Favourable investment climate

Traditional financial institutions in the region currently only invest a very small percentage of their portfolio in the agricultural sector. The financial gap for small and medium-sized enterprises is still large. Herein lies the opportunity for innovative financial institutions to meet the challenge by finding ways to mitigate the risks and take advantage of this growing investment potential. In the CARIFORUM region, there is an attractive enabling environment for investing in the agricultural sector, but it is not uniform from country to country.

Trade Relationships

Influence from the Food and Agriculture Organization (FAO) have liberalised trade in the region.
Partnerships exist with:

  • The EU – CARIFORUM's second largest trading partner
  • The USA (through the CBI trade program) – CARIFORUM's largest trading partner 

The countries in the CARIFORUM region have a history of trade relationships primarily with North America and Europe. Major trading sectors have been tourism, sugar, rum, bananas, and oil and gas. Economic growth through the tourism industry has significant potential, but trade in sugar and bananas has declined significantly after the loss of preferential trade agreements. The rum trade is holding steady, but revenue contribution from oil and gas has slumped with the drop in global oil and gas prices. There is an on-going attempt to diversify the product mix of the trading system with a focus on enterprise development, renewable energy and the creative industries. A special focus is being placed on non-sugar and non-banana commodities to resuscitate agricultural land lying in fallow and in bush.

Favourable climate for investment

  • Established trade relationships
  • Active efforts from governments to promote agriculture
  • Large financial institution presence
  • Commonly spoken languages
  • Experience with sweet potato

The investment climate is very sophisticated for established sectors and businesses in the economies of the region. There is a wide range of financial services provided by commercial banks, government financial institutions, microfinance institutions, private institutions, credit unions, cooperatives, youth business trusts, and foreign direct investors (FDIs) (Springer, 2015).

Policies of commercial integration

CARIFORUM governments have a positive e-commerce policy. Governments and the private sector have made great strides in creating an e-commerce-friendly enabling environment.

Economic partnership agreements (EPA) already exist between the EU and some of the countries in the region aimed at promoting trade with the EU to ultimately contribute, through trade and investment, to sustainable development and poverty reduction goals (EC, 2016a). The EU is the main destination for agricultural and transformed goods from the CARIFORUM region. The EU is CARIFORUM's second-largest trading partner, after the USA. In 2011, trade between the two regions amounted to over €8 billion (EC, 2016b).

There are other opportunities in the field of agriculture and beyond which have been given policy priority by governments in the region. In this context, these sectors may also contribute to a dynamic investment climate.

Enterprise development

The challenges include the creation of an environment to enable a new wave of entrepreneurs, addressing the management of business systems, reducing the rate of failure among start-up enterprises, and the sourcing of innovative financial capital that meets the needs of these fledgling enterprises.

The sweet potato sector and the value proposition

In the tropics, including the CARIFORUM region, sweet potatoes can be grown perennially, while in temperate regions it is only grown as an annual crop. Sweet potatoes require a soil pH of 5.6 – 6.6. High-quality tubers are best produced on fertile, well-drained, sandy loams (Titus, 2008). This creates an opportunity for select CARIFORUM countries to trade competitively with their traditional trading partners for most of the year.

 

CTA FAST GUIDE cover

Download your Investment Guide here

The Finance Alliance for Sustainable Trade (FAST) has partnered with the Technical Centre for Agricultural and Rural Cooperation (CTA) to develop an investment guide for the sweet-potato sector in the Caribbean Forum (CARIFORUM) region for financial institutions (FIs), with financial support from the Intra-ACP Agricultural Policy Programme (APP).

 

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