of imports than would normally be found in an economy of similar size. Enterprises in these sectors also tend to be locally owned. Though contributing 6% of Gross Output in 2005 (at current prices) light manufacturing is encouraged with incentives and support facilities. Products include garments, processed food and beverages and construction material. Most of the enterprises appear to be locally owned and face similar challenges to those faced by SMEs throughout the region lack of locally sourced raw material, limited skills and supply chain and logistical challenges. The service sectors also lead growth in 2005, with significant contributions from Financial Intermediation (17%); Construction (14%); and Hotels and Restaurants (13%). Growth in manufacturing was 2.2%. It is difficult to perceive any radical change in the relative contributions in the sectors, even if there is a major downturn in the economies of the developed world. The tourism sector in the Bahamas is among the most competitive in the Caribbean because of its closeness to the major North American markets which favourably affects the cost of transport, and the large installed capacity which provides airlines with an attractive market. The Bahamas brand is solidly established, and was able to attract almost 4 million visitors in 2006, with the Government targeting 7 million visitors by Economic features and evolving potentials The Bahamas Government continues to aggressively pursue the development of the tourism industry through foreign direct investment. While this policy spurs growth, a significant amount of the growth in the construction phase is provided through the importation of goods and services. In their 2007 ArticleIV Consultation the IMF reported that imports as a result of new FDI hotel projects resulted in an increase in the current account deficit to over 25% of GDP in At the 2007 Caribbean Hotel & Tourism Investment Conference in Curacao it was reported that the Bahamas had a pipeline of 53 projects valued at $13.6 billion under various stages of construction. The development of the tourism sector should permit significant linkages to other sectors, especially agriculture and construction. This is however not the case for a number of factors. Though the Bahamas has a larger land mass than Jamaica with Andros Island being bigger than Trinidad, agriculture has not responded to the opportunities and accordingly agro-processing remains underdeveloped as well. While local contractors have enjoyed increased work from the new projects, the larger projects tend to bring in foreign general contractors who sometimes are able to use their in country presence as a base to launch competitive tenders for smaller projects in competition with the locals. Though proximity to North America is an advantage for the tourism sector, it probably works against the development of the productive sectors. Local producers have mentioned a preference by consumers for foreign product and are very familiar with American brands. Local producers are unable to establish a competitive brand Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 103

104 presence for their product, and cannot match product design and packaging characteristics. The tourist industry is however vulnerable to developments in the USA where prospects for a significant economic slowdown are high. The proximity to the market may work in its favour though as more distant and expensive markets would probably bear an earlier and stronger impact. That said, the Bahamas tourism product, mainly based on sun sea and sand, is a mature product and subject to the vulnerabilities of such products. Political and administrative framework The Bahamas is politically stable and the General Election in May 2007 produced a new Government with a smooth changeover. It is expected that there will be continuity in the policy of private sector led economic development. Though the fiscal balance deteriorated in 2006 and international reserves declined, the IMF believes that medium term prospects are favourable based on the sound macroeconomic policies. According to the Worldwide Governance Indicators published by the World Bank Institute, ( the Bahamas has a very high average rating of.8 overall. These indicators cover voice and accountability, political stability, Government effectiveness, regulatory quality, rule of law and control of corruption. It is only in the area of Government effectiveness that the individual rating falls below.75 to.62. This rating could possibly be as a result of human resource capacity restraints due to the availability of staff and skills to the civil service. In January 2008 the Bahamas Chamber of Commerce produced a Chronicle of Vexing Business Issues detailing by department perceived inefficiencies in doing business with the Government. Issues involved the numbers of attending staff, staff attitudes, long processing times and inconsistency in the interpretation of laws. All of these appear to be the development issues that could be expected in countries of the size of the Bahamas. Though there is a well established offshore financial sector, the range of products available to the private sector is limited. Participants in the recently conducted CDE/UNIDO survey complained about product range, collateral requirements and the cost of borrowing. The domestic banking system appears to be oriented mainly to consumer credit. According to the Central Bank s 2006 Annual report, 67.2% of credit outstanding at the end of 2006 was for personal services. Credit to the construction sector was 6.8%, tourism 4.2% and distribution 3.6%. Manufacturing received 0.9% and agriculture and fisheries 0.4%. The Central Bank reported strong demand for mortgages and the traffic jams on the streets of Nassau suggest that a lot of money is going into the acquisition of private motor vehicles. The Bahamas International Securities Exchange listed 28 securities at the end of 2006, of which 19 were in respect of publically traded companies. Market capitalisation stood at BAH$ 3.2 billion. The Bahamas Chamber of Commerce ( is the premier private sector representation organisation. It is well established and can be considered large by regional standards. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 104

105 Private Sector development programs Private sector development strategies are clearly based on the continuing development of the tourism industry with Foreign Direct Investment. The Bahamas Ministry of Tourism is organised with specialist departments dealing with different aspects of the industry. Government policy supports a buy Bahamas initiative and there are agencies to support local private sector development. The premier private sector development agency is The Bahamas Agricultural & Industrial Corporation ( The Corporation has a mandate to promote, encourage and facilitate business development, with an emphasis on SMEs in manufacturing, tourism and cottage industries. It has five departments including Business Planning Development; Business Advisory Services; Marketing and public Relations; Handicraft and Administration and Property Development. It operates the Soldier Road Industrial Park in Nassau where factory space is available at concessionary rentals. There is a Government owned Bahamas Development Bank ( which has as its objectives: to promote industrial, agricultural and commercial development in The Commonwealth of the Bahamas through the financing of, or the investing in, approved enterprises; to encourage the participation in approved enterprises by citizens of The Commonwealth of the Bahamas; generally to promote and enhance the economic development of The Commonwealth of the Bahamas. The 2005 Annual Report disclosed a net loss for the year of BAH$627,210, down from a loss of BAH$2,751,258 in Of the BAH$47 million in loans at the end of 2005, BAH$20 million or 43% of the portfolio were non-performing. The main sectors serviced by loans included services (42%) fishing (27%), transportation (13%) and manufacturing (9%). Overview of the Agricultural and Rural Sector The Bahamas is an archipelago of more than 700 islands and cays, orientated in a south-easterly direction between the Florida peninsula in the United States and the southeast coast of Cuba. The islands vary in size and population density. Andros, the largest island is 2,300 square miles has a population density of 3 people per square mile. New Providence, the island on which the capital, New Providence, is located is 80 square miles with a population density of 2,635 persons per square mile. There is a marked difference in development between the urban centres of New Providence and Grand Bahama and the other islands, commonly referred to as the Family Islands, which comprise the rural sector. The disparity in economic opportunity and services between the urban and rural sectors is the principal reason for the ruralurban drift. The population of The Bahamas was 303,611 (DOS 2000). Approximately 69% of the population lives on New Providence, 15% on Grand Bahama and 16% on the Family Islands. The disparity between the urban and rural communities is also reflected in the poverty rates. The poverty rate for The Bahamas was 9.33%, varies considerably between regions. New Providence and Grand Bahama which comprise region 1 have a poverty rate of 8.33, compared to 13.19% in region 2 (Abaco, Eleuthera and Andros), 16.64% in region 3 (Long Island and Exuma) and 20.96% in Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 105

106 region 4 (Other Family Islands).(Department of Statistics DOS) Agriculture and fisheries are important sectors in the rural community. While the number of persons employed in agriculture, hunting, forestry and fishing is only 2.0% in region 1, it is 14.5% in region 2, 13.8% in region 3 and 12.3% in region 4. The Census of Agriculture (1996) reported that just over 50,000 acres or 30% of the 169,094 acres of agriculture land were in production. Forty-two percent (21,000 acres) of the land was in crops, 16% in livestock and 42% in mixed operations. Three percent of the area in production was irrigated. The Farm Register (DOA 2005) for the major production islands of Abaco, Andros, Cat Island, Eleuthera, Exuma, Grand Bahama and Long Island divided farms into three groups, small, medium and large based on the area in production. 77% of the registered farmers are small. The agriculture sector provides 10% of crop consumption and 20% animal consumption (IDB 2003). The GDP per capita is US$17,396. The agriculture and fisheries sectors contribute 4.4% to GDP. (IMF 2005). Citrus, winter vegetables and poultry are the mainstay of the agricultural sector which is concentrated in The Abacos The main agricultural exports are citrus and agro forestry product. The Government has sought to address the broader constraints of credit for the agriculture and fisheries sectors through the introduction of a loan guarantee programme. Through the programme, commercial banks and the Bahamas Development Bank can request a guarantee from the Government of The Bahamas for up to eighty percent of loans in the agriculture and fisheries sectors. The maximum guarantee cannot exceed B$250,000.00, the loan must be repaid within ten years and the interest rate is fixed at prime plus two percent. Due to the archipelagic nature of the country, sea transport is the main method to move products. Although the present system of weekly ferry services to the Family Islands is inadequate, the Government has initiated a study to look at ways to improve the existing system. Furthermore, the Government is also seeking to address the issue of land tenure throughout the country and recently signed a loan with the Inter- American Development Bank in this regard. The agricultural sector has several constraints the most significant are: low levels of production, small production systems and inadequate transportation to urban markets, high post-harvest losses and inconsistent quality. The opportunities for the sector are to improve the efficiency of production systems and expand the area in production, reduce post-harvest losses through farmer training, invest in cool storage facilities and value added processing. Additionally, improvements in quality by greater attention to grading and packaging can offer farmers better prices for their products and provide better linkages to the tourism sector. With respect to the livestock sector the most pressing constraints are those associated with expanding production are limited established pastures, limited water availability, lack of slaughter facilities and the distance from the market. These can be addressed by providing land clearing assistance, seeds and training to support pasture establishment. However, the distance from the market of the producers means that there has to be investment in post-slaughter cool storage and packaging facilities for farmers to improve their market access. Since there are no existing slaughter facilities, these need to be established in order to improve the sanitary conditions of slaughtering. For the fisheries sector the major constraints are the distance from the fishing grounds to markets, poor transportation for moving fishery products from Family Islands to urban centres and the limited storage capacity for fishery products in Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 106

107 Family Islands. There is still an abundance of shallow water fish species that are in demand by the domestic and tourism sector. Improvements in landing sites and cleaning slabs by small-scale fisheries as well as the construction of cool storage and processing facilities would expand the opportunity for these generally resource-poor fishers to use the existing transportation systems to access the urban market. About 20 food and beverage processors are located on the islands, with half of them manufacturing soft drinks and mineral water. The other half specializes in seafood, poultry, fruits, vegetables, dairy, and sugar products. Two companies meet most of the local demand for fresh seafood products. Many food products originating from around the world are transhipped through South Florida because of cheaper transportation costs. The Bahamas imports substantial amounts directly from Panama, Puerto Rico, and the Netherlands Antilles (St. Maarten). To protect local producers, the Bahamian government uses import licenses to limit the import of fresh foods like whole poultry, and fresh produce when it is in season. In addition to the agreed CARICOM priority areas of land and water management and rural infrastructure, the Ministry of Agriculture, Fisheries and Local Government has also given priority to strengthening private sector participation in the agricultural sector by establishing and strengthening farming groups. Summary of the Government Strategy for the Agri sector The Government has outlined its medium term strategic orientation for the agricultural sector for the period in its political manifesto, Our Plan. The focus has been on: Food security and farmer income by increasing food production, Food safety, food quality and agricultural health, Sustainable environmental management, particularly better water management, Disaster management, and Food processing. The major investment programmes involve the replacement and repair of rural produce marketing infrastructure destroyed by hurricanes and the construction of new facilities such gas ripening, onion drying and storage, and cassava washing and waxing. The strategic priorities of the Government are to increase the sustainable production of food for the local and export markets in the rural areas and to expand opportunities for valued added and non-food agricultural production particularly suited to the women and youth in the small rural communities. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 107

108 Recommendations Though the population is about inhabitants the economy has to supply additional 5 million tourists. An amount allowing for increased local production for consumers with high purchasing power. Following recommendations are drawn from the meetings and discussions held with representatives of the Government, institutions and enterprises: Supporting the industrial development especially SMEs in the food processing sector; Supporting the improvement of competitiveness of local producers and processors in order to enable better market access and competition in the global arena but especially with the imported products in the local market; Improving access to financing: (lack of warranties because government owns all the agricultural land, no access to credit) and attraction of venture capital; Activation of small loan programs (in place but not functioning); Strengthening the Caribbean Technological Consultancy and Caribbean Export Development Agency to enable increased and improved technical assistance; Supporting skills development at all levels (managerial and workers); Increase and promote technology transfer; Upgrading/Setting up of regulatory authorities (food safety, standards bureau); Strengthening the food safety and technology laboratory including its pilot plant. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 108

109 Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 109

110 BARBADOS Structure and recent performance of the Private Sector The Barbados economy is service sector oriented with the Government successfully encouraging the development of tourism and offshore financial services. According to the statistical data, the dominant sub-sectors are tourism followed by construction. While there are several internationally branded hotel properties in the tourism sector, a significant amount of rooms are provided by smaller properties of below 100 rooms. Villa and condominium tourism is being aggressively promoted, though there are concerns that such developments do not yield the same levels of occupancy rates as hotels, resulting in a lower annual income per bed generated. A wide range of associated activities have been developed to support the accommodation product including attractions such as deep sea fishing, day cruises and tours as well as supporting services such as laundries and maintenance services. The distribution sector has also been stimulated by the tourism sector as there are many establishments offering souvenirs and duty free purchases. Other than the larger hotels, most of the tourism operations in Barbados are SMEs with individual or family ownership. There are no mega properties as in the Bahamas that dominate the industry and act as independent attractions. In 2007 Barbados received 1,190,887 tourist arrivals, with 48% being stop over visitors and 52% cruise ship arrivals. The manufacturing sector comprises mainly light industry including construction materials, paint, furniture, chemicals and food products. The majority of companies are locally owned SMEs. Barbados continues to develop its capacity in other service sectors with a view to exports. These subsectors include Health and wellness, Education, Business Development Services, ICT, Construction services (architecture, engineering) and production services for the entertainment industry. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 110

111 Table 2: Barbados GDP at Current Factor Cost, 2005 Sector B$million % Agriculture Mining and Quarrying Manufacturing Utilities Construction Transportation & Communication Tourism Wholesale and Retail Trade Financial and Business Services 1, Government Services Other Services TOTAL 5, Source: Calculated from data in Caribbean Development Bank Annual Economic Review 2006 Economic features and evolving potentials In their 2007 Article IV Consultation the IMF reported that economic growth had been sustained by strong construction growth activity and tourist arrivals. As in other Caribbean countries, the 2007 Cricket World Cup stimulated the creation of additional rooms to accommodate an anticipated increased influx of visitors. Inflation which spiked in 2006 due to high energy prices had begun to decline, however this would probably be reversed by the current market increases. Though the current account deficit had reduced, a fall off in capital inflows contributed to a reduction in foreign reserves relative to imports. Though the Barbados economy has continued to provide a high standard of living, its situation is vulnerable to external shocks such as downturns in the major markets for its tourism products. The Government continues to seek to increase the value added in existing sectors and to promote and seek opportunities for economic diversification. In January 2007 a Strategic Marketing Plan for the Promotion of Professional services Exports for Barbados was prepared by Emerging Market Economics. It found that while Barbados had developed a foothold in several service sector markets, it was either a late entrant or a niche player by international standards or both. The study also noted the following constraints: Lack of entrepreneurship and a resulting lack of large firms. Perceived lack of attractive opportunities for small scale service providers. Diminished export competitiveness due to high costs. Savings and investment not used to fund business expansion. The authors also observed that Barbados lacks the scale that is necessary for the cluster formation and specialisation that are important success factors in these markets. The study however proposed that service development continue in niches and with targets not considered large by international standards, but nevertheless achievable. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 111

112 In developing its economy, Barbados has decided not to pursue the options of currency devaluation or realignment, casino gambling and private beaches. Unless oil is found in Barbados waters, Barbados has few options to develop a diversified economy that is self sustainable and not vulnerable to external events. They have been pursuing the development of a knowledge based economy as a platform for a strong service sector, which is probably their best opportunity. Political and administrative framework Barbados is considered very stable politically and an election on January 15, 2008 produced the first change in Government in 14 years. The country has strong institutions, and ranks high in the Caribbean in social political and competitiveness indicators. In the UNDP s 2007/2008 Human Development Report, Barbados has a ranking of 31, the third highest in the Western Hemisphere after USA and Canada. In the Worldwide Governance Indicators for 2006 the average rating is.8 with only Regulatory Quality reported below.8 at.76. In the World Economic Forum s Global Competitiveness Index for Barbados ranks 50, the fifth highest in the Hemisphere. Since 1976 Barbados has successfully anchored its monetary policy on maintaining a fixed rate of exchange to the US Dollar of US$1=BDS$2.00.Assessments of the real exchange rate show that it is in alignment with the fundamentals. (See IMF s Barbados 2007 Article IV Consultation). The report also concludes that the Barbados tourism product remains price competitive, as overall tourism receipts have continued to rise though arrivals have remained flat. The Government continues to follow a model of private sector led development. It actively encourages Direct Foreign Investment and has simplified the procedures to be followed by investors. Controls over capital account transactions have been liberalised, and it is hoped that this will lead to further inflows. A lot of concern has been expressed locally about the influence of foreign buyers in driving up property prices. It has been pointed out though that the property developments that target international investors occupy about 2% of the total land area in Barbados. The availability of residential lots for local purchasers is constrained by land use regulations, and the time taken to obtain authorisation for change of use. This has created a situation of tight supply in relation to demand. There are two ministries with a private sector development and support mandate. They are the Ministry of Trade, Industry and Commerce ( and the Ministry of Tourism ( The Ministry of Tourism also supervises the work of the Barbados Tourism Authority ( which is involved in destination promotion and certification of premises. Private sector intermediary organisations include the Barbados Chamber of Commerce and Industry; the Barbados Manufacturers Association ( and the Barbados Hotel and Tourism Association ( The Barbados Stock Exchange ( had a composite market capitalisation of BDS$18,815 million on March 11, 2008, representing issues by 20 local and 5 cross listed entities. Information gathered during the recent CDE/UNIDO Competitiveness Survey call for a better coordination of incentives for private sector development. Both development Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 112

