By Jerry Edwin:
The idea that Grenada may become the first CARICOM nation to follow the lead of Africa and Asia and issue a government guaranteed Diaspora Bond presents a compelling contract between the current government and the tens of thousands of its immigrants. Such an initiative could lead the way for Caribbean nations to find vast new sources of development funds.
While Grenada contemplates a Diaspora Bond, two other CARICOM nations, Jamaica and Guyana, appear better placed to issue these bonds, potentially receiving two billion dollars and two hundred and fifty million dollars respectively from their overseas nationals. Without question, the financial impact of a Diaspora Bond to these three economies will radically alter the trajectory of their national development plans.
Indeed, Grenada has progressed further in this regard than any other CARICOM member.
This past March, members of a research organization visited Grenada at the invitation of Prime Minister Tillman J. Thomas to address the Cabinet on their findings of the viability of using a Diaspora Bond to fund revenue-generating projects on the island. It is the first time that a CARICOM government has held a Cabinet-level discussion regarding the potential issuing of a Diaspora bond.
At a World Bank-sponsored conference on development finance held at New York University in December 2009, both Jamaica and Grenada were cited as viable candidates for Diaspora Bonds. Recently, the Bank also suggested that Haiti reach out to its vast Diaspora to issue a bond that can potentially raise up to two billion dollars.
According to the New York-based research organization, the Caribbean Development Policy Group, Inc. (formerly the Grenada Diaspora Organization), Grenada receives more than a third of its GDP from overseas remittances and has one of the largest annual out-migration rates globally. In its latest country report on Grenada, the International Monetary Fund further notes that remittances are the leading source of foreign exchange for the Spice Island as its construction and tourism sectors continue to lag.
So persuasive was the data compiled in support of the proposed Grenada Diaspora Bond by the New York research organization that the island’s leading newspaper, The New Today, said in an editorial that it fully supported the use of Diaspora Bonds as a leading alternative in the government’s toolbox of development options.
The organization also held high-level meetings with Opposition Leader, Dr Keith Mitchell, and opposition Members of Parliament, as well as stakeholders in the private sector and non-government organizations.
Bipartisanship and political cooperation are key elements to the success of a Diaspora Bond from any CARICOM nation including its governance, marketing and distribution. This approach is been fully embraced by both the Thomas Administration and Opposition Leader Mitchell and his MPs.
Moreover, Grenadian nationals have expressed their desire for separation of bond revenue from the government’s general budget. They also requested an oversight role for the Eastern Caribbean Central Bank or the Eastern Caribbean Securities Commission.
Although the Grenada government has yet to make a final decision on proceeding with a Diaspora Bond, several leading ministers have expressed full support and believe that this option could not have come at a better time for the island as it continues to experience a decline in tourism receipts and its export sectors.
From all accounts, stakeholder interest in and outside Grenada for a Diaspora Bond is highly animated. Grenada, renowned for the bold resolve of its past leaders like the Home Rule patron T.A. Marryshow and the revolutionary nationalist Maurice Bishop, appears ready for a government decision to issue a Diaspora bond that could dramatically alter the direction of its current and future economic and social development.
Some in Grenada’s Diaspora caution that, prior to issuing a Diaspora Bond, there must be careful planning, fiscal integrity and a transparent governance structure to secure the confidence of overseas investors.
“The Diaspora bond holds tremendous promise for CARICOM countries but its success requires leadership from experienced financial experts not from people with political alliances of one kind or another,” said Earle Brathwaite, a successful Silicon Valley financier and technologist, who is also the son of a former prime minister of Grenada.
Bernard Bourne, the research group’s Director of Community Relations, agrees with Brathwaite, adding that it is time Grenada changes its paradigm for seeking financing to develop the country. He stresses that with prominent nationals like race car superstar Lewis Hamilton, calypso icon Mighty Sparrow, former Chief Justice of the Federal Court of Canada, Julius Isaac, and scores of leaders in law, medicine, engineering and other professions, Grenada is more than capable of obtaining development finance from its own nationals once adequate protections are established.
Jerry Edwin, Executive Director of the Caribbean Development Policy Group, was a featured speaker on June 12, 2010, at the Annual Caribbean Private Sector Conference attended by CARICOM Ministers of Finance and Ministers of Trade. His topic was Diaspora Bonds: A Developmental Tool for Growth and Investment.
June 28, 2010