Inside St. Lucia’s Country Financing RoadMap: Island is first to trial new financing model

When the Saint Lucia’s prime minister addressed the United Nations in late September he focused heavily on an issue that has long been a concern of Caribbean nations – obstacles to sustainable development. He also announced that Saint Lucia would be the first country to partner with the World Economic Forum (WEF) to develop a Country Financing Roadmap (CFR) and shared his hope that, by developing such a plan, Saint Lucia would become a model for other countries in the region struggling to meet their Sustainable Development Goals (SDGs).

Saint Lucia has seen a myriad of development strategies over the years, assisted by a range of both regional and international agencies, which leaves many wondering how the CFR is different, and how it will deliver real and lasting change.

WHAT IS THE CFR?

SIDS like Saint Lucia have a complicated relationship with development financing. Seemingly generous programmes that come with heavy political and financial strings attached; inadequate delivery mechanisms that swallow up funds before they can be dispersed where they are most needed; costly projects that merely add to a country’s already significant public debt – these forms of financial support can come with a heavy cost. And yet they remain a vital component of SIDS’ survival. Extremely vulnerable to weather events and economic global shocks, island nations cannot go it alone. 

“A lot has been done on development finance but there is still a persistent US$ 2.5tn gap annually to meet the SDGs by 2030,” says Terri Toyota, deputy head of the Centre for Global Goods at the WEF. “We believe there are two key conditions to fix this mismatch: improve co-ordination and put countries and governments back at the centre. It is not about the money, but about how to ensure the money gets where it is most needed.”

The CFR intends to bridge the SDG financing gap. Aimed at mobilising capital, the plan looks to broaden sources of financial support and develop an integrated approach with the backing of all parties, from government agencies to private sector bodies.

Toyota calls it a “pivot from funding to financing” and says that, rather than moving towards attaining the SDGs by one project at a time, the CFR seeks to take a more holistic approach, creating the right enabling environment to attract high-quality investment and private capital. 

“Instead of focusing on Official Development Assistance and public finance for SDG-related projects, it considers all sources of capital (domestic and foreign, public and private) that can be mobilized and how they can be better allocated and blended for greater impact and sustainability,” she explains. “It entails a more comprehensive and interlinked understanding of the pipeline of projects, programmes and policy interventions that are aligned with, and can facilitate, the achievement of the country’s SDGs. Instead of having many different projects operating in silos, it strives to improve internal and external co-ordination so that all efforts are geared in the same direction and towards systemic change, maximizing positive externalities and spill-overs.”

The role of FDI

Foreign Direct Investment is a key element of the strategy, and Toyota believes Saint Lucia’s best opportunities for overseas capital lie in infrastructure, renewable energies and sectors relating to the blue and green economies.

But if FDI is to deliver on its potential, Saint Lucia must first ensure these investors are greeted with a welcoming, business-friendly environment. Given that the country is sliding down the World Bank’s Ease of Doing Business rankings – from 91 in 2017 to 93 in 2019 – there is obviously need for improvement in many areas. 

Toyota says the WEF and the Saint Lucia government have begun consultation with the private sector and international players to assess the strengths and weaknesses of Saint Lucia’s investment landscape and adds: “We believe measures can be taken to improve both the enabling environment and the instruments available to investors. One way through which the Country Financing Roadmap helps create a more investor-friendly environment is by improving communication and co-ordination for effective action and targeted innovation. The Country Financing Roadmap strives to be a bridge connecting thought-leadership on the global architecture for development finance and the concrete realities and needs at the local level.”

The team behind the CFR is hoping that the Global Future Councils meeting in Dubai in November, hosted by WEF, will also help chart the way forward as discussions will centre around enabling smaller investment opportunities in developing markets. While it is still gathering information, the WEF remains determined that Saint Lucia’s CFR will translate into tangible benefits at the grassroots level. Toyota says: “The Country Financing Roadmap is not an academic nor an analytical exercise. It has a very pragmatic approach to engage stakeholders, co-ordinate efforts, amplify initiatives that are working, and foster multi-stakeholder agreements to overcome some of the major bottlenecks preventing capital to flow to Saint Lucia.”

Regional leadership

It is very early days for the CFR. The team will conduct a “baseline assessment” on SDG financing over the next year. This will be followed by a series of roundtable discussions with stakeholders and, eventually, the development of an action plan. At every step, the initiative will be driven by Saint Lucia’s government. Toyota explains: “A critical element for a successful holistic strategy is that the government is at the centre of it, determining which are the priorities, and putting the interests of the country and its people as the main goal for all.”

Saint Lucia’s drive towards financial self-determination was, in part, why the country was chosen as the region’s CFR test case, according to Toyota who says: “The successful development of the Country Financing Roadmap requires political will, commitment, and alignment of national priorities to SDG. We found it all in Saint Lucia.

”The WEF is hoping other Caribbean nations will follow suit once they are able to identify and track Saint Lucia’s successes under the CFR, particularly given the prime minister’s current role as Chair of CARICOM. Toyota says: “Saint Lucia is an excellent prototype for Small Island Developing States. We hope the development of Country Financing Roadmaps in Saint Lucia will generate cross-cutting learnings and innovations that can be impactful for other SIDS as well.”