113 agencies and intermediary organisations faced capacity constraints, especially in the areas of human resources where there were skill shortages. Private Sector development programs Barbados has well developed private sector development programmes, subject of course to the capacity constraints of a very small country. The premier institution is the Barbados Investment and Development Corporation (BIDC) ( which administers the following programmes: Innovation Support Programme, Mentorship Programme, Incubation Programme, Business development Services, Shared Office Facilities, Special Technical Support Programme to enhance international competitiveness. The BIDC s programmes appear comprehensive and and the organisation ably led. The Enterprise Growth Fund ( was set up to succeed the Barbados Development Bank to provide funding to SMEs. The areas involved are: Loans and Equity for SMEs, Small Hotels Investments Fund, Tourism loan Fund, Agricultural Development Fund, Industrial Investment and Employment Fund, Innovation Fund It also offers technical assistance to a maximum value of BDS$70,000 to investee companies over the life of the investment. In discussions with the CEO of the fund the issue was raised of the scarcity of bankable quality proposals coming to the fund for consideration. In The Barbados Advocate of March the Prime Minister was reported as calling for a forensic audit of one of the major investments of the Fund, which also requires a new capital injection. Barbados is also the base for two regional SME support institutions, Caribbean Export Development Agency ( and Caribbean Financial Services Corporation (CFSC) ( Caribbean Export concentrates on technical assistance projects using EDF supplied funding while CSFC provides loan and equity investments, The Caribbean Development Bank ( based in Barbados also operates the Caribbean Technological Consultancy Services Network that proves technical assistance to SME s throughout the region. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 113

114 Overview of the Agricultural and Rural Sector Following a recession in 2001, real GDP in Barbados grew 0.5% in 2002, 2.0% in 2003 and 3.4% in Unemployment rate declined from 11% in 2003 to 9.8% in 2004, and inflation remained low. The economic activity is expected to improve during 2005 based on the expansion of the tourism industry and the international business and financial sector. Strong growth within agriculture and manufacturing is, however, unlikely as these sectors will face increasing international competition. Agriculture s share of GDP is continuously declining: 4.6% in 2004 compared with 6.1% in There is a declining trend of land area used for sugar and non-sugar commodities. In 2004, increased output was only registered in Chicken and livestock production (5.6% and 2.4% respectively). During the last ten years, the Government of Barbados (GoB) has been spending about 2-3% of total expenditure on Agriculture. Total population is 275,000 and the total area is 430 km2. Social infrastructure is well developed: almost 1,800 km of roads (96% paved); and 100% access to safe water both in urban and rural areas. Irrigation and drainage infrastructure covers 1000 ha, but there is potential for 3,500 ha. Barbados has made much progress in social and economic development since independence in Literacy, life expectancy and GDP per capita have improved significantly. According to the 2005 UNDP Human Development Report, Barbados is ranked 30 among 177 countries, and one of the highest among CARICOM/CARIFORUM member countries, on the basis the above-mentioned indicators. GDP per capita is over US$9,700. Despite plans to restructure and diversify the sugar industry in the face of EU price cuts, output rose by 3.1% in the 2007 crop season. However, revenues were the same, with the fall in the EU price offset by the increase in the value of the Euro. Further price cuts will be made next year, with 36% cuts to be made by Proposals for restructuring the industry remain under development. The future of the EU banana regime is also uncertain, with the tariff and quota system being challenged in the WTO by Ecuador, Colombia and the USA. Without some form of protection, the regional banana industry is unlikely to survive. Barbados has 192 food processing firms, the largest employing manufacturing sector in the island. In 2005, food processing accounted for roughly 3 percent of the total island GDP of $3.1billion. The firms also account for 35.7 percent of the export earnings of Barbados. Barbados claims the most medium- to large-scale processors of meats, fish, fruits, vegetables, pasta, bakery, confectionery, and dairy products, wheat, rice, and feed mills. They are also processing and packaging convenience foods, edible oils and fats. Several factors drive the growth of food processing in Barbados relatively high standards of living and education, increased exposure to other regions, more women in the workforce, the pursuit of a healthier society, and an increase in foreign direct investment. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 114

115 Summary of the Government Strategy The goal is to transform and reposition the agricultural sector in Barbados through the use of appropriate technology and sound management practices to achieve internationally competitive production, processing and marketing enterprises which contribute significantly to social and economic development and food security, as well as to the sustainable management of the natural base of the country. Barbados has limited natural resources and has been identified as a water scarce country. Every effort must be made to utilize the resources available to the fullest extent, while protecting the environment for future generations. Poverty alleviation and the elimination of marginalization can only be achieved if adequate income and employment can be generated for most, if not all, of the population. One route of achieving this is to develop self-reliant and prosperous rural communities. Recommendations Following recommendations are drawn from the meetings and discussions held with representatives of the Government, institutions and enterprises: Supporting the improvement of competitiveness of local producers and processors in order to enable better market access and competition in the global arena but especially with the imported products in the local market, Improving post harvest treatment of local produce, Improving infrastructure, Support cluster development and cooperation between enterprises, Development of common brands, Improving access to financing and attraction of venture capital, Supporting skills development at all levels (managerial and workers), Increase and promote technology transfer, Upgrading/Setting up of regulatory authorities (food safety, standards bureau), Strengthening BADMC in terms of technical expertise, scientific analysis and R&D as well as the existing pilot plant. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 115

116 BELIZE Structure and recent performance of the Private Sector Belize has a mixed private sector oriented economy in which agriculture, manufacturing and the service sector all play important roles. Though tourism is one of the largest employers and generators of foreign exchange, agriculture remains the leading generator of export revenue accounting for 54% of exports in Petroleum exports have risen in recent years to 28% of exports in The statistics for manufacturing include petroleum extraction, and the remaining manufacturing activity when this is excluded is small. Enterprises tend to be proprietorships or family owned businesses and there is a considerable amount of foreign direct investment in the key sectors. Table 3: GDP by activity at current prices, 2007 Sector BZ$million % Agriculture, Hunting, Forestry & Fishing Mining & Quarrying 11 0 Manufacturing Electricity & Water 86 3 Construction 87 3 Wholesale & Retail Hotels & Restaurants Transport, Storage & Communication Financial Intermediation Real Estate, Rent & Other Business Services General Government Services Community, Social & Personal Services Taxes less subsidies on products Financial services indirectly measured (113) (4) TOTAL 2, Source: Statistical Institute of Belize Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 116

117 In 2007 Belize experienced economic slowdown with real GDP growth falling to 1.6% as compared to 5.3% in Production of papaya, sugarcane, banana, citrus, farmed shrimp, garments and electricity fell for a variety of reasons including weather, crop disease and the impending termination of trade preferences granted under the Caribbean Basin Initiative. The substantial 34.1% increase in production of petroleum helped to offset these declines and the services sector also saw continued growth in free zone trade and telecommunications as well as a small increase in stay-over tourist visitors. Economic features and evolving potentials Since 1998, the economic strategy of the Government of Belize has been to stimulate private sector led growth. It encourages foreign investment and projects that result in increased production, employment opportunities, foreign exchange earnings and savings, and the transfer of technology and skills. Belize has a competitive agricultural sector in both traditional crops such as sugar and bananas, and in newer sectors such as aquaculture. The tourism product is more diversified than in most of the smaller countries of the Caribbean, in that in addition to the traditional sun sea and sand offerings, it has archaeological sites and the second longest barrier reef in the world. The recent addition of oil production though currently significant is not expected to remain so over the long term. Recent agricultural production has been disrupted by hurricanes and crop disease, resulting in a negative impact on GDP growth in The country s physical infrastructure is relatively undeveloped, which constrains growth and increases the cost of access to markets. Weak and relatively expensive transport links with the rest of CARICOM has caused local producers to look to markets in Mexico that are accessible by road. Tourism is expected to provide significant opportunities for employment, income generation and foreign exchange in the future, and this is reflected in skyrocketing increases in the prices of beachfront property and other sites with tourism potential. There is the opportunity for strong linkages between the tourism and agro-industry sectors. The industry is however vulnerable to developments in its US market, as linkages with other key markets such as Europe have not been developed. The petroleum extraction sector is expected to produce both higher volumes and better prices. Two local entrepreneurs have invested in the equipment for a microrefinery to produce refined diesel and gasoline for the local market. They project that when fully operational they will be able to supply more than 50% of the local market at prices significantly lower than the currently imported product. Government borrowing for disaster relief in earlier years has left the country with a large external debt. This was renegotiated in 2007, and the new terms have reduced short term servicing requirements to more manageable terms. Political and administrative framework Belize enjoys a stable political system, and in February 2008 there were general elections that led to a change in Government after a two terms in office by the incumbent party. The government is headquartered in Belmopan which is not in itself a commercial or business centre. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 117

118 Priorities set by the government for its attention are: Human resource development; Poverty reduction; Food security; Public safety; Environmental management; and Economic and social stability. All of this has to be addressed in context of tight fiscal discipline. Belize has one of the highest levels of indebtedness in the region, and though it has been restructured to reduce liquidity pressure in the short term, access to the market is limited. Belize has to bring its macroeconomic relationships back into alignment with expected norms in order to regain market access. A Petroleum Revenue Management Fund has been established into which oil revenues will be placed, with transfers to the government s budget limited to only real returns on the present value of oil savings. According to the IMF, although this might bring a measure of transparency and spending restraint, it is not without cost, as the returns on oil savings are likely to be less than the cost of additional borrowing that may be needed to replace lower oil revenue transfers to the budget. Belize maintains a pegged relationship of its currency to the US dollar. No restrictions are maintained on current payments, but there are restrictions on capital account transactions. There does not appear to be an unsatisfied foreign exchange demand from commercial banks, and the IMF considers the exchange rate broadly in equilibrium. Private sector advocacy is well developed with two of the leading membership organisations being the Belize Chamber of Commerce and Industry and the Belize Tourism and Industry Association. Private Sector development programs Belize has several investment incentives schemes designed to encourage private investment, including the Fiscal Incentives Act, International Business and Public Investment Companies Act, Export Processing Zone Act, and Commercial Free Zone Act. These acts provide for a range of exemptions of duties, taxes and licences that are aimed at stimulating investment. Limited resources do not permit the Belize government to establish institutions that focus on private sector development in the area of competitiveness enhancement. The government agency involved in private sector development is the Belize Trade and Investment Development Service which operates as an Investment Promotion Agency Belize depends on regional programs such as the Caribbean Trade and Private Sector Development Programme administered by Caribbean Export and the Caribbean Technological Consultancy Services Programme of the Caribbean Development Bank to assist enterprises that require external guidance and interventions. Other than this, the Inter-American Development Bank funds a programme for Improving Small Business Competitiveness in the Tourism Industry for which Belize Tourism and Industry Association is the executing agency. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 118

119 The government plans to resuscitate the Belize Development Bank to provide funding for the private sector with a capital injection from the Caribbean Development Bank. Overview of the Agricultural and Rural Sector In 2002 Belize s GDP reached US$928,000.Twelve percent (12%) of the GDP is generated though the agricultural sector (excluding fisheries), a decline from 16% in Agricultural production, amounting to US$139 million, is dominated by the traditional export crops of sugar, citrus and bananas. Papayas, red kidney beans and black-eyed peas have lately been major non-traditional export crops. The main agricultural products for local consumption are corn, rice, beans, fruits and vegetables. Farm sizes vary from 30 to over 1,000 acres and over 90 percent of farmers are considered small or subsistence farmers, cultivating less than ten acres each. Forty-one percent (41%) of the total population of some 290,000 (mid-year 2005 estimate) is working in agriculture, fisheries or forestry. The poverty index is estimated at 34% of the population, with 10.8% of these considered indigent. Among the indigenous Maya, who comprise 11% of the population and live mainly in the rural areas, poverty is estimated at an unacceptable 77%. The total rural population is 55% and these are almost twice as poor as their urban counterparts (44% vs. 24%). The small, essentially private enterprise economy is based primarily on agriculture, including agro-based industry (sugar refining and citrus processing), forestry and fishing. Sugar, the chief crop, accounts for nearly half of exports, while the banana industry is the country's largest employer. The production of oranges, which accounts for the largest acreage cultivated, grew strongly in Domestic agriculture on the other hand, includes rice, maize, beans, root crops, vegetables, poultry, beef and pigs. Exports are dominated by primary commodities mainly sugar, banana, citrus and fisheries products. Summary of the Government Strategy In the short term, Belize s economic strategy aims at strengthening its foreign reserves position and consolidating the fiscal account. In the medium to long terms the Government of Belize is addressing the poverty situation through significant propoor projects, such as the five-year US$8 million EUfunded Belize Rural Development Programme. Other initiatives in this time period include the implementation of rural community-based infrastructural projects, enhancing marketing and agroindustrial opportunities, building institutional and organizational capacity of the entire agricultural sector. The National Food and Agriculture Policy ( ) of the Ministry of Agriculture proposes that its cross-cutting policies will focus on research and development, human resource development, agro-processing, sustainable resource management, watershed management, extension, credit, trade/price, diversification and rural development Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 119

120 Recommendations Following recommendations are drawn from the meetings and discussions held with representatives of the Government, institutions and enterprises: Supporting the improvement of competitiveness of local producers and processors in order to enable better market access and competition in the global arena but especially with the imported products in the local market, Improving post harvest treatment of local produce, Improving infrastructure, Support cluster development and cooperation between enterprises, Improving access to financing and attraction of venture capital, Supporting skills development at all levels (managerial and workers), Increase and promote technology transfer, Increase the local expertise to provide consultancy services, especially related to food safety. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 120

121 Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 121

122 DOMINICAN REPUBLIC Structure and recent performance of the Private Sector The Dominican Republic has an open economy which is relatively well-endowed with natural resources and labour. It is highly dependent on international trade for the generation of new and better economic opportunities, for growth in production and job creation. The largest internal market in CARIFORUM and a strong agricultural sector has allowed the development of a large private sector led economy which has been developed by both local investors and foreign direct investment. Most of the sector is owned by individuals, families and foreign investors, as the issue of equities on the local stock exchange is still undeveloped. Table 4: GDP by activity at current prices, 2007 Sector DOP$million % Agriculture, Hunting, Forestry & Fishing 81,162 6 Mining & Quarrying 9,284 1 Manufacturing - local 209, Manufacturing - Free Trade Zone 51,917 4 Electricity & Water 30,141 2 Construction 88,559 6 Wholesale & Retail 127,753 9 Hotels & Restaurants 145, Transport, Storage & Communication 140, Financial Intermediation 69,691 5 Real Estate, Rent & Other Business Services 113,796 8 General Government Services 110,659 8 Other Services 94,070 7 Taxes less subsidies on products 129,123 9 Financial Intermediation, indirectly measured (37,706) (3) TOTAL 1,364, Source: Central Bank of Dominican Republic Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 122

123 Economic activity in 2007 as measured by Gross Domestic Product (GDP) with 1991 as a base year, demonstrates that the Dominican economy continues to exhibit a satisfactory growth rate: 7.9% in real terms. This performance was driven by the increase in income due to exchange rate fluctuations in the private banking sector, whose assets represent over 80% of the financial system. The following describes the composition of the main economic sectors considered in calculating the Dominican GDP and their performance for Agriculture Sector GDP: Agriculture, Livestock, Forestry and Fisheries In 2007, the added value of the total agriculture sector registered growth of 2.6%, boosted by the expansion of activity in rice (13.5%), grain corn (24.7%), beans (10.4%), sweet potato (58.3%), banana (14.9%) and pineapple (42.0%), among others; traditional export crops (6.6%), leaf tobacco (37.9%), sugarcane (4.5%), cocoa (20.2%), and livestock, forestry and fisheries (4.2%), Chicken production (3.9%), pork (9.0%), beef (2.8%), milk (4.7%), and eggs (3.4%), and to a lesser degree forestry (0.9%) and fisheries (4.0%). It s important to note that the growth attained reflects a slowdown compared to the high level (16.3%) exhibited in This is due to considerable damage incurred in agriculture from flooding caused by rains and of a tornado which hit the northeast. The decrease in this activity (-2.9%) can be attributed to the lowered production of potato (-25.3%), coffee (-16.4%), plantain (-3.0), and jam (-0.4%). Industrial sector GDP: mining, local manufacturing, free enterprise zones and construction Mining. The added value of mining activities in the industrial sector was positive, at 1.4%, particularly helped by the 2.7% increase in nickel production. Lime registered a slight increase of 0.7%. At the same time, construction inputs experienced a contraction of 2.4%. The trends in mining show a decrease in the growth rate compared to 2006, due to construction inputs in particular. Local Manufacturing. The added value of local manufacturing measured 0.3%, based on the positive performance of milling (12.4%) and of other manufacturing industries (2.8%), largely because of the production of construction sector inputs including cement (4.2%), rods (4.8%), and paint (57.8%). Other notable contributions were meats (4.2%), dairy products (6.4%) and miscellaneous food products (7.5%). However, the sub-sector shows a decrease in the rhythm attained in 2006 when it grew by 9.3%. This is due to the contractions reported in several activities. These include the beverage and tobacco industry (-3.1%) which weighs significantly in the GDP at 2.3%; the production of sugar (-0.8%), and of petroleum refinery products. These contracted (-18.9%), influenced by the drop in production of petroleum derivatives: liquefied petroleum gas (24.8%); gasoline (27.9%); gas oil (20.2%); and fuel oil (7.5%). Free Enterprise Zones. The added value of Free Enterprise Zones shows negative growth (-11.3%). This is largely due to the contraction of the textile industry (- 17.2%), the most influential activity in this sector, a consequence of the displacement of U.S. demand for textile products towards Asian countries, whose share of the American market went from 44.3% to 50.1%, an increase of 5.6 percentage points, to the detriment of Central American and Caribbean countries. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 123

