The Tribune

The Government yesterday seized on The Bahamas’ status as 2020’s top small island state for foreign direct investment (FDI) as “perhaps the strongest indicator of confidence” in this nation. The Ministry of Finance, in a statement, said this nation had bucked the trend of declining FDI inflows at the COVID-19 pandemic’s height via a 47 percent or $286m year-over-year increase in such receipts compared to 2019.

Asserting that The Bahamas had led all small island developing states “during what has been described as the worst global economic downturn in nearly 100 years”, the Ministry of Finance said the United Nations Commission on Trade and Development’s (UNCTAD) annual World Investment Report 2021 showed total foreign investment inflows among SIDS contracted by 40.3 percent globally.

They also fell by 36 percent for the Caribbean, standing in contrast to The Bahamas. The UNCTAD report showed FDI inflows to Barbados grew by 22 percent to $262, and those for Grenada increased by 11 percent to $146m, but Jamaica and St Kitts & Nevis experienced contractions in FDI receipts of 45 percent and 47 percent respectively. The Ministry of Finance said The Bahamas thus received the largest level of foreign direct investment among SIDS, outpacing its closest rival by some $500 million.

“This is perhaps the strongest indicator of the enduring and sustained confidence that investors have in The Bahamas. It cannot be taken for granted that during these challenging times, investments are not only continuing but increasing. This is evidence that we are headed in the right direction, and motivates us to redouble our efforts until full recovery,” said Kwasi Thompson, minister of state for finance.

“As the Bahamian economy rebounds, the Government’s articulated Accelerated Bahamas Recovery Plan has placed a renewed focus on prioritising public and private sector investment. Under this administration, The Bahamas will continue to improve its investment framework to ensure that domestic and foreign investment inflows will remain healthy and strong over the medium and long-term, resulting in more employment opportunities for Bahamians.”

While The Bahamas enjoyed a 47 percent increase in FDI inflows to $897m, these statistics were not as impressive as they seemed. For the UNCTAD report indicated that much of the increase stemmed from reinsurance inflows related to Hurricane Dorian reconstruction as opposed to capital investments in tourism and other industries/businesses.

“In The Bahamas, inflows grew by 47 per cent to $897m despite the contraction of the domestic economy and tourism. Reconstruction works following the ravages of Hurricane Dorian in 2019 and investment in ICT (information and communications technology) services continued in 2020,” the World Investment Report 2021 stated.

Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, told Tribune Business that The Bahamas “cannot rest on its laurels” and needs to adopt a more strategic, targeted approach to attracting sustainable FDI.

Mr Aubry, who served as a member of the Government-appointed Economic Recovery Committee, said the 2020 inflows were “not necessarily something we can trust as sustainable or based on capacity” given that they appear to be linked to one-off Dorian reconstruction.

“It doesn’t sound like we can rest on our laurels,” he told Tribune Business previously. “We have to recognise the value of broadening the ease of doing business and smart, strategic FDI that aligns with the domestic economy and makes sure local opportunities are there. A stronger and more diverse local economy benefits from strategic FDI.

“I think there’s things we can do to shore this up through accelerating the decision-making process. We’ve recommended to develop a full Land Use Plan so we know what projects we’re looking for. Instead of what comes knocking at the door, identify where we need to push and drive. We’ve identified medical tourism as being of value, and technology as being of value.”