The Tribune

By LIAM MILLER

AT LAST week’s African Export-Import Bank (Afreximbank) conference held in Nassau, Prime Minister Philip Davis KC called for the use of a multidimensional vulnerability index (MVI) as a tool to assess the challenges endemic to Small Island Developing States (SIDS).

According to the Alliance of Small Island States (AOSIS), a multi-dimensional vulnerability index is “a tool which finally takes the special circumstances of SIDS into account, designed to help us access critical support to drive sustainable development”. Developed by various high-level stakeholders, and recently discussed at the International Conference on Small Island Developing States, an MVI will be debated at the upcoming United Nations General Assembly (UNGA). I believe MVI is the right step forward in safeguarding the success and survival of SIDS such as The Bahamas.

For far too long, SIDS have been excluded from acquiring the necessary financial support due to the size of their gross domestic product (GDP) and gross national income (GNI). A country such as The Bahamas, despite being classified by the World Bank as a “high income economy”, suffers from endemic issues such as continual fiscal deficits, limited diversification, food insecurity and trade imbalances. These issues are exacerbated by other factors such as natural disasters, whether biological, as in the case of COVID-19; weather-related through hurricanes; and economic, as in the case of global recessions.

These events have continuously revealed the fragility of SIDS economies. Yet the size of their income levels or productive capabilities would prevent them from obtaining concessional financing. Common indicators such as GDP and World Bank classifications (middle income or high income) are only half the story. If you focus solely on half the problem, you will generate half-baked solutions. Multi-dimensional indicators such as the MVI can show a much fairer and fuller picture of a country’s economic health.

The incorporation of an MVI into the international financial system also allows for reform of the debt system that primarily prioritises repayments, rather than debt sustainability, for countries, especially those adversely impacted by climate change. Statistics from the European Network on Debt and Development (Eurodad) reveal that, between 2016-2020, SIDS only received $1.5bn in climate finance compared to collectively paying more than $26.6bn to external creditors. A Jubilee year can also be considered for countries at a very high risk of natural disasters, as these events can exponentially increase debt.

Stemming from colonial and racial bias, risk assessments have historically been heavily skewed to the benefit of more developed nations in the Global North while causing disadvantage to developing countries and stopping them from building a more favourable international standing. An MVI can help level the playing field in risk assessments by boosting investor confidence in SIDS. The index can attract attention from investors and organisations to help SIDS better implement climate adaptation and mitigation strategies through climate financing. International investment in blue and green industries can heighten climate resilience among SIDS.

Though an MVI is primarily designed for SIDS and developing countries, it can even serve as a rallying cry for global economic dogma to switch its focus from narrow growth to broader socio-environmentalism. An MVI is a positive step forward in rebuilding the international financial architecture for the better. It can propel SIDS to not be a silent face at the tables of global finance, but an active body that influences policy discourse.

As former Jamaican prime minister P.J. Patterson stated at last week’s conference: “Time for talkin’ done, time for acting now”, and it is time for the rest of the international community to follow suit.