124 Today, there are more than 550 manufacturing and exporting companies operating in the Dominican Republic's 55 Free Enterprise Zones. Approximately half of these companies are headquartered in the United States (including Puerto Rico), about 30% are based in the Dominican Republic and the remaining businesses are based in Asia especially South Korea or in Europe. Service Sector GDP The growth of the Dominican economy was propelled mainly by the activity produced in its service sub-sectors. Financial Intermediation. The added value of this activity maintained the growth trend it began in 2006, registering a robust increase of 48.0% in real terms in 2007, far exceeding the 9.3% growth attained last year. These results speak to implementation of a preventive model of supervision and regulation, which has improved the management of financial practices and resulted in a positive impact on the main performance indicators of the sector. Full-service banking was the determinant player, showing growth of 134.2% in private banks and 74.9% in public banks of this nature. The loan portfolio grew 28.0%, influenced by the increased credit granted the private sector (30.0%). Communications. The value contributed by this activity grew by 18.6% in 2007, driven mainly by the activation of wireless telephone lines. Telephone lines grew to 5.9 million, representing an increase of 945,091 lines in absolute terms over Of overall lines, approximately 5 million or 85.0% are for mobile telephones. These increased by about 900,000 lines as compared to last year. Energy and Water. This activity s added value increased 9.8%, reflecting an important increase as compared to the 3.9% attained in 2006, fed by the consumption of billable energy. The provision of potable water decreased 2.2% due to recorded interruptions from technical failures in production and pumping systems, a lack of electric power, and the drought reported in some regions of the country. Hotels, Bars and Restaurants. This sector exhibited positive performance (6.6%) in 2007, driven by the hotel sub-sector and its 1,900-room increase in hotel supply while maintaining an occupancy rate similar to To a lesser degree, the Bar and Restaurant subsector grew 1.1% through tourism-related income. Another factor was the additional 12,151 non-resident foreigners arrived as passengers and their expenditures while visiting the country (1.65%). The highest performing tourist areas in terms of occupation rates were Punta Cana-Bávaro (85.6%), Romana-Bayahibe (85.2%), and Puerto Plata (72.7%). Transportation. In 2007 this activity registered growth of 6.3%, mainly due to the increase in the volume of transported cargo. These include agriculture, manufacturing, and goods imported for national industry and consumption. Its value grew by 22.0% in 2007 as compared to It is also important to highlight the increase in such activities as national motor vehicles (7.5%), tax collection for passengers leaving the country (13.9%) and tolls for highways and bridges (5.2%). Other Services activities, described as Business Activities-Other and Real Estate- Other, showed an increase of 6.7% in 2007 as compared to 2006, measured in terms of persons employed in the activity. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 124

125 Economic features and evolving potentials The Dominican Republic is mainly dependent on agriculture, trade, services and, especially, tourism. While the services sector has surpassed agriculture as the largest job provider (due to the inception and growth of tourism and Free Enterprise Zones), agriculture still remains the most important sector in terms of domestic consumption and is only second, after mining, in terms of export. Tourism brings more than $3 billion U.S. per year. The Dominican Republic is the eighth largest economy in Latin America and the Caribbean after Brazil, Mexico, Argentina, Venezuela, Colombia, Chile and Peru. Since the 1990 s the Dominican Republic has undergone a profound economic transformation. In the last year, the Dominican economy grew approximately 8%, one of the highest growth rates in the region. The Dominican state recognizes the need to attract long term investments and high-value jobs to sustain development and diversify sources of economic growth. Its major export markets are the United States, Puerto Rico, Spain, Italy, Canada, the Netherlands, South Korea, the United Kingdom, Belgium-Luxembourg, and Haiti. 77% of the exports from Free Enterprise Zones in the Dominican Republic go to the United States, 12.41% towards Europe, 4.8% to Asia, 0.62% towards Central America and the Caribbean and 0.24% to the English-speaking Caribbean. The Central Bank report affirmed that the tradable goods index, consisting of those goods that can feasibly be traded internationally, fluctuated 7.12% due to the increase of prices for gas, alcoholic beverages, and cigarettes. Similarly, the index of non-tradable goods and services, those produced and consumed only in the local market, showed 1.74% growth which coincided with rising prices for fresh chicken, red onion, powdered and evaporated milk and land transportation services. These increases were tempered by drops recorded in staples such as sugar, beans, and rice. Trade policy in the last two decades has centred on the consolidation of the country s participation in the world economy, through the search for new and better markets for an ever-more diversified domestic supply of exportable goods and services. For this reason the country maintains its active participation in processes such as multilateral negotiations, the signing of treaties and bilateral free trade agreements. The country s competitiveness will grow with better fiscal management, more solid capital markets, free trade agreements, strategic alliances resulting in productive investment, strengthening of the energy system, expansion of rural electrification, and opportunities for small businesses. These results can be achieved via activities in: 1) reform of key economic policies; 2) increase in public-private strategic alliances for competitiveness initiatives; 3) establishment of alliances for the implementation of the National Plan for Rural Electrification in selected communities; and 4) the capacity to meet the obligations of fortified international trade exchanges. A variety of studies reveals that the main strengths shown by sectors of the Dominican economy can be summarised in the following way: The contributions of the respective sectors in the generation of jobs and to the Dominican GDP. Well-developed Free Enterprise Zones and industrial zones with good internal infrastructure. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 125

126 New port facilities in Caucedo, competitive costs of land and communications and easy air access to the United States. Potential opening of unlimited access to the Dominican Republic s local markets by companies of the Free Enterprise Zones to the extent that the government adheres to the WTO guidelines for elimination of subsidies. The structure of the Free Enterprise Zones provides solid support infrastructure to those businesses that wish to take advantage of tax-free incentives to establish themselves in the country. Although these incentives are currently being scrutinised by the WTO, today Dominican law allows business parks near Santo Domingo and Santiago to offer income tax exemptions for 20 years, whereas those in rural areas may request 25-year exemptions. An excellent logistical and promotion platform for Dominican tourism both nationally and internationally. This platform is closely tied to the hotel, bar and restaurant sub-sector. Among the weaknesses of the sectors figure: Traditional dependence on the North American market as the primary destination for the products of the goods-producing sector. This dependence has been affected, among other ways, by global regulatory changes derived from diverse free trade agreements that have become a threat to competitiveness, mainly for goods created in Free Enterprise Zones and the agriculture sector. Free Enterprise Zones have not had the desired domino effect on the rest of the country s productive apparatus. Tourism that has developed until now has been specialised in low-cost service and they tend to have an enclave-type nature. Inadequate infrastructures in land that allow to receive, process, conserve and commercialize products of the agricultural sector. Installation of docks, processing areas and cold rooms are a high initial investment for the agriculture and fisheries sector, yet they are fundamental pieces of the puzzle to guarantee efficiency, to improve quality and improve the profitability of these activities. Low consolidation levels within agroindustry. The new economic order requires that countries evaluate both their rank in free and modern trade. The key lies in harmonizing procedures, simplification of paperwork for registration and sanitary permits, as well as in improving information systems. This is something that all countries should do together. The main challenge facing the Dominican Republic to achieve customs integration is to establish a transparent customs administration modelled on WTO norms for imports coming mainly from the U.S. and Central America. This would lead to the elimination of consular procedures, to modern customs legislation and a reduction in arbitrariness discretional costs. Other challenges facing the domestic market in elevating levels of competitiveness to other countries in the region consist in: Improving the business climate; Increasing national productivity through a national system for training, technology transfer and quality improvement; Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 126

127 Implement trade facilitation project; Clusters development programme (agriculture, manufacturing, tourism and services); Implementing policies to defend competition. Currently the focus on improving levels of competition in the Dominican economy lie in efficiencies of the goods and labour markets and sophistication in the financial market. Set in the context of the Americas, Dominican initiatives today are in the second stage of the market expansion process. The same is true for Chile, Argentina, Brazil, Costa Rica, Peru, Panama, Mexico and Uruguay. Political and administrative framework The Dominican Republic is politically stable with general elections leading to peaceful changes of government, the last election being held on May 16, The Government actively supports private sector led economic development through a variety of support strategies. The Dominican state is continuing its process of active elimination of old barriers to trade and investment. To meet this goal it has emphasised the development of a new business environment that takes advantage of many of the country s resources and its competitive advantages such as: Great political and macroeconomic stability; An abundance of highly qualified labour; Excellent communications infrastructure; Highly developed banking and insurance system; No-risk Free Enterprise Zone environment; Attractive fiscal and financial incentives; Excellent training programs to improve skills and increase workforce productivity; Strategic geographic position. Currently, the Dominican Republic has two main fiscal incentive instruments for exports at its disposal: The Free Enterprise Zone Law (Law 8-90), which free the business working in them from having to meet standard Dominican customs and fiscal regulations; and the Law to Reactivate and Encourage Exports (Law 84-99) which uses three distinct plans to promote exports: i) Reintegration of customs rights and duties; ii) Simplified compensation for customs duties paid in advance; and iii) Temporary admissions procedures for purposes of inward processing. In practice, only the second system has been operational, and only used to a limited extent. The Dominican Republic has adopted a flexible exchange rate regime. The stability of the nominal exchange rate has been maintained. Its rate at the end of 2007 was only slightly above the prior year s average. Central Bank interventions in the exchange market were limited to avoiding excessive appreciation of the real exchange rate, made possible by the influx of foreign capital and the inflation differential. From October 2006 to October 2007 the peso appreciated in real terms, 3% with respect to the dollar. The national finance sector is comprised of commercial, development, mortgage, and full-service banks. The General Banking Law and other special laws such as the Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 127

128 Mortgage Banking Law establish the form and function of these banking entities. The Monetary Board s role is to dictate the rules for full-service banks. The Superintendency of Banks states that 12 full-service banks operated in the country in Three of these are foreign banks: Scotiabank, Citibank and Republic Bank. Nine are development banks, one a credit corporation, eight savings and credit organizations, 18 savings and loan associations, 44 financial institutions, 23 small loan lending banks and 5 governmental finance institutions. Three commercial banks concentrate the majority of their business in the banking system, and dominate the domestic credit market and placement of deposit instruments. These are the Banco Popular Dominicano, the Banco Dominicano del Progreso (both of private capital) and the Banco de Reservas (state capital). In 2007, the country continued its process of transforming financial intermediation entities to meet figures set out in the Monetary and Finance Law. It also worked to improve such bodies compliance with requirements set by monetary authorities to adjust their organisational structure to operate according to new allowed figures. Private Sector development programs Among those programmes currently being implemented for development of small and medium-sized business (SMEs) are some programmes directly supported by the government and international donors: Programme for the Promotion and Support of Micro, Small and Medium-Sized Businesses (PROMIPYME). PROMIPYME was created in May 1997 through decree as an institution specialised in offering financial and non-financial services to the sector. The programme is carried out via Banco de Reservas offices distributed throughout the country; it falls under the purview of the Ministry of Industry and Trade. PROMIPYME s fundamental goal is promoting the efficiency, modernisation and growth of businesses in this sector. The strategy is intended to generate jobs, improve the quality of life of low and middle income wage earners, improve national levels of competitiveness, and offer financial and non-financial services. The financial needs of micro, small, and medium-sized businesses can be satisfied through a specialised fund administered by Banco de Reservas: and The National Competitiveness Council (CNC in Spanish). The CNC is an organisation with public and private sector participation. Its main objective is to formulate, implement and develop competitive strategies for the national economy's vital productive sectors, thereby structuring national policy to confront challenges of globalisation and trade liberalization. The National Plan for Systemic Competitiveness was created and implemented by the CNC under the Competitiveness Law passed in It describes its focus as covering six levels or subsystems, including the mesoeconomic system, a sector approach. Three factors are considered using this system: a) organisational aspects b) logistics c) technological capital. These elements comprise precisely the types of capital that must be bolstered on the road towards competitiveness. They define the systemic competitiveness strategies for each sector. This explains the emphasis that the country has placed on encouraging development of productive clusters which, among other advantages, generate notable earnings in Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 128

129 productive processes due to economies of scale. By the same token these organizational arrangements develop logistical capital, becoming platforms to promote better infrastructure development (for ports as well as highways and bridges). At the same time, the technological capital component is responsible for promoting innovation, without which it would be very difficult to increase levels of competitiveness within sectors. Another of the actions planned to increase SME competitiveness in agroindustry is the program: Aid to Small and Medium-Sized Business of Central America and the Dominican Republic for Technical Requirements for Market Access under the Free Trade Agreement among the Dominican Republic, Central America and the United States (DR-CAFTA). The main goal of the program, implemented with the assistance of the International Development Bank (IDB), is to establish and validate a model to take advantage of opportunities created by DR-CAFTA in a focused manner. This would allow SMEs to find solutions to non-tariff barriers to market access by the agribusiness sector to selected subsectors and products. The technical mission of the Republic of China (Taiwan) offers permanent technical assistance in raising salt and freshwater shrimp. The Japanese government, through JICA, offers assistance in the management of fisheries with focus on techniques and equipment maintenance, among other activities. Recently, FAO aid was granted to train fisheries technicians and entrepreneurs in applying the HACCP system to maintain food safety in fish and seafood within these industries. CARICOM s fisheries unit, within the framework of the Integrated Agriculture and Fisheries Programme for the Caribbean region (ICRAFD), offers technical and financial assistance to the national bureau for fisheries, part of the Undersecretary of Coastal and Marine Resources. Its purpose is to strengthen and evaluate fisheries resources and to review and analyze existing historic fishing data for marine fishing entities in the Dominican Republic. Programme for the Development of Competitive Advantages, a foreign credit programme through the Inter-American Development Bank, IDB. This project has a significant impact on setting productivity and competitiveness as the main strategic focus for national development. This component is also an important factor in the modernisation of the national economy as one of the government s principal axes. Overview of the Agricultural and Rural Sector Economic activity is skewed towards 3 principal sectors; tourism, the free zones and agriculture. Although the service sector has taken over from agriculture as the leading employer of Dominicans (due principally to growth in tourism and the Free Trade Zones), agriculture remains the most important sector in terms of domestic consumption and is second place (behind mining) in terms of export earnings. The traditional export crops were sugar, coffee, cocoa and tobacco, but the country's agricultural sector has moved away from such crops, with increased production and exports of organic bananas, pineapples, citrus, melons, and mangoes. The government is committed to attracting new investment to this sector. Despite being a food deficit country, the Dominican Republic uses nontariff barriers such as import permits and domestic price quotas to protect its producers of dairy and meat products, beans, rice, sugar, chicken and pork. Consequently, these products are priced significantly higher than on the world market. To reduce cost of Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 129

130 domestic inputs, some processors have vertically integrated operations by producing their own products, or avoiding middlemen. In addition to buying products, they also may provide financing and technical assistance to producers. The largest producers have direct distribution systems to end consumers. Of 500-plus food processors, 40 percent are located in the capital Santo Domingo, with 14 percent in Santiago. The remaining processors are scattered throughout the country. The fastest growing segments in 2005 based on sales were dairy (22.3 percent), beer (16.4 percent), edible oils (14.9 percent), and pasta (10 percent). Local consumers and the HRI sector are contributing to the demand for high quality products. The country s food processing industry has made a big effort to improve standards and efficiency so it can compete domestically and internationally. Businesses are restructuring and investing in new technology to modernize production, distribution, marketing, and information systems. The prospect of CAFTA-DR is also bringing in more investment money as countries outside the region invest in food processing plants to take advantage of the agreement and the strategic position of the Dominican Republic. Products that promise more growth include flour, pasta, and bakery goods. Ingredients used in dairy products, edible oils, beer, juices, and soft drinks also show strong potential. Though not present in significant quantities yet and protected by import permits, future sales potential exists for chicken products, turkey meat, pork trimmings and fat, and rice. Summary of the Government Strategy The politics of the Government with respect to the agricultural sector pursues four main objectives: rural social equity and poverty reduction improving the productivity and profit gains of the business of the food and agriculture sector, to eliminate shortcomings that complicate the competitive participation in the international markets and the growth of the sector; strengthening the sustainability of the productive systems, in agriculture and the protection of the fragile forest ecosystems; and creating agribusiness based on social harmony, dominance of the private sector and a renewed public institutional structure. Recommendations Following recommendations are drawn from the meetings and discussions held with representatives of the Government, institutions and enterprises: Supporting the improvement of competitiveness of local producers and processors in order to enable better market access and competition in the global arena but especially with the imported products in the local market; Improving post harvest treatment of local produce; Improving infrastructure; Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 130

131 Support cluster development and cooperation between enterprises; Improving access to financing and attraction of venture capital; Supporting skills development at all levels (managerial and workers); Increase and promote technology transfer; Increase the local expertise to provide consultancy services, especially related to food safety; Supporting the industrial development especially SMEs in the food processing sector; Activation of small loan programs; Strengthening the IIBI to enable increased and improved technical assistance; Upgrading/Setting up of regulatory authorities (food safety, standards bureau); Setting up community based processing centres in remote rural areas. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 131

132 GUYANA Structure and recent performance of the Private Sector Since 1989 Guyana has had a free market economy based on the encouragement of private sector investment from both local and international sources. The economy is primarily based on the export of commodities in agriculture and mining, mainly sugar and bauxite. The per capita GDP is among the lowest in the Caribbean and the country is heavily indebted. There are attempts to diversify into other sectors such as tourism, but poor infrastructure both in terms of access and utilities constrain these developments. Table 5: Guyana, GDP at Current Prices, December 2007 Source: Bank of Guyana Sector G$million % Agriculture 37, Fishing 12,016 7 Forestry 3,658 2 Mining and Quarrying 19, Manufacturing 6,380 4 Distribution 9,920 6 Transport and Communication 21, Engineering and Construction 11,579 7 Financial services 7,447 4 Government 29, Other 12,406 7 TOTAL 171, The breakdown in the numbers of private enterprises in the formal sector in Guyana is as follows: Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 132

