Small Island Developing States such as Barbados must reduce investment barriers, lower financing costs and create conditions that attract more private capital if they are to accelerate development, World Bank Group President Ajay Banga has said during a visit to the island.
Speaking to journalists during a tour of major development projects with Prime Minister Mia Mottley and senior government officials, Banga said countries needed to make it easier for businesses to operate while maintaining safeguards that protect citizens.
A more efficient regulatory environment, he argued, would make island states more attractive destinations for investors.
He said: “If a private investor is building a hotel chain, and it takes 30 permits in one country and nine in Barbados, where will I take my money? I’ll bring it to Barbados.”
However, improving the business environment was only part of the solution. Banga said countries must also find ways to reduce financing costs and manage risks for investors.
The message came as the delegation toured the Oceana Innovation Hub, Bridgetown Fisheries Complex, Kensington Oval, Six Men’s fishing village and the National Botanical Gardens, several of which have received support from the Washington-based institution.
Banga said the World Bank’s partnership with Barbados was aimed at helping the country achieve its next phase of growth through more efficient public spending, stronger government systems and increased private investment.
He pointed to ongoing discussions with Mottley on resilient infrastructure, improving public-sector efficiency and restructuring existing debt through guarantees that could secure more favourable financing terms.
According to Banga, the resulting savings could then be redirected towards priority projects, including the geriatric hospital and other climate-resilient infrastructure initiatives.
He also spoke about the importance of disaster clauses in loans to vulnerable countries, recalling discussions with Mottley shortly after he became World Bank president in June 2023 that helped shape more flexible financing arrangements.
Banga explained that the clauses allow countries to redirect up to 10 per cent of approved project funding that has not yet been withdrawn to respond to citizens’ needs following a disaster.
He said the provision had already proven useful in a range of situations, including earthquakes, floods and hurricanes.
“We left it open to all kinds of disasters. Recently, it has come in use for everything from earthquakes to floods to hurricanes,” he said.
Banga added that a more restrictive approach could have limited access to the facility for vulnerable countries.
“The idea is to get country-led work. So that’s what that was about.”
He also stressed the importance of greater private-sector participation in development, noting that the World Bank mobilised US$112bn in private capital last year, in addition to US$120bn from its own balance sheet for emerging markets.
He said the amount of private capital mobilised was three to four times higher than it had been three years earlier.
Mottley, meanwhile, said Barbados was seeking to pair foreign investment with local savings through projects designed to increase economic participation among Barbadians.
She noted that approximately 16bn (US$8bn) was currently sitting in bank accounts earning interest of about 0.1 per cent.
Mottley said the government was working with the World Bank to explore financial instruments that could make it easier for Barbadians to invest in development projects.
“Nobody’s asking people to take out all of their money. The bank is going to help us look at other instruments that we can use in order to make it easier for Bajans to discuss how they want to invest.”
She added that while Barbadians could play a greater role in financing national development, domestic savings alone would not be enough to meet the country’s investment needs.
“Bajans at the end of the day still will not have all of the capital that we need, hence the need to bring in some foreign capital, too.”
(SB)
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