BRUS­SELS–Caribbean coun­tries can ben­e­fit from the es­tab­lish­ment of a ma­jor trade and in­vest­ment bank to serve the 79-mem­ber African Caribbean and Pa­cif­ic (ACP) group­ing, ac­cord­ing to a study fund­ed by the Eu­ro­pean Union.It said that fi­nanc­ing gaps worth more than US$400 bil­lion in ACP coun­tries can be im­proved by set­ting up the bank.

The study found that the ven­ture is not on­ly vi­able, it could al­so spur sus­tain­able growth by help­ing lo­cal ACP firms se­cure fi­nanc­ing in four key ar­eas: in­fra­struc­ture, trade, small, medi­um and mi­cro-en­ter­pris­es (SMMEs) and large in­dus­tri­al projects.The ACP Sec­re­tari­at said it is now seek­ing feed­back from stake­hold­ers on the find­ings, in­clud­ing two oth­er "fi­nanc­ing ve­hi­cle" op­tions, name­ly an ACP In­vest Com­pa­ny or ca­pac­i­ty-build­ing scheme for ex­ist­ing bod­ies in the re­gions.

"The out­come of the study is not en­tire­ly sur­pris­ing. Coun­tries in Africa, the Caribbean and the Pa­cif­ic have con­sid­er­able po­ten­tial for growth, if not al­ready per­form­ing in leaps and bounds," said the Sec­re­tari­at's Cab­i­net Chief, for­mer Deputy Gov­er­nor of the Cen­tral Bank of Nige­ria Dr Oba­di­ah Mailafia, who is steer­ing the ACP Bank project.

"They will need suit­able fi­nanc­ing to keep up the mo­men­tum. In or­der to ful­ly cap­i­talise on their po­ten­tial, the ACP needs to give a boost to its cit­i­zens and pri­vate sec­tor and en­able them to do busi­ness ef­fec­tive­ly," he added.

"The ACP is made up of 79 na­tions, with a pop­u­la­tion of 932 mil­lion peo­ple. The in­sti­tu­tion we en­vis­age would have to be a world class fi­nanc­ing en­ti­ty with cut­ting edge com­pe­ten­cies an­chored on ex­cel­lence. "We in­vite the in­ter­na­tion­al de­vel­op­ment com­mu­ni­ty and the sur­plus-rich emerg­ing economies to in­vest in this project, which is ca­pa­ble of mak­ing a huge dif­fer­ence to the life chances of al­most a bil­lion peo­ple," Mailafia said.

The fea­si­bil­i­ty re­port found that de­spite gen­er­ous fund­ing by in­ter­na­tion­al, re­gion­al and lo­cal fi­nanc­ing bod­ies such as the World Bank or na­tion­al de­vel­op­ment banks, "the vari­a­tions on the key dri­vers of suc­cess ... have not en­abled them to orig­i­nate, de­vel­op and fi­nance pro­grams and projects that re­sult­ed de­ci­sive­ly in mean­ing­ful in­dus­try de­vel­op­ment, firm start-up and growth, and ex­port per­for­mance tar­gets across the ACP re­gion."

In fact, for Sub-Sa­ha­ran Africa alone, an es­ti­mat­ed US$200 bil­lion of fi­nanc­ing needs for SMEs and US$ 225 bil­lion for trade re­mains un­met every year, in ad­di­tion to US$ 20-40 bil­lion worth for in­fra­struc­ture and USD 22 bil­lion for large in­dus­tri­al projects in gas, min­ing, man­u­fac­tur­ing, agribusi­ness and ser­vices.In the Caribbean, most gaps are for SMMEs and large projects, with hard­ly any bank, lo­cal or for­eign, ad­dress­ing the fi­nan­cial needs of small busi­ness­es.

While Pa­cif­ic SMME needs are al­ready cov­ered by oth­er fa­cil­i­ties, the re­gion still lacks fi­nanc­ing to ful­ly re­alise the po­ten­tial of large scale projects in tourism, min­ing and pe­tro­le­um, fish­ing/agri­cul­ture, and the emerg­ing un­der-sea min­ing in­dus­try.

"The ACP Bank, or any sim­i­lar in­sti­tu­tion set up, would have dis­tinc­tive ca­pac­i­ties and ex­per­tise suit­ed for the eco­nom­ic and fi­nan­cial sit­u­a­tions in African, Caribbean and Pa­cif­ic coun­tries. These can be quite spe­cif­ic, ac­cord­ing to lev­els of de­vel­op­ment, the lo­cal busi­ness cul­ture, and lo­cal needs and ex­pec­ta­tions...

" For mem­ber states and their pri­vate sec­tors, ser­vices of­fered would in­clude project de­vel­op­ment, co-in­vest­ing and ad­vi­so­ry ser­vices, pro­mo­tion of SMME fi­nanc­ing and the avail­abil­i­ty of com­pet­i­tive trade fi­nance lines of cred­it for in­stance," Mailafia said.He said the project would al­so sup­port re­gion­al projects while be­ing a strong ad­vo­cate for re­gion­al in­te­gra­tion amongst ACP coun­tries.

How­ev­er, the study cau­tioned that very high lev­el po­lit­i­cal back­ing – up to Heads of State lev­el – is nec­es­sary to get the ven­ture off the ground, es­pe­cial­ly in mo­bil­is­ing the ini­tial cap­i­tal sum of two bil­lion US dol­lars.High­ly skilled per­son­nel will al­so be re­quired to man­age the bank span­ning near­ly 80 coun­tries and three con­ti­nents.

More­over, the bank must be rat­ed with­in the next five to sev­en years, with a min­i­mum im­ple­men­ta­tion pe­ri­od of two years. In com­par­i­son, the oth­er two op­tions pro­posed would take less mon­ey and time.ACP of­fi­cials and spe­cial­ists are ex­pect­ed to mull over these is­sues in com­ing months, be­fore mak­ing rec­om­men­da­tions to the Coun­cil of Min­is­ters, the SCP Sec­re­tari­at said.

CMC