133 Table 6: Sectoral breakdown of Enterprises in Guyana Sector No. Enterprises Transportation 17 ICT 18 Mining 25 Light Manufacturing 58 Wood 77 Tourism & restaurants 125 Agro-processing 100 Source: Guyana Office for Investment In its Half Year Report for 2007, the Bank of Guyana reported on the following significant developments that impacted on production: A high grade parboiled rice processing facility has been established, helping to increase exports. Fish production has been increased as a result of the diversification into aquaculture. Shrimp catches have decreased because of stock depletion. Livestock and poultry producers have substantially increased their capacity. Bauxite output has increased because of investment in plant. There has been a shift of mining capacity from diamonds to gold because of increasing gold mining prices. Construction activity increased as a result of preparation activities for the Cricket World Cup. While commodity prices have been strong generally, Guyana is particularly vulnerable to the EU s reform of the Sugar Protocol which could potentially amount to a loss equivalent to 5.1% of GDP and 5.4% of merchandise exports annually. Economic features and evolving potentials Guyana is recognised as having excellent long term development potential for the following reasons: Extensive geographical size with a relatively small population; Natural resources of bauxite, gold, diamonds and tropical hardwoods; Water resources to support agriculture; Hydroelectric potential; and Possible oil reserves. Historically exploitation of this potential is hindered by an undeveloped internal transport infrastructure and limited shipping access because of shallow coastal waters. Alumina exports are still transhipped through Trinidad and Tobago. Economic development was depressed for a number of years under a socialist Government whose policies caused economic stagnation and decline, current account deficits, capital flight, and heavy external borrowing. When the economic Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 133

134 model changed to a market orientation in the early 1990s, growth took off sharply until In an April 2007 IMF Working Paper titled Guyana: Why has Growth Stopped? An Empirical Study in the Stagnation of Economic Growth, the authors attributed performance during the period to the following: Significant deterioration in the political and institutional environment. A dramatic reduction in the labour force due to emigration. A sharp decline in domestic and foreign direct investment. There have been recent improvements though, and the last IMF Article IV Consultation in 2006 commended the authorities for implementing sound macroeconomic policies, resulting in a better growth and inflation performance and an improved debt sustainability outlook. The IMF also noted that domestic and external imbalances remain large, and that the economy continues to be vulnerable to shocks ( Encouragement was received when in March 2007 the Inter-American Development Bank, Guyana s largest debtor, cancelled approximately US$470 million in debt, equivalent to nearly 41% of GDP. The economy of Guyana will continue to be dependant on the export of primary commodities for some time. Fortunately, commodity prices are rising, so earnings should be higher. A high level of skill migration will preclude the development of knowledge based industries unless there is a reversal of the brain drain. There is the possibility of oil production if current exploration initiatives meet expectations but the main impact of this initially would be on government taxation revenues, as most if not all of the ancillary services would have to be brought in from outside. Political and administrative framework Guyana has had a troubled political history with the last general election being the only one in recent memory not leading to civil unrest. Politics remains racially polarised, preventing the development of community trust and cooperation on which a strong economy can be built. In recent years allegations have surfaced about the strong influence of illegal drug operations in the community, but this has abated with the recent extradition of an alleged drug lord to the USA. Two massacres of civilians in rural areas in early 2008 have further raised levels of insecurity. Guyana ranks at 97 in the UNDP s Human Development Ranking for 2007, and 126 in the World Economic Forum s Global Competitiveness Index for Guyana recognises its shortcomings and published a National Competitiveness Strategy in 2006 aimed at identifying and addressing the issues that impact on its performance. Guyana has articulated two plans aimed at furthering its development, the National Development Strategy and the National Competitiveness Strategy. These plans are aimed at supporting the development of an enabling environment, and providing assistance to the private sector in the area of competitiveness. In 2007 Guyana signed an agreement with the Inter American Development Bank for a loan of US$26,650,000 for a Guyana Competitiveness Support Program. The program has two components: Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 134

135 i. A policy based program to enhance the enabling environment for the private sector (US$18,000,000). ii. An investment program to support the implementation of the policy based program and minor associated investments (US$8,650,000) The policy based program may include the following elements: Environment for Private Investment; Enterprise Development; Development of Clusters; and Cooperation for Competitiveness. The primary Government agency for promoting investment and export development is GO-Invest, the Guyana Office for Investment ( This organisation appears better resourced and led in comparison with other private sector and Government agencies. Guyana has a large number of private sector intermediary organisations, primarily based on sector and geographical location, but they are all small and poorly resourced. These organisations depend mainly on membership fees which are difficult to collect. The umbrella organisation of private sector agencies is the Private Sector Commission of Guyana ( which has its members both intermediary organisations and individual companies. The Forest Products Marketing Council of Guyana Inc. ( is involved in the development of the forestry industry through marketing and the arrangement of technical assistance. It is financed by a levy on timber exports and appears to be quite effective. The Guyana Manufacturing & Services Association Limited ( represents the manufacturing sector and some service companies. It is well regarded and has received funding from the IDB and has been involved in the UNIDO sponsored Empretec Guyana. Private Sector development programs The Action Plan and Institutional Arrangements for the National Competitiveness Strategy identify Guyana Trade and Investment (GTIS) Project as a key element of the implementation programme. GTIS ( is a joint project of the Government of Guyana and the Government of the USA through USAID. The project, with a value of US$5 million, is being implemented by CARANA Corporation ( over four years ( ). The project provides private sector support in the following areas: Cluster Development and Market Assistance. Technical Assistance and Supply Chain Development. Strengthening trade policy and the Guyanese Enabling Environment. Developing Public-Private Consultative Processes. Users of this program have expressed satisfaction with its assistance. It is market oriented in that interventions are only undertaken where a clear market has been identified, and grants are approved and disbursed in a timely manner. The sectors covered are Fisheries, Agro-processing, Eco-tourism, and Forest Products. GITS has Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 135

136 a well resourced office in central Georgetown and represents a credible alternative to CDE for local entrepreneurs. Papers can be downloaded from the GTIS website that suggest that a deep and comprehensive analysis has been done on the issues that affect private sector development in Guyana. Empretec Guyana ( is a Government of Guyana, UNDP and Private Sector Project implemented by UNCTAD and the Guyana Manufacturers Association. Its offerings are training and business development services. The Action Plan for the National Competitiveness Strategy indicates that a proposal for funding has been made to the Canadian International Development Agency for a new programme covering the following areas: Strengthening the SME Institutional Support structure. Strengthening Technical Vocational Education and Training for the SME Sector. Provision of Business Development Services to SMEs. Strengthening the Ability of SMEs to Access Finance. This program appears comprehensive and if properly implemented would represent a very competitive offering versus CDE. Medium and long term finance for SMEs is available from DFLSA ( a member of the DFL Caribbean Group. Funding ranging from US$50,000 to US$500,000 is available. Overview of the Agricultural and Rural Sector In 2004 Guyana s GDP reached US$780.0 million up from US$631.0 million in The contribution of the agricultural sector to GDP was approximately 30%. While, agricultural production continues to be dominated by the traditional export crops of sugar and rice, there has been a steady increase in the production and export of nontraditional produce including fruits, vegetables and seafood. The main agricultural products consumed locally are rice, fruits and vegetables, meat, seafood and milk. It has been estimated that approximately 75,000 persons or roughly 10% of the population are actively engaged in agricultural production. Approximately 85% of these reside in the rural and hinterland areas and are considered among the poorest in a country where the poverty index is estimated at 36% of total population. Approximately 19% of the poor has been classified as indigent. Among the most indigent are the Amerindians who comprise 9% of the population and live mainly in the hinterland areas. Guyana has long been considered to have considerable agricultural potential. However, for many of the reasons mentioned below the agricultural sector remains characterized by dependence on the production of a few export commodities and a relatively low productivity national food crop sector. The most critical constraints are: Lack of access to affordable financing (there has been an almost 50% decline in commercial credit since 2002); Erosion of preferential market arrangements (particularly with respect to the key exports of sugar and rice); Poor post-harvest technologies and practices; Lack of adequate rural and farm infrastructure (farm to market roads, drainage and irrigation, and transportation); Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 136

137 Lack of standards (particularly for crops and livestock); High cost of public services and utilities (especially energy); Low volumes of output (due to average small scale of cultivation) increase costs; Lack of value added facilities (to absorb produce in times of glut). Since the agreement with the World Bank in 2000 to restructure the sugar sector (18% of GDP) to be better able to compete with the rest of the world, Guyana has introduced a number of reforms including the construction of a new state-of-the-art sugar factory at the Skeldon Estate in Berbice, which includes power generation from bagasse. Other measures currently being considered include a distillery and the production of ethanol. Guyana has also successfully entered the organic market. Summary of the Government Strategy The agricultural strategy of the government emphasizes the promotion of agricultural diversification. This is based on the current and foreseeable problems with the sugar and rice sectors in terms of the decreasing opportunities under preferential market arrangements. The promotion of agricultural diversification will be characterized by public and private sector investments related to research, technical assistance, market information, plant and animal health certification, new production, processing and marketing systems for domestic and export products. Technical and financial assistance will be sought to facilitate the policies and programs needed to stimulate new business investment. There will be trade and marketing promotion activities linked to feasibility studies for establishing facilities and services related to the diversification programs. Recommendations Following recommendations are drawn from the meetings and discussions held with representatives of the Government, institutions and enterprises: Supporting the improvement of competitiveness of local producers and processors in order to enable better market access and competition in the global arena but especially with the imported products in the local market; Improving post harvest treatment of local produce; Improving infrastructure; Support cluster development and cooperation between enterprises; Improving access to financing and attraction of venture capital; Supporting skills development at all levels (managerial and workers); Increase and promote technology transfer; Increase the local expertise to provide consultancy services, especially related to food safety; Upgrading up of regulatory authorities (food safety, standards bureau). Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 137

138 HAITI Structure and recent performance of the Private Sector The private sector in Haiti operates in one of the most challenging environments in the region. An undeveloped physical and institutional infrastructure combined with political instability and vulnerability to natural disasters combine to create conditions that are very difficult for private sector development. Institutional weakness and the poverty of the people as whole results in a large informal sector with very few enterprises having the opportunity to grow and develop. Productive economic activity is mainly in agriculture along with some enclave manufacturing taking advantage of low wage costs. In Haiti registered economic growth. The positive GDP result (3.3%) was attributable to the performance of agriculture, construction (4.5%) and trade services (19.4%). Agriculture fared well thanks to favorable weather conditions, while construction was supported by investments in public works and trade benefited from the upturn in consumption resulting from remittances. Table 7: GDP by activity, at Constant prices Sectors Gourdes Million % Agriculture, Hunting, Forestry & Fishing 3, Mining & Quarrying 15 0 Manufacturing 1,032 8 Electricity & Water 57 0 Construction 1,042 8 Wholesale & Retail 3, Hotels & Restaurants Transport, Storage & Communication Other merchant services 1, Other non-merchant services 1, Fictive branch (643) (5) Taxes less subsidized products 1,000 7 TOTAL 13, Source: Institut Haïtien de Statistiques et d Informatiques Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 138

139 A number of diagnostic studies of entrepreneurial value chains with growth potential have provided the following information: a) Study of Construction sector, sub sectors and value chains The construction sector has been growing in the past ten years due to positive incentives including Government and donor funding and remittances. Family owned SMEs dominated the sector while smaller informal enterprises serve the poorer strata of the population. SMEs participate to Government bid for public works financed by international donors. Infrastructure, especially roads remains a priority for the Government. The main strength of this sector is its great flexibility to overcome major constraints and difficulties. Firms know the field which is an important advantage compare to foreign competition. As they know the field, they can be more productive by selecting quality raw materials providers or organize efficient production system. In terms of economic fluctuations the construction sector is the most resistant and remains an asset for investors. Other strength of this sector is its capacity to meet in very short delay its needs in non qualified labor force and train them on site. The industry has shown its strong capacity to attract investment and to absorb and train unskilled labor. A large low cost labor force looking for employment is available. This sector can also be an instrument to combat poverty because it creates jobs for low income non educated individual. Availability of good local construction materials is also an asset for the construction sector. But constructing firms are facing major constraints: lack of well-defined legal framework related to sector s operations; high cost of equipments; lack of guarantee fund required to participate to public markets. The banking sector cannot provide those funds. The Government terms of payment are also a constraint as companies need to improve their financial capacities. Other weakness of Haitian constructing firms is their poor managerial capacities. Structured on the Haitian old family business model, these companies do not employ qualified personnel to undertake efficient studies and develop strategies to improve their productivity. Both at the national and international level there exists great opportunities for the construction sector. They are determined by accelerated population growth and the lack or existence of poor infrastructure throughout the country. Favorable investments trends in the sector are fueled by renewed foreign assistance, increase stability and urgent demand for improved infrastructure. b) Study of ITC sector, sub sectors and value chains The Technology, Information and Communication (ITC) sector has been showing signs of development since Operators in this sector including diverse value chains call upon a plethora of agents creating jobs in different activities related to ITC. This sector includes a growing number of MSMEs cyber cafés, Internet Services Providers, sale and installation of data processing equipment companies, computer sale and repair firms and the large mobile telephone companies. Main constraint of the ITC sector is the absence of a specific legal framework. It is governed by the 1977 Telecommunication law not adapted to the sector modernization and trends. The Investment Code and the Labor Code do not cover this sector. The lack of legal framework constitutes an obstacle to ITC enterprises creation, expansion and regulation. The sector is also affected by poor public infrastructure such telephone network, roads and power. Other weakness of the sector is the lack of qualified technical and middle management personnel. A strong Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 139

140 competition in the ITC sector forces firms to innovate in products and services quality and diversification. Access to financing is also an obstacle to MSMEs development. The Haitian telecommunication sector is one of the best potential areas of investment for the future. Key strength of this sector is the involvement and dynamism of a new generation of well-educated entrepreneurs. Foreign investments have also had a positive impact on the sector in term of job creation and innovation of new business models in the sector. The ITC sector is one of the most competitive business sectors because of its strong innovation capacity and the growing market for Internet and mobile phone services. c) Study of Agribusiness sector, sub sectors and value chains Haiti s trade liberalization in the 80s has dramatically affected the agriculture sector. The results of lowering agricultural tariffs have been disastrous. As food imports have increased, local agriculture production has fallen. The coffee industry, once the most important product export has declined with price drops on the international market. Coffee growers without access to finance and dependant of market intermediaries have little incentive to reenergize the sector. Coffees growers cooperatives founded in the 90 s are exporting small volume of specialty coffee and large volumes of low quality coffee to the Dominican Republic and through fair trade markets with international NGO s assistance. They exist because of the support of these NGOs and will not contribute to industry growth. The coffee industry lacks strong value chain drivers. The price variability in the world market discourages investments in the cocoa industry. Small farmers turn away from traditional products such as coffee and cocoa to plant crops such as maize, rice, millet for the domestic market. Value chains analysis shows a great heterogeneity of involved actors and a domination of micro enterprises. The main constraints in this sector are: lack of suitable financing, difficulties to access to land and land tenure security, poor infrastructure especially roads and irrigation system, lack of information on markets, illiteracy and low level of education of agriculturists, poor technical and managerial skills, lack of public agricultural extension program, lack of equipment and mechanization, plant diseases. Despite these constraints, some value chains has shown growth potential for the domestic and export markets: coffee, essentials oils, fruits and vegetables especially mango and yams, dairy products and processed cereals. This sector main strengths are: low cost wages in rural area and availability of a large productive labor force, specific micro climate and ecosystem facilitating continuous production all year long, growing domestic market, proximity with the US market, growing ethnic market in the US, preferential duty free agreements with European Union, the US and Canada. d) Study of Textile sector, sub sectors and value chains The Haitian textile industry includes three industrial value-chains: apparel, home decor and clothing. They show different characteristics. Most textiles industries are located in Port-au-Prince. There are only two units in a Free Trade Zone along the border with the Dominican Republic in the Northeast. Many informal micro enterprises are producing for the domestic market. Apparel is the value chain with the most potential growth because of: competitiveness, domestic and international markets potential, impact on employment, national capacities mobilization, and income generation. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 140

141 There are many constraints to the Textile industry development. They are related to technology, management, human resources and logistics. Micro and small enterprises equipment and production processes are obsolete. Micro enterprises are dispersed and cannot compete with used cloths imports. Enterprises lack skilled technical professionals and qualified management personnel. The workforce illiteracy rate is high. The social protection public services are inefficient. Absence of norms and quality control system is also a major constraint to MSEs development. The lack of data collection and dissemination system is also an obstacle to the industry development. Firms are currently undercapitalized. They are also faced to logistics problems such as raw materials supplies. Poor infrastructure and basic services especially electricity is also a major problem. Government services, customs and import/export procedures are poorly administrated and affect the sector. The creation of the Investments Facilitation Center at the Ministry of Commerce and Industry should bring positive change to this sector. Nevertheless, Haiti has some assets to exploit in the textile sector: low cost, flexible and productive labor force; well-educated entrepreneurs with good connections in the US; liberal investment code facilitating domestic and foreign investments although this code has to be harmonized with CARICOM legal framework; Free Trade Zones law with investments incentives; the proximity of the large US market; HOPE act allowing duty free access to the US market to textile products; dynamic Manufacturers Association with strong advocacy and lobbying capacities; growing domestic market for schools uniforms; e) Study of Tourism sector, sub sectors and value Haiti is one of the less competitive tourist destinations of the Caribbean. The main constraints to this sector development are: lack of tourism products development; lack of hotel infrastructure adapted to the market trends; deterioration of some historic and natural sites. Poor infrastructure and basic services like electricity, water, and waste management are also major obstacles to tourism development. There is also a lack of qualified management personnel, of information on market. The use of modern technologies remains very limited in the tourism sector. The sociopolitical instability, crime and violence, a poor image and travel advisory warnings by some foreign Governments affect the sector. The sector deals also with sanitary problems including lack of adequate health infrastructure and services, streets insalubrities. The different operators in the sector do not have access to financing. Most of them have been undercapitalized. f) Study of handicraft sector, sub sectors and value chains This study covered eleven craft value chains including pottery, wooden products, horn and bone, metal works, vegetal fibers and seeds, papier mâché, paintings, stones, textile and glass. The craft producers are divided into micro enterprises, artisan s cooperatives, designers/producers and small and medium scale manufactures. This sector is supported by NGOs and international agencies. Despite of this support, the sector faces many constraints: lack of legal framework; absence of customs and statistics coding; non-existent or outdated tools and equipment; lack of information on quality and safety standards; lack of information on market trends; production of heavy, bulky products not fulfilling markets needs. Artisans managerial capacities are very weak. Micro and Small enterprises do not have any management and accounting systems meeting standards. The sector is affected by exodus of qualified management personnel and talented artisans. Craft SMEs do not have access to financing. The banking sector doesn t have suitable Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 141

