News

After a week-long visit to Jamaica, which included attending ‘Invest Jamaica 2022’ at the Montego Bay Convention Centre last week, James Scriven, CEO of IDB Invest — the private sector engagement arm of the Inter-American Development Bank (IDB) — is certain about one thing: Jamaica is ready for investment and the IDB has a role to play.

Scriven’s attendance at the conference also saw him providing support to the IDB Group General Manager Country Department Caribbean Group and Country Representative in Jamaica Tariq Alli. Even so, given Scriven’s portfolio, his scope is to encourage the private sector to invest, along with Government and other multilateral development agencies, to drive development and growth.

“So I would start by saying that part of the reason why I’m physically here is to show to the business community that we’re ready to invest in Jamaica. That takes the form of different areas,” the IDB Invest CEO told Jamaica Observer last week in an interview.

One of the areas of opportunity that Scriven, along with Alli, has identified is financing the growth of small and medium-sized enterprises (SMEs). However, Scriven points out that one of the challenges the IDB and its subsidiaries face — one that is not unique to Jamaica but common in Latin America and the Caribbean — is for privately held banks and other financial institutions to provide financing to small businesses, given their risk profiles.

To this end, he said, the IDB and its subsidiaries — IDB Invest and IDB Lab — have engaged with financial institutions in the region to determine the resources they will need to “expand” into the SME space. Since 2019 the IDB has engaged financial institutions in the region to provide financial support to SMEs and, in particular, women entrepreneurs as well, as part of its Trade Finance Facilitation Program.

Here in Jamaica, IDB Invest provided US$66 million to JMMB in 2021 to support local SMEs — $35 million in January and $31 million in August.

During last week, Scriven explained, IDB Invest had “conversations” with commercial banks identify and assist them with a strategy to go to both local and international financial markets to raise funds to support local businesses. Part of that discussion, he said, included “how to develop a strategy predicated on women-owned SMEs [and] attaching sustainability indexes” to them.

“In some cases they require more funding, in some cases they require guarantees,” the head of IDB Invest shared. Still, he pointed out that IDB Invest’s interest in Jamaica is not only confined to financial institutions and SMEs.

“There is a large push for the Government and for a larger participation of private sector entities in physical infrastructure,” Sciven noted.

“We are primarily an infrastructure bank. Most of what we do — 70 per cent our business — is in the infrastructure and energy space so we are going to be on lookout for assets to finance both PPPs (public-private partnerships) and privatisations that might be going to market.

According to Scriven, 30 per cent of the world’s public-private partnerships originate from Latin America and the Caribbean, with the IDB having a heavy presence in those deals as it prepares governments to prepare for and prepare to take PPP assets to market. However, he lamented that PPPs are underutilised in the Caribbean.

It is within this context that the IDB Invest has been “having that conversation with the Government of Jamaica” and “proposing when those [infrastructure] assets go to market”. In this regard, Scriven said the IDB is also willing to finance them.

When asked if PPPs are a better alternative to multilateral finance, he explained that the two don’t have to be mutually exclusive.

“Multilateral financing can be combined in a PPP. PPP is the instrument that gives some form of support for the private sector to step into building and financing infrastructure, and that’s how multilaterals [like the IDB] can play a role,” he shared.

So what are the other areas that the IDB Invest head has identified as key drivers? “I would say that I’m finishing a week in Jamaica and I can point to a few sectors that we are already seeing a demand from clients,” Scriven stated, adding that first is transportation and, in particular, roads.

Additionally, he identified the renewable energy sector as a driver, “moving some of the pre-established forms of producing energy and taking advantage of the natural beauty Jamaica has”. Given the Government of Jamaica’s “keen interest” in providing broadband Internet to the entire population, technology and telecommunications is another winner sector, Scriven listed.

Source Jamaica Observer