David Cox | Thoughts on policy reform – new approach to development in the Caribbean

During Connected Caribbean Summit held in Miami in December 2024 I laid out what I thought were three potential areas for urgent reform in the Caribbean.

The first area I argued was desperate for overhaul was the Caribbean’s current approach to fiscal incentives for tourism. All across the region, Caribbean governments are bent over backwards, competing in the equivalent of a kind of fiscal-incentive “knife fight”, for more investment in the tourism sector. From Jamaica to Suriname, Caribbean countries are in a race to undercut each other, to grant huge incentives to hotel operators and private firms to increase hotel plant and engage in risky, corruption-attractive projects to expand air and seaports.

To be sure, tourism is a huge employer in the Caribbean and has played an outsized role in ensuring our countries could maintain adequate foreign exchange reserves.

But what is also true about the tourism sector is that it doesn’t create inter-generational wealth, and generates mainly low-skilled, low-paying jobs, while being dependent on governments voluntarily giving up billions in taxes, which could possibly be better spent on roads, schools, and healthcare.

Some years ago, I met a woman in her late 60s, working as a server in a restaurant of a famous hotel. She had been working in the same restaurant for 36 years, and was forced to continue working because she had no pension and had never earned enough to save enough to take care of herself in the sunset of her life. She would literally have to work to death.

But in what other industry could someone work for 36 years in the same company and not be promoted to the position of CEO, or at least retire in a middle management position? Truly, the hotel industry of the Caribbean is the last working plantation in the region.

So while tourism has its benefits, it is also arguably contributing to the slow pace of development in the region, while causing devastating socio-economic consequences, many of which are not studied or well understood.

TAX BROADBAND

By contrast, Caribbean governments continue to tax the broadband and ICT industry with merciless zeal up and down the region. Despite a flurry of public statements insisting that the future of Caribbean economic competitiveness depends on digital transformation and getting people online, the same governments have granted relatively few incentives to telecoms providers in CARICOM.

And yet, investment in telecoms infrastructure could have a transformative effect on our economies, making the region more attractive for investment, creating millions of high paying, wealth-creating, pandemic and disaster-resilient jobs, as well as supercharging the efficiency of government services, all while lowering the cost of doing business.

Put simply, we could radically accelerate the pace of regional development if governments would only consider reforming our fiscal incentives, to promote and attract more investment in broadband infrastructure and digital services. In so doing, we could finally allow the tourism plantation to fully embrace the 21st century, by weaning it off expensive subsidies that suck much needed revenue from our public services and simultaneously reduce our dependence on a fickle industry.

UNBANKED

The second critical area for reform is in banking. Across the Caribbean, millions of our citizens are “unbanked”, or unable to open a bank account, due to outrageous and culturally inappropriate rules, largely imposed on the Caribbean by the United States, and the resulting insistence of Caribbean banks that applicants for bank accounts need to provide two forms of ID as well as proof of address, all in a region where the vast majority of Caribbean governments have not even commenced, far less completed, records for postal mapping of their countries.

The consequences are devastating. Millions of our people are unable to shop online, or pay for government services digitally. They are unable to develop a credit history, or to acquire financial literacy. In fact, millions of our people can’t do something as simple as pay for their water or electricity bills with a bank card, simply because they don’t own one.

This state of affairs is having a devastating impact on the region, by denying Caribbean citizens an opportunity to develop inter-generational wealth, and is keeping our people in poverty.

This must stop. Caribbean Central Banks must step in to force commercial banks, which have hitherto operated as independent fiefdoms, if not quite states within states, to relax these onerous and unreasonable rules for opening a bank account.

If we could agree some common-sense rules for opening bank accounts, we could finally ensure that the last great divide between the “banked” and “unbanked” is bridged at last, finally allowing millions in poverty to have a fair shot at wealth creation.

HURTING

Finally, we need to solve the problem of people. And it’s in the area, again, of ICTs. The Caribbean has never been short of experts and luminaries in any field. But it is perhaps tragically true that we lack a critical mass of strategic thinkers in the public sector in the fields of technology. This is hurting us across the region badly.

We desperately need more experts in the fields of technology and broadband to work in the public sector, to help governments drive their technology and connectivity policy in our Ministries, in order to make real headway in our digital and technology transformation.

This is a desperate need, and in some ways, the most difficult reform we need to undertake. Part of the solution is that governments need to be willing to compete with the private sector by offering better remuneration to experts in those fields, in order to attract the best talent, and keep them for a period of time.

Without that technical advice and a strong policy focus in this area, development in the region will continue to languish.

While these three things are not a panacea for all that ails the Caribbean, it is also true that solving these problems alone, would have a dramatic impact on the pace of development in the region, which is another way of saying we could improve the fight against persistent, generational poverty.

By taking just these three steps, we could unleash the economic potential of the Caribbean and kickstart a new age of development for all of us.

As things stand, we remain a stubbornly under-developed and under-developing region, not just in danger of being left behind, but ultimately, being lost.

David Cox is former chairman of the Caribbean Association of National Telecommunications Operators and is currently managing director of the Eastern Caribbean Telecommunications Authority based in Saint Lucia. Send feedback to dcox@ectel.int and columns@gleanerjm.com