142 financial products for them. There is not vocational school or training programs for artisans. One of the main logistic constraints is raw materials supply. Poor infrastructure increases raw materials and products costs. Other constraint is inadequate space to produce and exhibit products. Insecurity is also an obstacle to the sector development as buyers and importers don t visit Haiti anymore. The sector is strongly affected by Asian and Latin American competition. Despite these constraints, the craft sector has some strengths: availability of a talented, ready to learn and productive labor force; thousands of artisans well qualified in different trades; strong products and designs innovation capacities; expertise and experience of former craft factories owners and exporters; availability of unexploited raw materials; strong international reputation; growing international markets for home décor and hand made products; growing Caribbean tourist market, preferential duty free access to the US, Canadian and European market. Economic features and evolving potentials The Haitian economy is largely informal and dependant on aid and remittance inflows. Economic development hinges on the country s ability to address the following issues: Infrastructure and basic services. The biggest infrastructure problem is electricity. Most firms have to make major investment in generators. Per capita energy is one of the lowest in the world. Energy cost is very high cents per kilowatt compare to 12 cents in the Republic Dominican and 9 cents in Honduras. Micro enterprises do not have the facility to generate their own power. The provision of public goods like roads, water, waste management and electricity is very poor throughout the country. Rural population depending largely on agriculture is affected by the lack of infrastructure and irrigation systems. Corruption. In recent years, the country has been placed at the bottom of corruption surveys by Transparency International. Corruption within the public and private sectors has a direct effect on the business sector: developing uncompetitive firms in construction and other services, making participation in corrupt practices some of the most lucrative businesses, having illegal trade and contraband destroying manufacturing industries. Corruption is also compounded by fraud and the lack of ethics in the private sector itself. Insecurity and crime. Kidnapping and crime is a major impediment to business. Despite the presence of the United Nations forces (MINUSTAH) and efforts to improve the National Police capacities, kidnappings are accelerating dramatically. Firms have to invest in security guards and secure facilities. Insecurity and crime are also obstacles to domestic and foreign investments. Political instability. Despite free and fair elections in 2006 and the installation of the President, the Government, the Parliament and local governments, unpredictability of macro economic and private sector policies, the lack of specific policy and political will for private sector development, upcoming senatorial and local assemblies elections and the high cost of living increase business uncertainty and risks. Legal and judicial environment. The courts have been ineffective and corruptible. There is a widespread mistrust of the courts making enforcement of contracts and property rights very difficult. The trade legal framework needs to be modernized as a key element of the enabling environment for private sector development. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 142

143 Administrative barriers. Despite the creation of the Centre de Facilitation des Investissements (CFI), enterprises and investors face numerous administrative barriers as they seek to establish and operate businesses. Registration and customs procedures are still long and cumbersome. Customs systems and procedures contribute to excessive delays in the processing of imports. Political and administrative framework Haiti is politically unstable, and dependent on foreign assistance to maintain law and order. The country s poverty constrains the development of strong public sector institutions, and competent staff for the public sector are hard to come by and retain. Chambers of Commerce and private sectors associations capacity building Haiti has a large number of chambers of commerce and private sector associations. These include regional chambers of commerce, sector-specific associations and bi national chambers of commerce. The European Union private sector development program (PRIMA) is assisting most of those organizations in upgrading their organizational structure, their membership services, developing strategic plan and strategies to better finance their activities. Business associations have a very important role to play in addressing policy, business regulation and other constraints. The Association des Industries d Haïti (ADIH) was the promoter of the Centre de Facilitation des Investissements (CFI). This association has a strong lobbying capacity and has influenced the US government, senate and congress for the vote of the HOPE act in Bilateral chambers particularly the francophone chambers have been very pro-active organizing trade missions in France, Guadeloupe, Canada. The regional chambers have joined forces by creating the Assembly of Chambers Presidents. Regional chambers of commerce are building their capacities and developing cooperation among them. Formalization of the public-private sectors dialogue Both Government and private sectors associations are calling for the institutionalization of the public-private dialogue. European Union, the Inter American Development Bank (IDB) and USAID through their private sector development programs are encouraging and supporting those efforts toward the improvement of the enabling environment for business. The Foundation Nouvelle Haiti (FNH), a private sector think tank has been working for the last five year for the formulation of a national common vision. The FNH is looking for international donors financing to develop a two year program which main objective is to articulate a common public-private comprehensive vision and agenda for Haiti s economic development based on the four key growth vectors covered by the Growth and Poverty Reduction National Strategy Paper (DSNCRP). Other private-public interactions are emerging: a public-private commission Commission de mise en oeuvre de la Lois Hope (CMO- Hope) has been created for the implementation of the HOPE Act. The Haitian Government, in cooperation with the private sector, is taking the initiative to put in place a world-class labor compliance-monitoring program for the apparel industry. The US Government through the US Department of Labor will provide US$ 1,000,000 for the implementation of this program by the Bureau of International Labor Affairs. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 143

144 With the support of European Union, Inter American Development Bank and USAID, chambers of commerce and private sector associations are building their advocacy, negotiation and lobbying capacities. Trade infrastructure development The Haitian Government in a joint effort with the private sector as put in place the Centre de Facilitation des Divertissements (CFI). The Ministry of Commerce and Industry is working toward the creation of other autonomous institutions such as a bureau for standardization and quality control and a national competitiveness council. Progress in economic governance reforms During , the Haitian Government made progress in the implementation of economic governance reforms. These included: improvements in budget formulation, execution and reporting; improvement of public procurement system with the establishment o the National Commission of Public Procurement (CNMP); anticorruption efforts by creating an Anti-Corruption Unit (Unité de Luttte Contre la Corruption, ULCC) under the Ministry of Economy and Finance; public administration building capacities; Civil servants wages were increased by 35 percent; development of a mechanism for civil society to monitor its program of economic governance reforms. Other governance measures have proceeded more slowly. Public authorities are working toward critical institutional and legal changes Private sector development programs In Haiti, there is a lack of national productive support institutions. The government established the Center for Investment Facilitation (CFI) in It is an autonomous institution under the Ministry of Commerce and Industry. It refers to as a one-stop shop and is a tool for the Government in providing a business and investmentfriendly environment which means: remove red-tape, standardize procedures, and provide investors with necessary information. It is governed by a bipartite board of directors that includes representatives of the business sector and ministries concerned. Donor- funded private sector development programs in Haiti are as follows: a) USAID USAID through its Economic Growth Division is financing four private sector development programs. Economic Development for a Sustainable Environment (DEED) is an overall, holistic approach to bring economic opportunities, address land degradation, and overall environmental vulnerability by focusing resources on two select watersheds. This program links the management of natural resources to economic opportunity by facilitating relationships among watershed stakeholders. It creates economic incentives, provides technical assistance, and facilitates community driven solutions. This US$ 18 million three-year program mobilizes and works with targeted communities and producers groups to exploit market opportunities that promote sound natural resource management. These activities include facilitating publicprivate partnerships, technical assistance, and providing stimulus to developing markets. This program also works with the Haitian Government, non-governmental organizations (NGO), and other donor groups to leverage the maximum amount of Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 144

145 resources available to the two watersheds. The program is managed by Development Alternatives Inc. (DAI). I-Trade (Investment-Trade & Association Development) is a project designed to increase trade and investment in Haiti. This project has just started early It will address deficiencies and policy barriers in the public and private sectors by providing to the Government of Haiti some of the necessary tools to effectively negotiate in the competitive global economy; building public sector institutional and ministerial capacity in investment and trade policy; and addressing weaknesses at the level of private sector institutions by strengthening their ability to be proactive and reactive. It will help stimulate private sector competitiveness and business growth by removing significant obstacles to market access and processes that defer investment. USAID has budgeted $4M for I-TRADE over the next three years. The project is implemented by Chemonics International. Support to Haiti s Microfinance, Small and Medium Enterprises Sector (Haiti MSME) is a three-year technical assistance project ( ) which specific mission is to improve access to finance and to improve livelihoods in Haiti. It is a financial sector service project designed to facilitate transactions between the demanders and suppliers of financial services through supply-oriented interventions. It improves the capacity of a core group of microfinance institutions (MFIs) and banks receiving Development Credit Authority (DCA) support, and USAID-supported credit cooperatives to design and deliver appropriate financial products to bankable enterprises. This program is implemented by Development Alternatives, Inc. (DAI). Haiti MSME draws upon an integrated set of tools to achieve results: Performance Innovation Fund (PIF) designed for innovative financial development initiatives will help Haitian institutions develop products adapted to Haitian needs and to improve their institutional capacity to manage increased product and client diversification. Development Credit Authority (DCA) Guarantees encourages financial institutions to meet the financial needs of MSME productive enterprises by mitigating some of the risk. In addition to the financial guarantee, participating institutions receive tailored technical assistance. Capacity-Building Training and Technical Assistance. Haiti MSME will provide training and technical assistance to financial institutions best positioned to expand the delivery of financial services to MSMEs. b) European Union (UE) The European Union has launched, in 2005, its private sector development program: Programme de Renforcement Intégré du Milieu des Affaires en Haiti (PRIMA) - Program for a Reinforced and Integrated Business Climate in Haiti. This four-year programs main objective is to enhance a balanced, sustainable, equitable and poverty reducing economic development in Haiti. Its specific objective is to support the development of micro, small and medium enterprises with strong growth potential. The program has several areas of intervention including Business Support Organizations (BSO) such as chamber of commerce, manufacturers associations, professionals association etc. capacity building; MSMEs capacity building, Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 145

146 development of an enabling business environment through public-private dialogue and partnership. This program has conducted studies of sectors, sub- sectors and value chains with growth potential, organized studies and held conferences on agricultural value chains and non agricultural productive value chains. Through regular calls for proposals, PRIMA selected programs to be funded through Business Support Organizations. Those programs covers Business Support Organizations institutional capacity building, technical assistance to SME members of those BSO or group of micro enterprises within an association. Two projects focusing on business environment improvement are conducted by two private sector think tanks: Fondation Nouvelle Haiti (FNH) and Centre pour la Libre Entreprise et la Démocratie (CLED). PRIMA is funding an important project through the Haiti Chamber of Commerce and Industry focusing on strengthening ten regional chambers of commerce as effective umbrella support organization for their members. This project also aims at developing a federation of chambers and other private sector organizations to become the recognized and effective voice of the Haitian private sector with a well-defined role. Currently, PRIMA is cooperating with the Inter American Development Bank (IDB/MIF) by providing the counterpart to develop alternative dispute resolution through the Cour d Arbitrage at the Haiti Chamber of Commerce and Industry. PRIMA is also financing the establishment of a Standardization and Quality Control Bureau by the Ministry of Commerce and Industry with the assistance of UNIDO. c) Inter American Development Bank (IDB) The IDB s Multilateral Investments Fund (MIF) is the main window that is promoting the private sector development in Haiti. In line with the IDB group s private sector development strategy and the Bank priorities for the country, the MIF strategy for Haiti is focused on the following areas: Development of an Enabling Environment for Business. Provide support for the identification and elimination of barriers to private sector development in collaboration with the public and private sectors and in coordination with other multilateral institutions. The IDB/MIF is funding a program to develop alternative dispute resolution through the Cour d Arbitrage at the Haiti Chamber of Commerce and Industry. IDB/MIF is also funding the Reinforcement of Airport Security project. Promoting Micro, small and medium enterprises (MSME) through microfinance institutions. The Bank through the MIF strengthens microfinance institutions to facilitate SMEs access to credit both in urban in rural areas. The following operations have been recently implemented: institutional strengthening of Micro Credit National (MCN) affiliated to UNIBANK; Institutional strengthening of Association pour la Cooperation avec la Microentreprise (ACME), a non profit organization. The following operations are on-going: institutional strengthening of Micro Credit Capital (MCC) of Capital Bank; strengthening of the Caisses populaires, credit cooperatives supported by Development International Desjardins (DID). MIF has already disbursed about US$ 1.4 millions to strengthen microfinance institutions in Haiti. Improving the remittance services. The Multilateral Investment Fund (MIF) should play a leading role in reducing remittance transfer costs and to improve the developmental impacts of remittance funds. Remittances should work as a tool for development in Haiti. Along with the technical cooperation, new and similar initiatives will be encouraged in order to have the necessary synergy leading to a sustainable Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 146

147 impact on this domain. Awareness will be raised about the role that remittances can play in the development process of Haiti. The MIF is also supporting the development of MSME through technical assistance to Private sector development organizations within the civil society. The following operations have been approved: Promotion of community tourism in the North department; Promotion of Micro entrepreneurship in the slums of Port-au-Prince; Promotion of Micro and Medium enterprises in Cap-Haitien. New Initiatives. Under the 10th EFD, European Union will not have a specific program working directly with the business sector in Haiti such as PRIMA. Support to Haitian private sector will be channelled through regional or international organizations. Haitian Business Support Organizations (BSO) should develop strategic alliances with key partners within the region and in the Dominican Republic for a better integration of those programs. PRIMA will support the establishment of a unit at the Ministry of Commerce and Industry to ensure follow up of its program. The Inter American Bank (IDB) through the Multilateral Investment Fund (MIF) for FY 2008 will support a women micro entrepreneurs development program in the Jacmel region, launch in May 2008 a call of proposals for the tourism sector, support the improvement of remittance funds economic and social impacts. The IDB is also committed to support the Government forum on investment. USAID will launch in May 2008 a new private sector development program Market Chain Enhancement Project (MarChE) that will stimulate and facilitate the development of competitive interrelated market chains in the agribusiness, handicrafts and tourism sectors. It will also target construction, transportation and textiles. This project main objectives are to increase the value of selected Haitian market chains in domestic and export markets; to improve small and medium Haitian enterprises ability to compete at the national and international level. Overview of the Agricultural and Rural Sector The Republic of Haiti covers an area of km2 with a population estimated at 8 million people of which 2/3 live in rural areas. Agriculture contributes to more than 25% of the GDP and provides job employment to more than 50% of the population. After having occupied the first place in the economy about the Seventies, the agriculture sector has undergone a net decline during these two last decades. Agriculture remains today a sector generating growth and development. The country is characterized by a very great diversity of ecological environments which allows a broad range of farming systems. The irrigated plains occupy only 2% of the territory whereas the wet and semi-wet mountains take up some 47%. The demographic pressure and the constant rising food request by an increased urban population push the farmers to cultivate marginal grounds inapt for the agricultural production. Agriculture is practiced by nearly farmers having on average less than 1.8 ha of ground divided into several pieces. The low technological level of Haitian agriculture and an unfavorable macroeconomic policy seriously eroded the performances of agriculture. The crisis of agriculture had serious consequences for the population such as an aggravation of the food insecurity. In 2000, the national production accounted for 55% of the total food offer. Malnutrition affects a good part of the population. Approximately 36% of the population consumes less than 75% of the protein level necessary to meet their daily needs. Malnutrition strikes 23% of the children of less than 5 years in a chronic manner and 5% in an acute way. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 147

148 Haiti is classified among the poorest countries of the world and the poorest country of the American continent. Based on a poverty line of 1US$ per day, it is estimated that nearly 4 million individuals, that is to say approximately 55% of the population, live in poverty. The cases of extreme poverty are especially listed in rural areas. Approximately 56% of the population in rural areas lives under conditions of extreme poverty. Summary of the Government Strategy In spite of the importance of the rural sector in the economy, the share of the agricultural sector in the public investments amounted only to 2.7% for the fiscal year In March 2004, the temporary government determined the main policy of the agricultural sector with the aim to give it a boost. The broad outline of this policy is: to restore a macro-economic framework favorable to the agricultural sector (drop real interest rates, etc.); to invest in the construction of public infrastructures in rural areas (roads, tracks, irrigation, water control structures) and to support the construction of private infrastructures (cisterns, storage, etc); to focus on the technical supports (research and development, marketing); to strengthen the supply chain; to create a channel of communication between the actors, to set up contractual approaches and to decentralize pilot entities by creating regional centers for the rural development. These main lines of intervention are mentioned in the summary of the working group on agriculture and food safety in the Framework of Temporary Co-operation (CCI). The working group on national and regional development, decentralization and local development stressed the strategic advantages of promoting local development. Recommendations Following recommendations are drawn from the meetings and discussions held with representatives of the Government, institutions and enterprises: Supporting the improvement of competitiveness of local producers and processors in order to enable better market access and competition in the global arena but especially with the imported products in the local market; Improving post harvest treatment of local produce; Improving infrastructure; Support cluster development and cooperation between enterprises; Improving access to financing and attraction of venture capital; Supporting skills development at all levels (managerial and workers); Increase and promote technology transfer; Increase the local expertise to provide consultancy services, especially related to food safety; Supporting the industrial development especially SMEs in the food processing sector. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 148

149 Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 149

150 JAMAICA Structure and recent performance of the Private Sector The composition of the Jamaica Private Sector is made up of a wide range of ownership structures including proprietorships, locally owned public companies and foreign direct investments. The Private Sector is very dynamic, and participates in all of the economic sectors. For the past five years, Jamaica has been experiencing positive real growth following a number of years during which the economy was on the decline. This trend continued into 2007, where the overall GDP performance for the nine months January to September 2007 demonstrated that the Jamaican economy continued to experienced real growth in that the real GDP was estimated to have grown by 1.6%. In fact, for the first six months of the year, the economy actually expanded by 2.1% but slowed during the third quarter due to negative effects of the passage of Hurricane Dean (August 2007) on the country s productive sectors. The level of growth experienced throughout the nine-month period emanated from expansion in both the goods producing and services sectors, which grew by 1.2% and 2.2%, respectively. The main growth sub-sectors were: Construction & Installation, which grew by 3.8%; Distributive Trade, which grew by 3.0% and the Finance & Insurance sub-sectors, which grew by 4.5%. Collectively, these three sectors accounted for 1.4 percentage points of the overall growth for the period. The composition of Jamaica s GDP for 2006 was primarily dominated by activities in the services sector, which accounted for a very significant 72.4% of economic activity in that year, with tourism-related activities accounting for the largest share of the sector. Total visitor arrivals (both cruise ship and stop-overs) surpassed three million for the first time in a single year, while average visitor represented 22% of total GDP. In fact, the most representative group of those activities that is, hotels, restaurants and bars grew by 12.3%. Another service sub-sector that is making a significant contribution to the national economy, rivalling the now dominant position of tourism is in the financial subsector, which accounted for 21.6% of GDP in The performance of this sector is lead by the level of remittances entering the country. The top three performing sub-sectors was rounded out by the Transport, Storage and Communication subsectors, which accounted for 14.2% of GDP 2006 and is primarily made up of income earned through the provision of international maritime services. As it regards the goods producing sectors, which accounted for the remaining 27.6% of GDP, performance was dominated by the Construction & Installation, and Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 150

