The CARICOM Development Fund (CDF) and the US has partnered to develop a new CARICOM Resilience Fund aimed at bolstering growth and resilience within the region against climate change.
Inaugurated in late January 2024 in Barbados, the new fund which has a target of US$100mn was conceptualised and developed with the technical support of the US Agency for International Development/Eastern and Southern Caribbean over the last 12 months.
According to a release from the US Embassy in Bridgetown, it “is dedicated to supporting initiatives that will enhance growth and resilience across the region in the face of climate change. It also aims to reduce a financing gap by expanding investment on adaptation and climate change in the eastern and southern Caribbean”.
Speaking at the ceremony, Barbados Prime Minister Mia Mottley praised the CDF for initiating the new resilience fund and expressed anticipation for regional and external support to invest in it.
“We’ve seen in Florida that many insurance companies are narrowing what they are prepared to accept as risk, and while the state has the federal government to support it and the residents of Florida have the ease of which they can make decisions to move to another state without having to contend with the difficulties of citizenship and permission, our people in the region who are an extension of the same risk that Floridians face do not have that luxury or option,” argued Mottley.
The Prime Minister recognised the significant support from essential allies such as USAID, the Green Climate Fund, and the Latin American Development Bank, disclosing a total commitment of US$47.5mn in funds and setting a bold objective to attract several hundred million more over the coming five years.
The Fund intends to channel investments into resilience-oriented small and medium enterprises (SMEs) and vital infrastructure endeavours, utilising adaptable debt and equity financing aimed at six principal sectors: renewable energy, clean transport, the blue economy, sustainable agriculture, information and communication technology, and financial services.
CARICOM has appointed Sygnus Capital, an alternative investment firm based in Jamaica, to oversee the fund’s management, and officials at the launch acknowledged the role played by the CrossBoundary Group in structuring the fund.
“The CARICOM Resilience Fund offers a unique blended finance structure to unlock private-sector participation and maximise impact. The structure includes a first-loss tranche that will act as a catalyst, lowering investment risk and attracting crucial private and commercial capital to the region,” wrote the Group in a post on LinkedIn.
CARICOM has provided US$15mn in first-loss capital to anchor the fund, but with the IMF estimating the region’s climate adaptation annual financing at over US$100bn, buy-in and investment is critical.
Making the case, CEO of the CDF, Rodinald Soomer noted that the CARICOM Resilience Fund “is an integrated and transformative vehicle that will offer investors attractive social and economic returns on investments geared toward building economic and climate resilience in the Caribbean”.
At the launch, the US reiterated its commitment to helping the countries of the region contend with the growing fallout from climate change and the escalating costs of adaptation and mitigation.
“The Resilience Fund symbolises not just an allocation of resources, but a promise—a promise to invest in innovative solutions, technologies, and strategies that will fortify our societies against the changing climate patterns. It will contribute to preparing Caribbean countries to mitigate and adapt to adverse economic shocks, in particular those related to climate,” said newly appointed US Ambassador to Barbados and the Eastern Caribbean, Roger Nyhus.
The CARICOM Development Fund (CDF) was established in 2008 initially to provide financial and/or technical assistance to disadvantaged countries, regions and sectors caused by the implementation of the CARICOM Single Market and Economy (CSME).
Source: The Caribbean Insight (Feb 2024)