A regional framework for port development financing
By Jan Sierhuis
COVID-19 further emptied the coffers of most Caribbean governments. More than ever, Caribbean ports will have to depend on private funding for sustainable port investments through Public Private Partnerships (PPPs). Many countries do not have an effective PPP framework. A regional approach may be the answer to this problem. William Ashby, Portfolio Manager of the Economic Infrastructure Division of the Caribbean Development Bank (CDB), and Damien Reeves, Economist in CDB’s Economics Department, explained the approach taken by the CDB on this matter.
Approximately 25% of Caribbean Development Bank (CDB) financing support has been in the Transport sector. And that sector remains among the main beneficiaries of the Bank’s project financing.
Transport is the largest contributor to regional carbon emissions and the CDB has been seeking every opportunity to further greenhouse gas reduction at design, construction and operation phases of the projects it finances.
At the end of 2021, the CDB was looking at investment needs of more than a billion US dollars over the coming 10-15 years to improve and upgrade regional port infrastructure and equipment; and to make systems more climate resilient. Port projects included alternative fuel sources and low/zero carbon ports; and, E-identification and freight automation, tracking systems and training.
The Covid-19 pandemic reinforced the need for effective public financial management. Most (about 13) of the 19 Borrowing Members Countries* (BMCs) now have debt ratios of more than 60%. And the average debt-to-GDP ratio increased, from 65% to 82%, over the same period.
Most countries have been taking steps to reduce national debt by re-prioritising expenditures or by enhancing revenues through more efficient tax collection. Some have been seeking debt restructuring. Belize, for example, recently announced plans to buy back its debt using blue bonds, this to protect its marine resources. Such instruments help to free fiscal space for necessary capital investment and green technology.
Public Private Partnerships
One alternative is private port operation through public-private partnerships (PPPs). However, many countries do not have an effective legal and institutional framework to define and implement rules for private engagement in such projects that will allow them to flourish. Some countries do not have the technical capacity to structure and successfully tender PPPs in the market.
The CDB does assist in overcoming such barriers to development and has this situation in focus. It has been restructuring its in-house PPP function to better advise and service its regional clientele on this matter.
The CDB partners with multi- and bilateral partners to source external financing to benefit its BMCs. In this regard the regional institution established relationships with the UK Caribbean Infrastructure Partnership Fund, which is supporting port development in St. Vincent and the Grenadines and Montserrat. It also has partnerships with climate action funds including the Climate Action Line of Credit, sourced through the European Investment Bank; the Green Climate Fund; and, the Adaptation Fund.
CDB partners also with regional institutions to promote better cooperation between the private and public sectors. While there are many similarities, each country and each project is unique and regional knowhow is required to make public private investments successful. 
* CARIBBEAN DEVELOPMENT BANK BORROWING MEMBER COUNTRIES
Antigua and Barbuda
British Virgin Islands
St. Kitts and Nevis
Saint Vincent and the Grenadines
Trinidad and Tobago
Turks and Caicos Islands
Jan Sierhuis is a Caribbean maritime professional and Portside Caribbean columnist.