151 Manufacturing sectors. Interestingly, the growth trends of these two sectors are opposite as while Construction and Installation has shown significant expansion over the last five to six years, manufacturing and especially the food, beverage and tobacco sub-sectors, which is the leading sub-category has been consistently contracting over the similar period. Table 8: GDP by activity at current prices 2006 Sectors J$ Million % Agriculture, Hunting, Forestry & Fishing 35,521 5 Mining & Quarrying 24,660 4 Manufacturing 84, Electricity & Water 28,096 4 Construction 65, Wholesale & Retail 133, Transport, Storage & Communication 78, Financial Intermediation 42,499 6 Real Estate, Rent & Other Business Services 40,720 6 General Government Services 74, Miscellaneous services 45,168 7 Households & Private non-profit Ins 3,381 0 Taxes and service charges 25,117 4 TOTAL 681, Source: Institut Haïtien de Statistiques et d Informatiques Economic features and evolving potentials The Jamaican economy is heavily dependent on services, which now account for more than 60% of GDP. The country continues to derive most of its foreign exchange from tourism, remittances, and bauxite/alumina. Remittances account for nearly 20% of GDP and are equivalent to tourism revenues. The size of the domestic market is 2.7 million persons with an estimated GDP per capita of US$4,800 in 2007 and estimated growth of 1.7%. The sectoral opportunities that exist within the Jamaican economy are in the sectors that have a comparative advantage and which when exploited will aid the developmental process. The potential that can be derived from these products is based on a high level of demand from the global market. These products and sectors are: 1. Service Sector a. International maritime sector- trans-shipment port b. Tourism c. Entertainment-film, reggae. 2. Manufacturing Sector a. Agro-processing of internationally competitive products such as Blue Mountain Coffee, sauces and seasonings b. Fashion and Craft industry. 3. Agricultural Sector a. Competitive or niche products ginger, scotch bonnet pepper, ackee, fruits Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 151

152 Political and administrative framework Jamaica is a stable democracy with a history of regular general elections, the last of which was on September 11, 2007 that resulted in a successful change of government. The country has a strong and well recognised civil service that supports this. In recent years, the Government of Jamaica has worked closely with the various private sector organizations but the creation of a sustainable and enabling environment for the private sector is challenged by a number of negative factors in the macro economic environment such as: a. High incidence of crime, b. Soaring costs of doing business, c. Frequent recurrence of natural disasters, d. Failure to improve the incentive framework for the private sector real interest rate, labour cost, credit information, labour productivity and tax regime. However, these negatives are juxtaposed beside a slew of positive trends, such as: a. The percentage of public sector debt to GDP is declining and projected to be 100% by 2009 (currently 135%) as a result of fiscal consolidation b. The economy is making gradual recovery through the efforts of agriculture, tourism, bauxite and large infrastructure projects c. Memorandum of Understanding with Trade Unions and related organizations The Government of Jamaica s strategic approach towards private sector development is one of sectoral consultation, a strategy sector lead growth, the creation of an enabling environment, the promotion of competitiveness amongst key sectors and the implementation of investment-friendly fiscal regimes. The strategy of inclusion takes the form of retreats/discussions/forums with various private sector groupings on a regular basis and the implementation of regulations and procedures to improve competitiveness. Competitiveness programmes include improvement in infrastructure, trade facilitation, business environment, modernization of legislations, customs modernization, e-commerce etc. In terms of the monetary, fiscal and/or foreign currency regime there has been no significant transformation to monetary and fiscal policy in Jamaica in the last eight years. Consideration is however being given to methodologies of improving the collection of taxes, reduction in company taxes, widening tax net and rationalization of the wage structure. In terms of long term financing programmes (beyond 10 years), these are available but on a structured basis and depends on several factors such as the viability, the sector and the nature of the project. Financial sector funding (loans) is usually limited to a period of 10 years. Investment companies are encouraging clientele where possible to use equity finance so as to reduce the sum borrowed, this option has yielded limited success. The Private Sector Organization of Jamaica (PSOJ) is the organization, which represents approximately three hundred and thirty (330) private sector associations, companies and individuals and liaises with the Government of Jamaica. It is an advocate of free market principles and a vehicle for achieving economic growth and deregulation of the Jamaican economy. Its current major area of focus with the Jamaican government is the improvement of the international competitiveness and productivity. However, where the development challenge is specific to a sector the government will initiate dialogue with that sector e.g. manufacturing. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 152

153 Private Sector development programs The Government of Jamaica s strategic approach towards private sector development is one of sectoral consultation, a strategy sector lead growth, the creation of an enabling environment, the promotion of competitiveness amongst key sectors and the implementation of investment-friendly fiscal regimes. Competitiveness programmes include improvement in infrastructure, trade facilitation, business environment, modernization of legislations, customs modernization, e-commerce etc. There are a number of PSD programmes in Jamaica that offer some sort of support to the sustainable growth of the country. Some focus on improvement in key macroeconomic variables while others focus on development at the micro level, such as boosting the level of international competitiveness among SMEs. The following outlines a list of planned PSD programmes geared towards the development of SMEs that are supported by the Government: United States Agency for International Development (USAID) In Jamaica, the USAID has economic growth at the heart of its sustainable development strategy for its programmes leading up to Their primary aim is to improve the private sector s capacity to contribute to economic growth and job creation, while benefiting from trade and investment opportunities. The programme also promotes strategic partnerships between the public and private sectors to respond to challenges in the global business environment. USAID/Jamaica has provided technical assistance as well as training and mentoring to firms in strategic planning, corporate governance, finance, marketing and distribution to enhance their ability to innovate and take advantage of emerging opportunities. The Economic Growth programme focuses on segments of the tourism, entertainment and culture, and agricultural sectors. These three industry sectors were identified in the Government of Jamaica s (GOJ) National Industrial Policy document as key priority areas for development. The programme also works to enhance the competitiveness of the workforce in selected industry sectors. USAID/Jamaica has also provided technical assistance to support the GOJ s efforts to reduce impediments to business growth and investment. Mechanisms such as the Development Credit Authority (DCA) guarantee programme are being leveraged to expand the availability of credit to micro, small, and medium-sized businesses by reducing the impact of defaults to financial institutions. USAID programmes in Jamaica for year ending 2006 included: a. Sustainable Management of Natural Resources and Bio-diversity, b. Clean Water and Sanitation, c. Increase of Private Sector Growth inclusive of tourism and agriculture and the promotion of cross sector linkages, d. Promotion of Agricultural Productivity. Inter-American Development Bank (IDB) The IDB s presence in Jamaica is usually in the capacity of offering support for the development of physical infrastructure such as roadways, irrigation systems, etc. In addition, their Jamaica Private Development Strategy Programme provides the economic opportunity for the majority of programmes to: Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 153

154 a. Reduce transaction costs for titling and registration of land b. Improving access to credit for sole proprietorships and small businesses c. Improving incentives for the informal sector to become formal d. Strengthening the private sectors capacity to meet international standards for market access Private Sector Development Programme (PSDP) The Private Sector Development Programme was designed to strengthen the level of competitiveness of MSMEs in Jamaica and is funded jointly by the Government of Jamaica and the EU (9th EDF). Its beneficiaries are Private Sector Organizations and Small and Medium Enterprises, through the provision of a slew of financing programmes that offer information, business development services and capacity building. The PSDP offers assistance through the execution of twelve main components: 1. Export Centres 2. Business Information Points 3. Cluster Sector Initiative 4. Market Penetration 5. Target Growth Competitiveness 6. Corporate Finance Broker 7. Back Office Services 8. Enterprise Rating and Upgrading 9. Mutual Guarantee Company (discontinued) 10. Consortia Business Development Services 11. Enterprise Business Development Services 12. PSO Cost Sharing Capacity Building Scheme (PSO/CBS) Overview of the Agricultural and Rural Sector Over the period the Agricultural sector (agriculture, fisheries and forestry) accounted for just over 7% of GDP. More recently as a result of drought and subsequently Hurricane Ivan its share has declined to some 5% of GDP. Over the past five years or so the total budget for the MoA (recurrent & capital) has been around US$ 31,4 million, equal to about 2.5% of non debt central government expenditure or 0.6% of GDP. Agriculture nevertheless remains an important sector of the economy, employing nearly 200,000 people or 20% of the workforce, as an important provider of primary products for agro-industries. The country is not selfsufficient in agricultural products. Agricultural imports account for 80% of its cereal product needs, 12% of meat & fish needs and a rising proportion of fruits and vegetables. 3.2% of the total land area of 1.4 million ha, equal to 350,000 ha is cultivable with no limitations. This land is predominantly along the coastal belts and southern plains. Of this area 25,000 ha is under irrigation. 25% of the total land area is pasture (improved and unimproved). More than 75% of the country has slopes of 10% or more, and the majority of small holder s farm on the hillsides on steep and fragmented holdings. Ownership is highly distorted, with some 80% of farmers being smallholders (average holding size 2.25 ha) farming 16% of the area cultivated. The total area cultivated decreased by some 25% over the period A wide range of tropical and sub-tropical crops grow Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 154

155 well on the Island. The main traditional export crops included: sugar, bananas, coffee, citrus, & cocoa. Important non-traditional export crops include: root crops (mainly yams, cassava and sweet potatoes), allspice or pimento, and ackee. Jamaica produces a wide range of tropical fruits (e.g. citrus, passion fruit, guava, mango, breadfruit, papaya, a small amount of coconut, and most of the vegetables consumed). The country grows some starch or staple root crops for domestic consumption. Jamaica has a vibrant poultry sector dominated by a few large private producers. The same producers are also engaged in an expanding aquaculture industry. The country has the potential to be self sufficient in dairy products, as it has a well adapted local dual purpose breed and plenty of pasture land. Capture fishing along the coast is important, with some 200,000 people reported to be dependent on such fishing. However uncontrolled over fishing has resulted in a serious decline of the coastal catch. There appears to be considerable unexploited pelagic or deep water fishing potential, much of which is currently fished by unauthorised vessels. Factors which have binding constraints on agricultural, rural sector competitiveness and investments: Massive public sector debt burden; Poor public security and high levels of crime; Changing international trade regimes for bananas and sugar; High frequency of natural hazards; Small size of holdings; inadequate infrastructure; poor marketing systems; high cost of inputs; insufficient credit facilities; competition from cheaper food imports and inadequate research and extension services; Competition with cheaper often dumped imports; High cost of imported feedstuffs.; Over fishing and the destruction of marine habitats; Decline in importance of agriculture in the economy coupled with the increasing autonomy of many of the agencies and authorities linked to the Ministry of Agriculture (MoA); Reduction in the Ministry s resources base, staffing and influence. Summary of the Government Strategy In June 2005 the MoA published the Agricultural Development Strategy The main objectives of the three year rolling strategy are: to contribute to sustainable growth & development through employment, export earnings and food security; to halt the decline of the sector; to restore levels of productivity; and promote expansion of products with viable markets; to promote agro industries, and to provide meaningful livelihoods, especially for young people in rural areas. The main components of the strategy include: Reduction of Praedial Larceny, through better enforcement of the amended Act; Increased Productivity & Production, especially a 60% increase in food crops; More Efficient Use of Land, especially government lands through distribution; Improved Infrastructure, especially rural road rehabilitation & irrigation networks; Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 155

156 Enhanced Research & Technology Development; Expanded Extension Services; Improved Marketing & Access to Credit; Rationalisation of Trade Policy & Upgrading Food Safety Measures; Expand Rural Development. This extensive list of components and related activities has an overall budget estimate of J$3907 million (US$ 61.4 million) over three years, including some J$3292 million (US$ 51.7 million) for infrastructure. Recommendations Following recommendations are drawn from the meetings and discussions held with representatives of the Government, institutions and enterprises: Supporting the improvement of competitiveness of local producers and processors in order to enable better market access and competition in the global arena but especially with the imported products in the local market; Improving post harvest treatment of local produce; Improving infrastructure; Support cluster development and cooperation between enterprises; Improving access to financing and attraction of venture capital; Supporting skills development at all levels (managerial and workers); Increase and promote technology transfer; Increase the local expertise to provide consultancy services, especially related to food safety; Supporting the industrial development especially SMEs in the food processing sector; Upgrading up of regulatory authorities (food safety, standards bureau). Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 156

157 Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 157

158 OECS Member of CARICOM only Associate member of CARICOM only Member of both CARICOM and OECS Associate member of both CARICOM and OECS Organisation of Eastern Caribbean States The Organisation of Eastern Caribbean States comprise Antigua and Barbuda, Dominica, Grenada, St. Christopher and Nevis, St Lucia, and St. Vincent and the Grenadines. Though independent states, they share a common currency and have common institutions such as the Eastern Caribbean Central Bank and a Supreme Court. Structure and recent performance of the Private Sector For the purposes of this report statistical data produced by the Eastern Caribbean Central Bank ( will be used even though it includes data for Montserrat and Anguilla which are considered insignificant. Table 9: GDP of OECS by Sector, Current Prices 31 Dec Sector EC$M % Agriculture Mining & Quarrying 86 1 Manufacturing Electricity & Water Construction 1, Distribution 1, Hotels & Restaurants Transport 1, Communication Banks & Insurance 1, Real Estate and Housing Government Services 1, Other Services TOTALS 9, Source: Eastern Caribbean Central Bank National Accounts Statistics 2007 Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 158

159 The majority of private sector activity in the OECS in the period was driven by preparations for and the hosting of the 2007 Cricket World Cup. The construction of new accommodation and infrastructure improvements drove the construction and distribution sectors. Capacity constraints in the construction sector plus targeted financial aid arrangements led to the wide scale use of contractors from China with an associated import of Chinese labour. With the evaporation of preferences for agricultural products, the OECS economies have turned to the tourism sector for growth. The tourism product ranges from high end international chain facilities in St. Kitts and Nevis, to locally owned small properties in Dominica and St. Vincent. In all cases growth is constrained by limited airlift and paltry resources for destination marketing. The countries with international chains tend to have a slight advantage as they benefit from the chains international marketing budgets. These marketing activities though tend to promote the chain s brand rather than the destination. Hosting the international chains however introduces complications into the management of the industry as a whole. The chains negotiate concessions that are not available to the local investors, and are able to undercut local properties for business in the low season when their occupancy rates are low. Some international chains introduce gambling into the product mix that enables them to cross subsidise room and food and beverage costs, thus increasing competitive pressure when comparing value for money with locally owned properties. Operating costs for the locally owned properties tend to be high. Much of the food is purchased from local distributors without the benefit of import tax concessions. Energy costs are high. Skilled labour is in short supply, especially in the food and beverage area where cost control and containment is essential. A bright spot is the widespread use of internet marketing, without which many properties would not be able to attract international business. All of the countries are attempting to distinguish their product beyond the mature sun sea and sand offering by introducing event tourism based on festivals, eco tourism, sport fishing and diving. All of these create new opportunities for service sector activity that do not require high levels of investment. There are pockets of manufacturing activity in all of the countries. Some of the activities complement the dominant tourism sector, especially in the food and beverage area. Many of them are however stranded, as the local markets are small, and they have limited opportunity to compete externally. The main issues affecting the competitiveness of the manufacturing sector are high energy and transport costs, and inadequate transport frequency. This inhibits their ability to achieve the supply chain efficiency that is essential to compete in international markets. Economic features and evolving potentials The total GDP of the OECS countries made up approximately 5% of CARIFORM GDP in 2005 at current prices. All of the economies are small, with 2006 GDPs ranging from US$317 million for Dominica to US$1,006 million for Antigua and Barbuda. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 159

160 Table 10: OECS 2006 Population and GDP at Current Prices Country Population GDP GDP (per capita) (thousands) (US$millions) (US$) Antigua and Barbuda 84 1,006 11,980 Dominica ,465 Grenada ,247 St. Kitts and Nevis ,904 St. Lucia ,465 St. Vincent and the Grenadines ,776 Source: ECLAC Selected Statistical Data of Caribbean Countries, Vol. XX 2006 The only comparative advantage of the OECS is geographic as it relates both to climate and physical attractiveness as well as proximity to the major tourist markets of North America and Europe. Some of the islands, such as Dominica, Grenada, and St. Vincent and the Grenadines have the capacity to develop an eco tourism product. Others are limited in what they can do, and will have to emulate Barbados in developing attractions to supplement the mature sea and sand product. Table 11: Geographical factors Area (Sq km) Arable Land % Antigua Dominica Grenada St. Kitts & Nevis St. Lucia St. Vincent and the Grenadines Source: The CIA 2008 World Factbook The countries are developing human resource capability in the tourism sector, but the range of skills is still limited, especially in the management and technical areas, and further development is needed. In order to increase the revenue opportunities from tourism, they will have to position themselves as up market destinations that command premium prices. Political and administrative framework The OECS countries are politically stable and recent changes of government have gone smoothly. Populations are relatively homogeneous and the racial tensions that exist in some other Caribbean countries are absent. All countries face capacity constraints in the development of public and private institutions because of small populations and limited educational opportunities. Recognition of these constraints led the individual countries to establish and join the OECS ( The OECS serves its members through a variety of institutions such as the Eastern Caribbean Central Bank, The Eastern Caribbean Supreme Court and units such as the Export Development Unit. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 160

