Commentary: Citizenship by investment programs are vital to Caribbean recovery
By Nuri Katz
Several weeks after Hurricanes Irma and Maria devastated the Caribbean, residents work tirelessly to restore and rebuild their lives. On the small island of Dominica, the country’s 74,000 residents face a daily struggle with limited access to power and no running water. Dominica’s Prime Minister Roosevelt Skerrit has estimated that two of the country’s key sectors – agriculture and tourism – are between 95 percent and 100 percent destroyed.
As island populations struggle to address these recent natural disasters, the citizenship by investment (CBI) industry can provide an invaluable source of funding.
When Tropical Storm Erika caused damage that totaled nearly half of Dominica’s GDP in 2015, Dominican UN Representative Vince Henderson called the country’s program “a lifeline” and a “major source of state revenue” as the program facilitated immediate direct investment into the small country.
The success of these programs is one of the reasons why several countries in the path of recent historic storms already have citizenship by investment programs (CIPs) in place, including Antigua and Barbuda, St Lucia, St Kitts and Nevis, Grenada and, of course, Dominica.
Most programs follow the same general premise – interested stakeholders can invest in real estate, a government fund, or a business venture in exchange for citizenship. For example, a donation of US$200,000 to Antigua and Barbuda’s National Development Fund will earn the investor citizenship and contribute to the fund, which is focused on supporting government-sponsored projects.
The benefits of CIPs are extensive and impact a number of crucial business sectors. For many countries, the hospitality industry remains a main supporting force for their economy. As five-star accommodations become an expectation amongst travelers, funds from CIPs are crucial in creating a luxury experience. Approved hotel programs create jobs for local residents in construction and management and the completed result has the opportunity to attract much-needed returns from foreign visitors. In 2016, over 29 million people vacationed in the Caribbean.
In the past, funds from CIPs were used to strategically develop and grow a more modern and independent infrastructure across the region. For example, inflows from Dominica’s program have been used to support the Douglas Charles Airport and the construction of a geothermal energy plant.
Prior to the storms, US$10 million from the program was granted to the AID Bank of Dominica to support local agriculture. During this rebuilding process, citizenship by investment units can work to tailor programs that funnel funding into the hardest-hit sectors.
Unfortunately, Caribbean countries are at extreme risk for climate change-related issues, including the increased rate of severe storms coupled with the hazards of rising sea waters. Several months ago, the Caribbean Tourism Organization received a grant to help develop preparedness tactics in the face of climate uncertainty, which will be even more essential following recent events.
This support, in addition to the potential for funding from CIPs, will help the Caribbean come back stronger than before and will create a more sustainable economy moving forward.
Citizenship by Investment units across the region are operating normally despite the recent harsh conditions, and continue to strategize on best practices to attract qualified investors who undergo an extensive due diligence process, showing the proactive and resilient nature of businesses and executives in the region.
With business opportunities spanning multiple industries and benefits such as ease of travel and a more tax-friendly environment, those who are willing to see the potential in CIPs should consider investing in the Caribbean.