11TH European Development Fund Implementation Report 2017- 2023

Context of the Action

The five-year review of the CARIFORUM-EU Economic Partnership Agreement (EPA) after signing in 2008, revealed that (sic.) “the conversion of market access offered by the EPA into meaningful market presence remains a major challenge for the CARIFORUM private sector.” The CARIFORUM private sector, which accounts for 90% of employment and 70% of the gross domestic product (GDP), comprises of two major constituents: Micro, Small and Medium-Sized Enterprises (MSMEs) and Business Support Organisations (BSOs). MSMEs primarily operate within the productive sectors, with the service sector being the largest employer¹, followed by manufacturing, agriculture and the creative industries. However, these MSMEs often have little to no internationalisation capabilities and primarily specialise in low-tech activities. As a result, sales and employment growth within many of these firms trail their peers in other small economies². According to a study on the regional private sector undertaken by the Economic Intelligence Unit released in 2015, the primary challenges faced by the Caribbean private sector are access to finance, soaring energy cost, strained public finances, deficiency in human capital and lack of innovation capacity. At the macro level, the private sector continues to face enormous regulatory and bureaucratic barriers in relation to government institutions. It has been noted that Caribbean countries are not particularly easy places in which to do business. Furthermore, a change in the Venezuela Petro Caribe Programme will present loss of revenue for the region. With one of the highest debts to GDP ratios in the world, the role of the private sector as an engine for economic growth is paramount. In recognition of these challenges, Caribbean Export sought to design interventions at the macro, meso and micro levels to address some of the more intransigent obstacles. As such, the 11th European Development Fund (EDF) Regional Private Sector Development Programme (RPSDP) on market penetration; supply chain and intelligence frameworks; increased access to finance; promotion of green energy and energy efficiency as key factors in lowering costs; business to business forums and more targeted diagnostic tools to enhance firm capacity. The Programme also sought to facilitate public-private dialogue to strengthen the private sector’s ability to influence policy formulation at the national and regional levels, leading to a more conducive business environment for sustained economic growth. Overview The Caribbean Export Development Agency (Caribbean Export/CE) commenced implementing the 11th European Development Fund (EDF) Regional Private Sector Development Programme (RPSDP) in January 2017. The European Union (EU) committed €24, 525 million to the programme to build on the achievements of the 10th EDF and continue the utilisation of the CARIFORUM-EU Economic Partnership Agreement (EPA). In 2020, a further €3 million was committed by the European Union to facilitate direct financial support to firms to mitigate the impact of the COVID-19 pandemic. The overall objective of the programme was to increase employment creation, inclusiveness - particularly for youth, women, and indigenous groups, and reduce overall poverty in CARIFORUM States. Through targeted interventions that provide a new and innovative framework for growth and development, the Agency sought to achieve three specific objectives in support of the overall goal: 1. Build private sector capacity at the firm level to increase export competitiveness. 2. Strengthen Business Support Organisation (BSO) capacity to provide greater support to the private sector; and 3 . Strengthen regional mechanisms aimed at promoting effective Public-Private Dialogue (PPD) to develop a more effective business enabling environment.

¹ Clusters in the Caribbean - Understanding Characteristics, Defining Policies for their Development: Compete Caribbean ² Private Sector Development in the Caribbean: A Regional Overview: Compete Caribbean

Implementation of the 11th European Development Fund (EDF) Regional Private Sector Development Programme (RPSDP)

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