IFC in the Caribbean Presentation on Small States December 11, 2008

Caribbean Profile – Region of Diversity 13 countries o/w 5 IDA and 8 non-IDA, 8 small states 11 island economies 30% living under $2/day High unemployment Anemic growth since early 1990s OECS – IFC Members Antigua and Barbuda Bahamas Barbados Dominica Grenada St. Kitts & Nevis St. Lucia

Development Challenges of the Caribbean Public Private High unemployment, poverty and inequality Rising crime High HIV/AIDS incidence Gap in education, skills and productivity Brain drain Labor cost is high relative to skills High levels of public debt: 7 out of 10 (14 out of 30) most indebted countries in world; Average debt rose from 67% of GDP (1997) to 96% (2003) high tax rates Small and fragmented market sizes Economies vulnerable to disasters and external shocks Lagging growth and investments, especially FDIs Non-uniform regulatory climate Increasing competition in tourism market Few indigenous successes and little linkages to local economy Infrastructure constraints Inefficient Ports and Customs Costly Power and Water Air/sea freight – Inadequate and expensive route structure Agriculture increasingly uncompetitive Preferential access [US, EU] removed

Challenges for IFC What products? What delivery model?

Strategy and Results Focus Areas Results 2000-2008 PRIORITY SECTORS: Access to Finance Infrastructure Healthcare & Education ITC Tourism * Funding means IFC plus mobilization (which incl. co-funding) ** Including DR and Haiti Five main sources of demand consistent with our development mandate Comparative Advantage – Tourism (Grenada, Guyana, Regional) some natural resources (T&T and Guyana) Competitiveness – Cement, Retail, Telecom, Textiles Infrastructure – Airports, Power Smaller Economies – Financial, Telecom, Cement, Retail Funded US$1.3* billion in 48 investments, plus 14 Technical Assistance in the region * IFC’s own account + B-loan + co-funding

Results: Reversing a Declining Trend In 2009, a doubling of business More complex projects requiring industry and advisory focus

Recent IFC Business Development Efforts

Coordination between WBG, Govt, Donors and Private Sector Important Systemic Efforts Infrastructure Energy Independence World Bank study on alternative energy (March-June 2009) Geothermal (current) A2F Transportation Inter-island Ferry (OECS) Low-cost airline (East Caribbean) Small businesses Microfinance, SME Credit bureau Direct small investments (< $5.0 mm) Sustainable Tourism Linkages Agribusiness Vocational training Coordination between WBG, Govt, Donors and Private Sector Important