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Speaking at a seminar yesterday at the Bank of Guyana organised to sensitise potential beneficiaries of the mechanism through which assistance available can be accessed from the EDF, Director of Technical Operations, CARIFORUM Programming Unit, Percival Marie exhorted Caribbean countries to act expeditiously to benefit from the Fund because there is no special allocation for them, as assistance will be provided on “a first come, first served basis.”
Under the EDF the sum of 2.2 billion Euros have been allocated for development assistance to African, Caribbean and Pacific (ACP) countries, Marie disclosed and already Dominica has successfully accessed 100 million Euros for two private sector projects.
Marie noted that historically provision of aid was characterised by a channelling of it through the public sector, however, that method was found to be inefficient and there was poor utilisation of funds provided, whereby they did not reach the intended beneficiaries. Consequently, the emphasis through which aid will be channelled has shifted towards the private sector but that does not disqualify commercially viable public sector enterprises from accessing finance from the Fund.
Marie noted that private sector development is not a panacea for social and economic ills because governments have a moral and political responsibility to promote social development.
He pointed out too that a political dimension is now part of the process, whereby democracy and good governance are essential factors in accessing aid.
The design of the development assistance programme has taken cognition of the constraints facing developing countries in accessing aid, such as availability of skills, shortage of finance and the small size of the markets in the Caribbean, Marie observed. Therefore in this context the realisation of the Caribbean Single Market and Economy (CSME) is very important so as to have the free movement of skills, Marie contended.
Another constraint identified by Marie is that foreign investors perceive the Caribbean as a “high risk” investment because of the high costs of acquiring technical and technological information, noting that personnel hired have to be paid “super salaries.”
The fund provided under the Development Assistance Budget of EU states is a revolving one and as such it is operated under commercial terms and repayments are used to invest in ACP countries, Marie explained, adding that as a consequence transparency of how the funds are utilised is of critical importance, moreso, because the funds are derived from the taxpayers of the donor countries.
The objectives of the EDF include the expansion and growth of the private sector through the provision of loans and investments, further development of the financial sector and to promote foreign direct investment.
However, Marie noted that under the loan provision arrangement for projects the minimum project size must be 4 million Euros of which the investor has to provide 50% of the project value.
Economic Adviser of the European Delegation of EC, Ms. Helena Laakso, observed that since Lome IV rapid global and technological changes have taken place, as such other instruments under which assistance is provided have been developed by the EC.
She pointed out that among the central objectives of the ACP-Cotonou Agreement are the eradication of poverty, the integration of the economies of developing states into the global economy and creation of sustainable employment.
She also observed that no country has succeeded in reducing poverty without achieving economic growth consequently the EDF is geared towards the capacity of developing countries to increase and accelerate their economic development.
Acting Governor of the Bank of Guyana, Ms. Dolly Singh in welcoming the participants said, “we are living in challenging times”, adding that with the advent of globalisation and the removal of preferential markets businesses are under increasing pressure.
She however, noted that in the search for viable solutions to the emerging difficulties the Cotonou Agreement is an appealing initiative.
The seminar is a follow up to one that was held in November last year in St. Lucia and attracted participants from the banking and financial community and the private and public sectors.
The Centre for the Development of Enterprise (CDE) is an institution of the ACP countries and the EU within the framework of the Cotonou agreement.
It forms part of the general system of support the EC created for promoting the private sector and thus helping to combat poverty.
The CDE works closely with key development players, in particular the public and private sectors, multilateral, bilateral and local institutions.
Its financial resources are derived mainly from the EDF, but also from other European programmes or countries that may assign their appropriations or offer co-funding for operations.