161 Individual countries have established their own tourism support agencies supporting destination marketing, product development and property certification. The level of support provided by the agencies depends on the resources available, with Antigua and St. Lucia providing more than St, Kitts and Dominica. Some support in the area of export readiness is also provided to SMEs by Government investment promotion agencies. Countries also have established Bureaux of Standards with varying levels of capacity. St. Kitts for example has equipment resources but limited human resources, with Grenada having more human resources than equipment. The absence of properly resourced bureaux puts countries at a tremendous disadvantage in a liberalised trade environment. Not only would they not be able to properly test and evaluate imported goods, they would also not be able to certify that products to be exported meet required standards. This constraint could make any strategy of further investing in the development of the productive sector questionable. All countries have Chambers of Commerce and hotel and tourism intermediary organisations. The Chambers of Commerce in most cases represent the manufacturers as well. There are contractors associations in several islands. All of the intermediary associations are resource constrained, usually with one or two permanent staff. Extensive reliance is placed on the membership to keep the associations operative. They all carry out advocacy with some arranging training events and seminars as resources permit. Most of the finance for the private sector is supplied by regional and international banks. These however are rigorous in terms of loan collateral requirements, and their loans tend towards shorter durations. There are development banks in most countries (Antigua, Dominica, Grenada and St. Kitts, St. Vincent). Funding comes from a variety of sources including The Caribbean Development Bank, local social security agencies and the European Investment bank. All of the institutions are small, and are challenged to maintain loan portfolio quality and to cover overhead expenses. Private Sector development programs The OECS are served by a number of national and regional private sector development agencies. The national agencies tend to be embedded in government departments such as investment promotion agencies or in development banks. The range of services tends to be limited to training, assistance in business planning advice and a similar range of services using local resources with more academic training than wide extensive hands on experience. There are two regional programs of significance, the OECS Export Development Unit and USAID s Caribbean Open Trade Support Program (COTS). COTS is being implemented over the period September 2005 to September 2009 by Chemonics International ( Based in Antigua and managed by Earle Baccus, formerly of CEDA. COTS is similar to the USAID s GTIS programme in Guyana. They claim that their programs are very effective as can be substantiated by measurable impact. The approach is marketing oriented in that projects are only accepted where a beneficiary can identify a specific market to be developed. Prior to developing an intervention, the feasibility of the market for the beneficiary is assessed, and if found acceptable, an intervention is designed to respond to the market opportunity. Projects must have a positive financial impact of at least 5 times the cost of the intervention. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 161

162 ANTIGUA AND BARBUDA Overview of the Agricultural and Rural Sector In 2003, Antigua and Barbuda s GDP reached US $757 million, with per capita GDP estimated at US $9,633. The agricultural sector contribution to the economy is relatively small, accounting in 2003 for about 3.8% of GDP, about the same as in It employed around 6% of the workforce. Livestock, since the closure of the sugar industry in the 1980 s has traditionally occupied the largest share of agricultural production, followed by fishing and crops. The country s agricultural production is focused on the domestic market and constrained by a limited water supply and a labour shortage stemming from higher wages in tourism and construction. Besides livestock, main agricultural products are cotton, fruits and vegetables. Fisheries (lobsters) are the top single agricultural export accounting for about 45% of total agricultural exports (less than 1% of total exports in ). Over the nine-year period , the country s food import bill grew by 55% to US $61.5 million, or 17.4% of total imports. In 1999, food and live animal exports were valued at US $305,600, or 6.3% of total exports. Agricultural production (Cotton, fruits, vegetables, bananas, coconuts, cucumbers, mangoes, sugar cane and livestock) is mainly directed to the domestic market and is constrained by the limited water supply and labour shortages that reflect the attraction of higher wages in the tourism and construction industries. Agricultural output increased by 6.5% in Small manufacturing outlets produce goods for export including bedding, handicrafts and electronic components. There was little growth in manufacturing in The sector accounts for about 2.5% of GDP. Summary of the Government Strategy The Government s overall policy objective is to achieve real growth in food production and marketing and in natural resources utilization through sustainable increases in production and productivity, while at the same time forging the necessary linkages with other sectors of the economy. The modernization and development of the agricultural and rural sector will be achieved through: Definition and implementation of a policy framework with necessary and sufficient incentives that can provide the environment conducive to development; Institutional strengthening and enabling legislation; Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 162

163 Conservation of land and water resources and create the conditions for their rational and efficient utilization; Institute a land use policy; Investment in infrastructure (irrigation and access roads); Improve the competitive ability of farmers, fisher-folk and others involved in natural resources by improving their management skills and increasing their productive and technical know-how; Strengthening the linkages with tourism and agro-industries; Promote the concept of value-added agricultural products; Provision of increase opportunities for rural based entrepreneurs and communities; and Create and enabling environment for increase private sector investment. Recommendations Following recommendations are drawn from the meetings and discussions held with representatives of the Government, institutions and enterprises: Supporting the improvement of competitiveness of local producers and processors in order to enable better market access and competition in the global arena but especially with the imported products in the local market; Improving post harvest treatment of local produce; Improving infrastructure; Support cluster development and cooperation between enterprises; Improving access to financing and attraction of venture capital; Supporting skills development at all levels (managerial and workers); Increase and promote technology transfer; Increase the local expertise to provide consultancy services, especially related to food safety; Supporting the industrial development especially SMEs in the food processing sector; Activation of small loan programs; Development on national brands for food; Upgrading up of regulatory authorities (food safety, standards bureau); Setting up community based processing centres in remote rural areas; Integration of tourism to production and commercialization. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 163

164 DOMINICA Overview of the Agricultural and Rural Sector Although mountainous, with only 3% of its area devoted to agriculture, Dominica is endowed with fertile soils and the contribution of its agricultural sector to the economy is larger than that of the other OECS states. Agriculture and fishing accounted for about 18% of GDP in 2003, down from 25% in 1990, which translated into a per capita GDP of US $3,586, amongst the lowest in the OECS. Agriculture is centred on and around the banana industry, although increasing attention is being given to non-traditional agricultural crops such as plantain, coconut oil, oranges, mangoes and root crops. Bananas are the principal export crop and are mainly destined for the UK, but export revenues from this source fell from US$ 30 million in 1992 to less than US$ 10 million in 2003 as a result of low volume and prices, mainly resulting from changes in the EU banana import regime. Copra produced from local coconuts provides the basis for the main manufacturing industry, soap. Reduced export demand for this product has had a negative impact on coconut producers since Tourism showed some signs of recovery in 2003 as Government sought to promote Dominica as an ecotourism destination. Development of tourism remains difficult however, because of the rugged coastline and limited airport facilities. The government began an extensive restructuring of the economy in 2003 including elimination of price controls, privatisation of the state banana company, and tax increases - to address Dominica economic crisis and meet IMF targets. In 2003, approximately 33% of the population lived below the national poverty line and 67% of all poor households resided in rural areas. Dominica's rich volcanic soil provides a base suitable for growing a wide variety of fruits, produce, and plants. A favourable climate with an average temperature of 80 F, and abundant rainfall allow for year-round agricultural production. Unlike many other Caribbean island nations, Dominica was never a suitable site for sugarcane cultivation, as rocky and mountainous terrain made plantation production impossible. Only about one-quarter of the island is cultivatable. Climate, fertility, and topography are favourable for tree crops, however, and Dominica has been a producer of coffee, cocoa, and citrus fruits in its history. Citrus crops are still Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 164

165 important, being grown for export to other Caribbean islands, but the biggest share of agricultural production is bananas. Apart from bananas, Dominica produces a wide range of agricultural produce, both for local consumption (it is self-sufficient in fruit and vegetables) and for export. More recently, Dominica's agricultural development has been towards diversification into the production of non-traditional crops including pineapple, peppers, sweet corn, and other fruits and vegetables. Some exports are directed to the French overseas territories of Martinique and Guadeloupe, and there is a thriving network of small traders and inter-island commerce. There is a relatively large fishing industry in Dominica, but it is not modernized and almost exclusively serves the domestic market. A successful experiment in freshwater prawn farming, supported by Taiwanese aid, has produced substantial amounts of prawns for the domestic and local markets. Japan has provided support for a fish landing and processing plant in Roseau. In an endeavour to add value to agricultural raw materials, the government is encouraging investments in agro-processing by the provision of a regime of fiscal incentives and technical support services. In attempts to boost the economy Dominica is increasingly looking to niche markets in eco-agriculture and eco-tourism. Among the main issues affecting the agricultural sector are: (a) The small and fragmented nature of most farm units appears as a constraint to investment in agricultural production at farm level (b) Local agro-industry is constrained by the insufficient and/or unreliable supply of raw materials, the high cost of packaging supplies which are almost all imported and high utility rates; (c) Access to information and availability of up-to-date technical knowledge concerning most appropriate technologies at the level of crop production, post harvest, agro processing, quality standards, sourcing of appropriate equipment and marketing is reported as one of the main constraints to modernization of the production systems and to the uptake of new technologies. (d) Inadequate shipping arrangements are a major constraint to broadening market options for agricultural products; etc. Summary of the Government Strategy The aim of the Government in the medium term is to facilitate the accelerated emergence of a modernized, more diversified and resilient economic structure which will be supportive of genuinely, profit oriented private sector investment, less reliance on access to guaranteed export markets and more compatible with the imperative of ecological sustainability and the realities of the rapidly emerging liberalized global trading environment. Within this context Dominica has embarked on actions to attain economic stabilization and growth. These measures include particular measures for dealing with the contraction of the banana sub-sector and for general agricultural and economic development, as well as to promote expansion in trade and investment, technology transfers and institutional development, including human resource development and regulatory reforms. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 165

166 The Government s priorities related to the agricultural sector and the rural areas focus on agricultural diversification, social recovery of rural areas and economic diversification. The strategic elements for these priorities include: (a) greater economic diversification to encourage a more diversified economic growth with job creation by improving the conditions for the development of the private sector; (b) the development of human resources and institutional capacity; and (c) investment in economic and social infrastructure. Recommendations Following recommendations are drawn from the meetings and discussions held with representatives of the Government, institutions and enterprises: Supporting the improvement of competitiveness of local producers and processors in order to enable better market access and competition in the global arena but especially with the imported products in the local market; Improving post harvest treatment of local produce; Improving infrastructure; Support cluster development and cooperation between enterprises; Improving access to financing and attraction of venture capital; Supporting skills development at all levels (managerial and workers); Increase and promote technology transfer; Increase the local expertise to provide consultancy services, especially related to food safety; Supporting the industrial development especially SMEs in the food processing sector; Activation of small loan programs; Upgrading up of regulatory authorities (food safety, standards bureau). Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 166

167 Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 167

168 GRENADA Overview of the Agricultural and Rural Sector In 2002 Grenada s GDP reached US$ 1,083 million. 10% of the GDP is generated by the agricultural sector. The agricultural production is mainly a multi-cropping system. The principle agricultural export products are in order of export value priority (2003) nutmegs, cocoa, mace, bananas and fresh fruits. The main agricultural products for local consumption are fruits and vegetables. The importance of agriculture has been reduced over the last decade with natural disasters, declining international prices and disease affecting this sector. The Ministry of Agriculture has developed a National Strategy to address the decline in people working in the agriculture sector. Banana growers have benefited by a growing niche market for Fair Trade crops within the UK market. The average farm size is 2.8 acres and 80 percent of the farms are less than five acres. Traditional crops are nutmegs, mace, cocoa and bananas. Non-traditional agriculture is considered to be fruit, root crops and vegetables, livestock, poultry, and small ruminants. 23% of total population is working in the agricultural sector (approx people) and 62% live in the rural areas. About 32% of the population and 29% of households are considered poor, while 13% are considered extremely poor. Factors which are binding constraints on agricultural and rural sector competitiveness: Agricultural institutions lack adequately trained personnel; Agricultural production is mainly a multi-cropping system; the application of improved/ adapted technologies faces difficulties for its implementation at farm level; Limited area of flat land is suitable for irrigation and mechanical cultivation; High cost of labour, limited availability of inputs and services (especially credit), small-scale production, pests, and fragmentation of holdings and limited market opportunities; Constraints of trade related issues (world prices, trade policies, etc) on the agricultural industry. Decreasing importance of domestic agriculture production and increased reliance on imports. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 168

169 Summary of the Government Strategy The Government agricultural strategy can be presented as follows: to achieve its full growth potential to become a significant industry of the Grenadian economy through the creation of investment and the generation of income in Grenada. Thus, Grenada s agriculture has a potential to become competitive in selective niche markets for high valued products mostly at national, regional and in some cases at international level. In this regard, the primary focus of the Ministry of Agriculture will be to create an enabling environment for increased private sector investment (Grenada Agriculture Strategy 2005). The modernization of the agricultural sector will be achieved through: (i) (ii) the support to value-added agricultural products; seeking stronger linkages with tourism or (iii) an improved land use policy. Recommendations Following recommendations are drawn from the meetings and discussions held with representatives of the Government, institutions and enterprises: Supporting the improvement of competitiveness of local producers and processors in order to enable better market access and competition in the global arena but especially with the imported products in the local market; Improving post harvest treatment of local produce; Improving infrastructure; Support cluster development and cooperation between enterprises; Improving access to financing and attraction of venture capital; Supporting skills development at all levels (managerial and workers); Increase and promote technology transfer; Increase the local expertise to provide consultancy services, especially related to food safety; Supporting the industrial development especially SMEs in the food processing sector; Activation of small loan programs; Assistance in application of regulations and standards in the food sector. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 169

170 SAINT KITTS AND NEVIS Overview of the Agricultural and Rural Sector In 2003, St. Kitts and Nevis recorded a GDP of US$370 million, with per capita GDP estimated at US$7,923. For the same year, the agricultural sectors contributed 4.85% of GDP. The total value of agricultural exports, at US$9.3 million, accounted for 17.5% of total exports. Sugar and molasses represented 93% of agricultural export revenue. Traditionally the agricultural sector of St. Kitts and Nevis was dominated by sugarcane production; however, as of July 30, 2005, the Federal Government decided to close the sugar manufacturing industry. The resulting job losses within the sugar industry are a worry for the government. Other production of agricultural goods and services is on a comparatively small scale but rose by 3.8% in Non-sugar agriculture consists mainly of vegetables, fruits, tubers and groundnuts, which are mostly grown on smallholdings averaging 1.0 ha, and up to 8.0 ha, and mostly consumed locally. Livestock farming (mainly small and large ruminants) has been significant in Nevis, but is becoming increasingly important in St. Kitts as well. The country continues to import over 75% of its annual food consumption, which makes the country vulnerable to external shocks. Food imports in 2003 reached an estimated US$26.8 million. The country has a total population of 46,700 and a working population of 22,500. In 2003, 15% of the working population was employed in the agricultural sector. It is estimated that for every person employed in agriculture there are another 3-4 directly dependent on their farm income. A Poverty Assessment Report (2000) for St. Kitts and Nevis indicated that over 30% of the country s population lived below the poverty line, with a marked number living in rural areas. Summary of the Government Strategy The Government s strategic plan for agriculture is outlined in the most recent fiveyear plan developed by each island. For St. Kitts, it calls to significantly increase non-sugar agricultural production in a competitive and sustainable manner through the development of farmers. Production will be marketed and penetration of new markets is a special area of focus, while for Nevis to establish and improve an integrated Production and Marketing System that will contribute to diversification within and increase the rate of development of the agricultural sector. To achieve these, the major goals are to increase food production through commercialization Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 170

171 and development of farmers through the use of improved technologies including the use of irrigation, formation and development of farmer groups, to effect stronger linkages with tourism, to expand agro-processing and encourage value-added investment, and generally to encourage all stakeholders to treat farming as a business. Recommendations Following recommendations are drawn from the meetings and discussions held with representatives of the Government, institutions and enterprises: Supporting the improvement of competitiveness of local producers and processors in order to enable better market access and competition in the global arena but especially with the imported products in the local market; Improving post harvest treatment of local produce; Improving infrastructure; Support cluster development and cooperation between enterprises; Improving access to financing and attraction of venture capital; Supporting skills development at all levels (managerial and workers); Increase and promote technology transfer; Upgrading up of regulatory authorities (food safety, standards bureau); Setting up community based processing centres. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 171

172 SAINT LUCIA Overview of the Agricultural and Rural Sector Agriculture s contribution to GDP which accounted for 15 percent in 1983 has decreased to 5.4 percent in Despite the island s fertile, volcanic soils only about 30,000 ha of the total land area (61, 000 ha) is suitable for agriculture. The agricultural area breaks down into ha annual crops, 19,000 ha permanent crops, and 2,000 hectare under permanent pastures. Employment in agriculture stands at about 22% of the population. The relatively high level of rural poverty is mainly linked to the low productivity levels. Saint Lucia's economy was traditionally reliant on its agricultural sector. However, the banana industry has declined over the last years with the erosion of the ACP countries' preferential access to the EU market and increasing competition from Latin American producers. As in other Windward Island banana producing countries, a large number of farmers have been displaced over this period. Banana exports fell to 30,000 tonnes in 2005 from a peak of 132,000 tonnes in Nevertheless, Saint Lucia continues to be the leading Windward Island banana producer, accounting for around half of Windward banana exports in recent years. Banana production continues to occupy the largest share of land currently under cultivation- 48%. In 2006, the country saw a modest recovery in banana production, with growth of 13.2%. This continued into the 2007, with year-on-year growth of 34.8% in the first half of the year. However, the banana industry suffered widespread damage when Hurricane Dean passed close to St. Lucia in August. Coconut, the next major crop occupies about 42% of agricultural land. The other crops produced include cocoa, vegetables and herbs, other fruit and tree crops and cut flowers. The livestock sub-sector is small and dominated by the poultry industry. Recent efforts by the Ministry of Agriculture and Fisheries (MAFF) have sought to encourage the production of small ruminants (sheep and goats), swine and rabbits. The fisheries sector has shown steady growth in output and in the number of producers over the last 5 years and is emerging as a viable option for further diversification. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 172

