Government and the business community need to do more to facilitate and undertake investment projects using public-private partnerships (PPPs).
That is the recommendation in the new Inter-American Development Bank (IDB) report Catalyzing Capital: Public-Private Partnerships For Resilient Growth, which says “the environment for PPPs is still nascent” in Barbados.
The publication is part of IDB’s Caribbean Economics Quarterly series, which focuses on the economic performance of Barbados, The Bahamas, Guyana, Jamaica, Suriname, and Trinidad and Tobago.
An analysis in the report by IDB country economist for Barbados, Cloe Ortiz de Mendivil, concluded that Barbados “has been making steady progress with its reform agenda and is clearly defining its priorities. These efforts have recently translated into economic growth”.
She noted, however, that “the path towards sustainable and inclusive growth remains challenging”.
With Barbados’ high public debt levels and limited fiscal space constraining Government’s capacity to finance public investment, de Mendivil observed that Barbados “has developed a comprehensive plan laying out priority investment priority needs over the next ten years that incorporates active participation of the private sector”.
“Despite recent progress, however, the environment for PPPs is still nascent. Developing clear frameworks, policies and specific regulations for engagement between the public and private sectors will help unlock the resources the country needs,” she added.
The economist identified a role for PPPs to help close infrastructure gaps identified and reflected in the Barbados National Investment Plan, but said that “significant efforts are needed by both the public and private sectors”.
“On the public side, investment is essential, but so is fostering an enabling environment for doing business and attracting investments,” she said.
“The country needs to continue to put in place clear policies and guidelines to govern public-private collaborations and dedicated resources and teams.
“On the private sector side, a strong commitment to prioritising investments that enhance resilience and support long-term sustainable and inclusive growth is crucial.”
The IDB economist examined Barbados’ enabling environment for PPPs using information from a methodology known as Infrascope, which the IDB developed in collaboration with Economist Impact, the analysis unit of The Economist Group.
The Infrascope index is a benchmarking tool that evaluates the capacity of countries to implement sustainable and efficient PPPs in key infrastructure sectors, including transport, energy, water and sanitation, solid waste management, and social infrastructure, de Mendivil explained.
It aims to help policymakers identify the challenges to private sector participation in infrastructure that, if overcome, could encourage greater use and availability of PPPs and support the broader development agenda.
The most recent Infrascope diagnostic (2023/24) evaluated, scored, and ranked countries on more than 100 indicators across five main categories: regulations and institutions, project preparation and sustainability, financing, risk management and contract monitoring, and performance and impact evaluation.
“In the Infrascope 2023/24 report, Barbados had an overall index score of 22.1 out of 100, with the assessment highlighting both relative strengths and weaknesses across the five categories,” she shared.
“Though Barbados does not have a long history of PPPs, it did pass a National Public Procurement Act in 2021 that should help facilitate progress. As a high-income country, Barbados sees its best ranking in the financing category, with its lowest relative score in the area of project preparation and sustainability.”
The economist said that despite being in the relatively early stages of capacity development for PPPs, Barbados shows strengths related to financing and risk management.
Regarding challenges, de Mendivil said that “key areas of focus from the 2023/24 Infrascope assessment include those related to the country’s capacity to carry out and manage PPPs, particularly with respect to project preparation and performance evaluation; the need to create and operationalise a PPP Unit; and the need for mechanisms to address sustainability requirements, risk management protocols, and project management capabilities for infrastructure more generally”.
A a news release on the Catalyzing Capital: Public-Private Partnerships for Resilient Growth report said that the overall finding for Barbados, The Bahamas, Guyana, Jamaica, Suriname, and Trinidad and Tobago was that innovative financing solutions and PPPs were are key to unlocking the Caribbean’s development.
The report estimated that the Caribbean would require more than US$21 billion in infrastructure investment by 2030, which could generate additional economic growth exceeding US$84 billion across the region.
Anton Edmunds, IDB general manager for the Caribbean stated: “Countries across the region need significantly larger volumes of private investment, expertise, and innovation to drive faster and more inclusive growth.
This report highlights key sectors – including transport, water and sanitation, energy, and digital telecommunications infrastructure – that are most critical for sustainable growth and best placed to benefit from PPPs, as well as areas where focused reforms are most likely to deliver results,” he said.
“The IDB Group and our ONE Caribbean regional programme can provide countries and firms with financial, technical, and project preparation support needed to help catalyse new investments in these and other priority sectors,” added Edmunds.
