Tuesday, July 1, 2014

Summary: Caribbean Forum - Promoting Growth Through Innovation

By Grace Lanier

The Caribbean has potential to expand broadband penetration and mobile banking, speakers said.

Summary

On June 27, AS/COA Miami hosted a forum on technology and innovation in the Caribbean. Speakers addressed the challenges and successes for growth, private and public sector collaboration, and broadband and mobile penetration throughout the region.

Challenges and Prospects for Growth The forum began with an update on the region’s current economic climate by Citi’s Dennis Evans. Challenges include high debt-to-GDP levels, stalled infrastructure projects, and a reliance on tourism, which is more vulnerable to external shocks. Nevertheless, several countries have enacted energy and tax reforms, and all but two countries are experiencing increased GDP growth. Evans noted that “out of adversity, comes innovation.” The IDB’s Claudia Stevenson added that the Caribbean’s challenges actually help bring about the region’s solutions. While economic diversification and increased private sector activity are critical for growth, high energy costs have forced people to come up with innovative ways to reduce spending. In regard to the challenge of small economies, Stevenson said: “There are solutions on how to broaden the markets or how to make the most of tourism in terms of value chains and getting the local economy more involved in the economic activity.” Public and Private Sector Partnerships Speakers commented on the successes of public-private sector engagement. Stevenson explained the IDB’s program Compete Caribbean promotes finance and investment, aides in business registration, and includes an Innovation Challenge Fund. Because innovative ideas are usually risky, Compete Caribbean works to provide access to finance and capital for entrepreneurs and small businesses. HBO Latin America’s Javier Figueras commented on his company’s broadcast support for local carnivals and festivals in Curaçao and Jamaica, which not only help the tourism industry, but also lead to greater engagement with civil society and government. G2G Americas’ Gavin Ottley said that “local value added component is critical,” especially when governments may be initially hesitant to engage foreign investors and companies. Figueras also noted the differences between the islands; some governments are more cooperative than others in regard to regulatory issues. Intellectual property legislation is not up to date in many countries and requires greater enforcement, he said. Broadband, Mobile, and Data Access Broadband penetration varies throughout the islands. Skinner mentioned an IDB study that showed that for every 10 percent increase in broadband penetration, GDP grows by about 3.2 percent and productivity rises by 2.6 percent. In underdeveloped markets, growth is even more substantial. Participants noted that broadband access allows for greater productivity. Although there is increased connectivity throughout the region, adoption rates are still relatively low. Skinner stressed that the challenge is to get the general population hooked up to broadband networks. He acknowledged two problems: a lack of proper legislation and policies, along with a lack of affordability. Ottley added: “Access to the solution is there, but the execution of the solution is where the challenge is.” Speakers also offered varied opinions on mobile banking. In some Caribbean countries, there are high rates of mobile penetration, but mobile banking penetration has not kept up. Skinner explained that in order to have greater levels of mobile banking, the general population needs affordable access to data. Stevenson acknowledged these difficulties, and highlighted the IDB’s support for mobile banking with two ongoing pilot projects. Evans cited an example in which Citi developed a system where suppliers and small retailers can benefit through mobile technology. Instead of cash transactions, which can have security risks, payments are authorized by an SMS text message, which are sent after the funds have arrived in the accounts. The use of these types of technologies can not only decrease theft, but also promote banking and account-holding among people who may have previously not relied on traditional banking methods.

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Summary: Caribbean Forum - Promoting Growth Through Innovation

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