173 Small and medium-sized agricultural enterprises are constrained by: (i) low level technology in primary production and value-added (crop and livestock); (ii) poor product quality; (iii) high of cost of inputs; (iv) poor human resource capacity (aging farmers, low level of education); (v) inadequate marketing arrangements; (vi) costly transport for domestic and export markets; (vii) inadequate infrastructure and facilities for provision of technical support and advisory services. The livestock subsector faces shortage of pasture and water sources; inadequate veterinary services, lack of breed development; lack of slaughtering-marketing infrastructure, training facilities, laboratory, animal pens. The fishery sub-sector suffers from declining fish stocks; insufficient infrastructure for aquaculture development; unavailability of proper fish and shrimp feed; lack of credit, insufficient processing facilities; insufficient market outlets. Land issues concern the lack of land use/management policy and zoning, fragmentation of parcels, limited ability of producers to access credit for infrastructures. The institutional constrain are: ineffective extension service; no viable agricultural credit institutions; overlap in mandates of sector ministries; lack of local institutions supporting community driven development. Summary of the Government Strategy The Government prepared a Medium Term Development Strategy (MTDS) for the period which articulates Government s vision for social and economic development and is founded on the principle of increasing competitiveness in the key income and foreign exchange generating sectors (i.e. tourism and agriculture), while developing the emerging sectors such as international financial services, telecommunications, information technology and other service sectors. The overall development aim is to transform the economy into a more service oriented economy. Hence a level of priority is assigned to education, training and human resource development. The government s strategy has as the principal objective, the reduction on the dependence on the single crop (bananas). The vision statement according to the Ministry of Agriculture is: to sustain a diversified national agricultural income base and enhance the integrity of rural livelihood systems; by generating capacity for efficiency and the competitive production and marketing of agricultural goods and services. The GOSL s objective with respect to the agriculture is the following: (i) Increase the efficiency and competitiveness of agriculture; (ii) promote the adoption of improved/appropriate technological packages; (iii) expand the agricultural production and export base; (iv) enhance the national food security status; (v) generate new opportunities for income and employment in rural areas; (vi) conserve the natural resource base, and; Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 173

174 (vii) modernize legislative and policy framework for optimal agricultural production and trade. Recommendations Following recommendations are drawn from the meetings and discussions held with representatives of the Government, institutions and enterprises: Supporting the improvement of competitiveness of local producers and processors in order to enable better market access and competition in the global arena but especially with the imported products in the local market, Improving post harvest treatment of local produce, Improving infrastructure, Improving access to financing, Supporting skills development at all levels (managerial and workers). Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 174

175 Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 175

176 SAINT VINCENT AND THE GRENADINES Overview of the Agricultural and Rural Sector In 2004 Saint Vincent s GDP reached US$ million, 8.33% of the GDP is generated though the agricultural sector. The country is typical of small, lower-tomiddle income nation-states in the Caribbean region, its economy has been historically dependent on, or dominated by agriculture, with the banana sub-sector being the chief exports. Farms sizes are relatively small, averaging less than 5 acres, and often resembles subsistence a subsistence farming system. The active population in the agricultural sector is 10% of (approx. 12,000) and 42 % live in the rural areas. The crop sub-sector dominates agricultural output and land use, where banana exports had traditionally been the largest foreign exchange earner, now displaced by Tourism services. The principle agricultural export products are in order of export value priority (2003) banana, arrowroot and other products as flowers and foliage plants, fruits and vegetables, including plantains and sweet potatoes. Agricultural lands are small size, averaging less than 5 acres, often with land positioned on slopes of up to 20. The economy performed well in 2006, despite a slight rise in inflation. Economic growth stood at 4.5% (EIU). This was led by tourism-related construction. However, stagnation in the agricultural sector continued, primarily due to high rainfall and labour shortages. Factors which have competitiveness: binding constraints on agricultural and rural sector Declining of agricultural exports as result of the ongoing challenges posed by the European banana regime. Agricultural exports accounted for about 9% of the GDP in 2003, declining from 17.3% and in 1983 and 15% in 1993; Inadequate marketing environment for agricultural products; Low levels of technical capacity of farmers, farm workers and others entrepreneurs; Limited Research and Technology Development Programme; Unsustainable environmental agricultural management and land use practices; Limited value added in the agricultural sector; Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 176

177 Inadequate legislation and institutional arrangement for the integrated development sector; Weak community linkages to support the Agricultural Industry; Summary of the Government Strategy The main objective of the government is to improve the socio-economic conditions in rural communities, to strengthen, expand and facilitate commercially productive activities through diversification and the implementation of rural development programmes with a renewed focus on production. Through the Ministry of Agriculture, Lands and Fisheries (MALF) there is commitment to realising the mission and vision for the agricultural sector through a programmed of strategic intervention and institutional cooperation. The public expenditure in Agriculture in the 2005 has been 5.7% of the overall US$76.8 million capital financing, that is, Agriculture was allocated US$4.38 million Capital Budget Estimates. Recommendations Following recommendations are drawn from the meetings and discussions held with representatives of the Government, institutions and enterprises: Supporting the improvement of competitiveness of local producers and processors in order to enable better market access and competition in the global arena but especially with the imported products in the local market; Improving post harvest treatment of local produce; Improving infrastructure; Support cluster development and cooperation between enterprises; Improving access to financing and attraction of venture capital; Supporting skills development at all levels (managerial and workers); Increase and promote technology transfer; Supporting the industrial development especially SMEs in the food processing sector; Activation of small loan programs (in place but not functioning); Upgrading up of regulatory authorities (food safety, standards bureau). Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 177

178 SURINAME Structure and recent performance of the Private Sector Suriname has a small but dynamic private sector of approximately 24,000 companies of which over 80% are SMEs. The sector includes privately and publically owned enterprises together with foreign owned companies. The economy is based on primary production of minerals (bauxite, oil and gold) and agricultural products. The local private sector has limited involvement in the major economic activities, with multinationals involved in bauxite mining, alumina production and large scale gold mining, and a state owned enterprise involved in oil production and refining. Gold mining though, also attracts a large level of informal activity together with forestry. Food-processing, alumina production, and lumber and wood processing represent the bulk of the manufacturing activity in Suriname. The remaining industries produce items such as detergents, brooms and brushes. With the exception of alumina production and some food-processing activities, particularly those involving shrimp and fish, most manufacturing activity in Suriname is aimed at supplying the local market. Table 12: GDP by activity at 2006 current prices Sectors SR$ Million % Agriculture, Hunting, Forestry & Fishing Mining & Quarrying Manufacturing 1, Electricity & Water Construction Wholesale & Retail Hotels & Restaurants 93 2 Transport, Storage & Communication Financial Intermediation Real Estate, Rent & Other Business Services General Government Services Community, Social & Personal Services 71 1 Taxes and service charges Informal sector TOTAL 5, Source: IMF, 2007 Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 178

179 As in many countries, the services sector is the largest of the economy both, in terms of employment and contribution to GDP. The sector comprises financial intermediation, telecommunications, transport, tourism, construction, wholesale and retail trade, hotels and restaurants, real estate, and personal services. Some of these services have an outdated legal and regulatory framework based on legislation dating back before independence. The need for modern and more efficient regulation has been a central theme of recent policy statements and initiatives, but the progress has been somewhat uneven across sectors. Concrete steps have been taken towards deregulation, but in relatively few areas. The recent good performance of the economy has been driven by increasing mineral production combined with increased prices. Growth in 2006 at constant prices (1990 base) was 11%. The distributive sector grew in the same period by 15.8% and the hotels and restaurant sector by 12.6% reflecting the growing importance of tourism. Private sector development is currently restricted due to a variety of factors such as: underdeveloped infrastructure and financial support services; the tax burden, which is higher than in most countries at a similar level of development; the extreme administrative complexity with much discretionary decision-making; and Moreover, the feasibility of private sector projects is very restricted due to a variety of factors such as: the poor infrastructure and financial support services; the tax burden, which is higher than in most countries at a similar level of development; the extreme administrative complexity with much discretionary decision-making; and the regulations that introduce strong rigidities in the economy specially regarding labor hiring and firing, land tenure and business licenses. Economic features and evolving potentials Endowed with extensive natural resources including the capacity to produce its own energy, the Surinamese economy has considerable long term potential. In the short term however, it is vulnerable, because of its narrow base dependant on three commodities (alumina, gold and oil) for 80% of export receipts and 25% of central government revenue. These sectors continue to command government attention and to attract investment capital aimed at increasing output. Historically the agricultural sector has been subject to a wide range of regulations and constraints that have inhibited the development of its full potential. Efforts have been made in recent years to remove some of these constraints and are aimed at modernizing the sector, improving the production of traditional exports and expanding non traditional production. The tourism sector has been growing rapidly over recent years, and is responding by increasing capacity in hotels, restaurants and tour operators. The largest source of visitors is the Netherlands, and the largest classification is visiting friends and relations. The country has considerable eco-tourism potential, and its prices are favorable in comparison with regional competitors. The main constraint though is lack of air transport links, especially with North America, traditionally the largest tourism market for the Caribbean. The construction sector will benefit in the future from a significant number of planned investments in the public and private sector. Infrastructure works are planned to strengthen and develop the road network, as well as for bridges, canals and port rehabilitation. Expansion of capacity in the mining sector will also lead to increased activity. Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 179

180 Overall, the authorities have to take steps to keep rising inflation under control. This inflation influenced by rising commodity prices together with higher levels of government spending. Political and administrative framework Though there has been a history of instability, in recent years elections have been orderly and democratic government maintained. Institutional capacity for promoting economic growth is not fully developed, and the government bureaucracy is widely perceived as lacking transparency and consistency in its administration. According to the IMF, a comprehensive civil service reform is needed to increase public sector efficiency and reduce a large wage bill. There are also a large number of inefficient public enterprises that hinder the development of the private sector and whose operations are weakly monitored. Though progress has been made on structural reforms, but much remains to be done. Officially, the Suriname dollar is in a managed float, but this has in practice developed into a de facto peg to the US dollar. The IMF assessment is that the real exchange rate has been broadly stable since 2005, and is slightly undervalued. The banking system consists of both state owned and privately owned banks. Both carry relatively high levels of non-performing loans, the state owned banks carrying the higher level of risk. Tis matter is to be addressed by the regulatory authorities. Representation of the formal private sector is well organised. Under local law, all businesses must be registered at the Trade Register maintained by the Kamer van Koophandel en Fabrieken, or the Chamber of Industry and Commerce. This gives the Chamber direct access to the business community in a way not found in other CARIFORUM countries. It also offers a One Stop Window for application and extension of licences from the government and acts as a trade promotion agency. Another active association is the Vereniging Surinaams Bedrijfsleven, (VSB) or the Suriname Trade & Industry Association. The VSB plays a strong advocacy role for business owners and it represents the local private sector in international fora including the ILO, the International Organisation of Employers and the Caribbean Employers Federation. Private Sector development programs The Suriname Business Forum (SBF) is a body comprising representatives of the public and private sectors charged with formulating a National Strategy for the development of a sustainable Domestic Private Sector (DPS). Representatives of Suriname Chamber of Commerce and Industry, Suriname Manufacturers Association, Association for Trade and Industry, Ministry of Trade and Industry, University of Suriname, Non-Government Organizations, Ministry of Justice and Police, Ministry of Agriculture, Animal Husbandry and Fisheries, Ministry of Finance and Workers Union consists of the board. A Plan was finalised in 2002 and used as the basis for attracting international funding for implementation. According to the national strategy, the DPS includes all enterprises that are the result of mainly private investment including middle sized, small and micro enterprises, but excluding enterprises that have developed as a Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 180

181 result of mainly direct foreign investment (primarily natural resources related). The national strategy identified by the SBF focuses on the main structural weaknesses affecting Suriname s DPS as well as the priority actions needed to address these weaknesses. The overall purpose of this the plan is to create an enabling environment for the development of a DPS providing competitive and high quality goods and services. It is expected that the right prevailing conditions will generate economic growth and contribute to the reduction of poverty in Suriname. The following outcomes are anticipated: The SBF will formally become an operational platform for continuous dialogue between the public and private Sectors. This dialogue will identify priority areas for improving competitiveness. Business and trade promotion support services and information will be coordinated and delivered through a Suriname Business Centre (SBC), including capacity building and institutional strengthening for the DPS and organizations for the private sector. Special attention will be paid to improving business services provided to SME s as well as to trade promotion. An improved operational environment for the DPS will be created. Key officials in the public sector will be given the skills mix to create the enabling environment for the DPS. This will be based on international benchmarks and standards. Overview of the Agricultural and Rural Sector Agriculture, including fishing and logging, along with other traditional resource based industries such as bauxite, oil and gold constitute the major components of the Suriname economy. Following a recession in , GDP growth has picked up with rates of 5.3% and 4.6% in 2003 and 2004 and currently stands at just over US $ 1,000 million. With per capita income at about US$ 2200 (World Bank 2004), Suriname belongs to the category of the lower middle income countries. Agriculture contributes about 7% to 10% of GDP and about 15 % of total employment. Agriculture is a major employer, and therefore key to the economy, but the outlook does not look good. The banana industry looks healthier after a restructuring programme, but the uncertain future of the EU banana regime is a concern. The industry also benefited from the first-come-first-served proportion of the EU s overall quota. The rice industry has a huge debt and suffers from high costs, as well as being threatened by a phasing out of EU trade preferences. The state owned rice company was closed. The only bright spot is a palm oil plantation, funded by China, may move ahead and provide employment opportunities and improve the sector s long-term outlook. There is a relatively large informal sector (that includes gold mining, wholesale and retail trade, drug trafficking and other illicit cross border trade) and statistics do not adequately capture economic activity. Suriname s agricultural sector is dominated by rice and vegetables as the major annual crops and bananas/plantains, coconuts and citrus as the main perennial crops. Sugarcane production stopped as of 1992 due to high production costs, declining prices and managerial problems and oil palm production has been discontinued since Rice exports account for about 4 % of total export earnings, banana exports which accounted for 2-3% of export earnings fell drastically and have only recently resumed with support from the European Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 181

182 Union. Suriname s other main exports are shrimp and fish amounting to about US$ million per year (10-12 % of total export earnings) and lumber amounting to about1% of export earnings. Agriculture is undertaken primarily around the coastal belts by about 12,000 farm holdings (down from 20,000 in 1980), about 50% in small scale holdings while the rest are in large holdings by parastatals/commercial farmers. A major portion of the small scale farmers are part-time farmers. The main issues facing the agriculture sector partly relate to the enabling environment encompassing overall macroeconomic environment and the absence of an appropriate legislative and incentive framework for private sector to operate. It also relates to the more specific elements that include: Dependency on two or three crops with a protected external market which has acted as a disincentive for any initiative involving more flexible cropping patterns, diversification and technological improvements; Outdated land tenure system which although in principle designed to promote economic land use and prevent land speculation, in practice acts as a disincentive to agricultural investment and slows down, complicates and eventually precludes access to the land by entrepreneurs and young farmers; Small size of the internal market, the need to look at exports as a condition sine qua non for most of the foreseeable agricultural diversification products including fruits and vegetables and livestock products; Absence of active and organised farmers associations and constituencies at grassroots level that could represent the interests of the rural world in policy making and eventually act as intermediaries to facilitate transfer of technology, training, capacity building, procurement of inputs at competitive prices, assistance in marketing and processing of agricultural products linking production to markets and agro processing industries; Dilapidated status of most of the infrastructure including irrigation, drainage, roads and bridges and on farm equipment and the farmers' reluctance to pay water charges; the diffused responsibility for O&M between various Government agencies with no participation by the irrigators and the lack of effective Water Users Associations; Limited implementation capacity of agricultural sector institutions and the difficulty in recruiting and retaining competent and dedicated staff to work in agriculture; Summary of Government Strategy In purely quantitative terms the agricultural sector represents a relatively small percentage of GDP and will probably remain so in the short and medium term. Its sustained growth is nevertheless important for a balanced and harmonious development of the Surinamese economy. It has impact on poverty, social, natural resources management and environmental issues and on a new vision of the rural areas as a space where there are opportunities for investment, employment, income generation and attractive living conditions comparable if not better than those of the towns. The Agricultural Sector Plan recently approved by the Legislative Assembly confirms Government s commitment to a new vision for sustained growth of the agricultural sector and constitutes a fundamental step towards modernization of the sector. It specifically aims to: Enlarge the contribution of this sector to the development of the national economy in a way to distribute regional spreading of economic activities; Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 182

183 Promote employment and sustainable development; Increase agriculture production for the local and export market; Reorganize/privatize parastatal agro businesses and phase out subsidies. Recommendations Following recommendations are drawn from the meetings and discussions held with representatives of the Government, institutions and enterprises: Supporting the improvement of competitiveness of local producers and processors in order to enable better market access and competition in the global arena but especially with the imported products in the local market; Improving post harvest treatment of local produce; Improving infrastructure; Support cluster development and cooperation between enterprises; Improving access to financing and attraction of venture capital; Supporting skills development at all levels (managerial and workers); Increase the local expertise to provide consultancy services, especially related to food safety; Supporting the industrial development especially SMEs in the food processing sector; Increase and promote technology transfer; Upgrading up of regulatory authorities (food safety, standards bureau). Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 183

184 TRINIDAD AND TOBAGO Structure and recent performance of the Private Sector The economy of Trinidad and Tobago continues to be dominated by the energy sector, with natural gas being the major commodity produced. The other main products of the sector are crude oil, liquefied natural gas, refined petroleum products and petrochemicals such as ammonia and methanol. Most of the outputs of this sector are exported primarily to the USA, Europe and regional markets. Though the Government continues to follow a policy of economic diversification, exports from the energy sector accounted for 87% of total exports in Trinidad is considered a stable supplier of energy products. Table 13: Trinidad and Tobago GDP by Sector, Current prices 2007 (provisional) Category TT$ millions % Energy & Petrochemicals 56, Agriculture Manufacturing 7,317 6 Electricity & Water Construction & Quarrying 10,653 8 Distribution & Restaurants 19, Hotels & Guest Houses Transport, Storage & Communications 8,282 6 Finance, Insurance & Real Estate 15, Government 8,819 7 Education & Culture 3,097 2 Personal Services 1,465 1 FISM (4,431) (3) VAT 4, , Source: Review of the Economy 2007, Government of Trinidad and Tobago Draft Programme on Competitiveness and Innovation in CARIFORUM Countries 184