Georgetown, Guyana
Remarks
DEPUTY ADMINISTRATOR ISOBEL COLEMAN: Thank you, Nurriyih [Gerrard], for that introduction. Thank you to President [Irfaan] Ali, Peter Ramsaroop, and Minister Oneidge Walrond, along with the Caribbean Export team for making this conference possible. I’m delighted to join this group of leaders this week as we explore opportunities to further expand the promise of the Caribbean.
The U.S. government is committed to supporting sustainable, inclusive economic growth in Guyana and across the region. And we are eager to grow our partnership with both governments and the private sector to do that.
Together, we can unlock growth and tackle the challenges facing the Caribbean region today. One of those challenges is, of course, the impacts of climate change. And given events of the past week, I don’t need to remind anyone here of the gravity of the climate crisis that is threatening lives and stretching budgets around the world.
My heart goes out to the many communities across the region which have been devastated by Hurricane Beryl. Disconcertingly, Beryl was not just the first hurricane of this season, it was the earliest Category 5 ever recorded in the Atlantic. Over the last two decades, countries in Latin America and the Caribbean have lost the equivalent of 1.7 percent of GDP each year on average due to climate related disasters.
According to a 2023 IMF study, the Caribbean will need an adaptation investment of more than $100 billion USD to modernize its power generation and transmission systems, strengthen its infrastructure, and cope with the effects of climate change. This is equal to about one-third of the region’s annual economic output. And, in part due to the growing prevalence of climate disasters, nearly 6 million people in the region are at risk of being pushed into extreme poverty by 2030. For all of these reasons, and for the future we wish to hand to our children, addressing the climate crisis is a top priority for the Biden Administration. How we’re going about that work here in the Caribbean serves as a good illustration of where I want to focus my remarks today – on how we’re approaching catalytic capital and public-private collaboration.
At the U.S. Agency for International Development, or USAID – the institution I have the privilege to help lead – we partner with countries and communities around the globe to advance opportunity, alleviate poverty, and ultimately, build a more peaceful and prosperous world. USAID’s programs promote regional trade and integration, and support the good governance essential for growing commerce and investment. In parallel, we purposefully engage with the private sector to drive the kind of sustainable, inclusive growth needed to accomplish the goals we share with our partners.
Traditionally, we have focused primarily on direct foreign assistance – in other words, grant funding. And while we still do plenty of this vital work, we undertake it with the full knowledge that development needs have far outpaced available public resources. Simply put, there is not enough available funding from governments and other donors to meet today’s development needs. The landscape of global development finance is changing, and official development assistance is no longer the dominant source of capital in many emerging markets around the world, including the Caribbean. Private capital investment has far overtaken the volume of official development assistance.
But even the current hundreds of billions of dollars of private capital invested will not be enough to cover the trillions of dollars needed to meet the SDGs by 2030. One trillion dollars is roughly the level of financing that developing and emerging economies, excluding China, need every year through 2030 to meet their climate goals – to adapt infrastructure and food systems that serve 3.6 billion people, to rebuild and recover from worsening disasters, and to build the clean energy systems needed to support sustainable economic growth that allows these countries to advance without surpassing our global emissions goals.
For those of us at development agencies like USAID, that $1 trillion in need looms large. And it has forced us to rethink our approach. Because even if we dedicated all of our collective official development assistance and finance exclusively towards climate action – which of course we couldn’t justify in light of the multitude of other challenges we face – we would meet only around one-sixth of the total need. There’s simply no way to meet the requirements of climate financing without a sharp increase in private sector investment. This dynamic isn’t limited to climate finance, of course. In order to meet most of the development challenges of our day, we need private investment. And yet all too often, the kinds of investments that lead to sustainable development are difficult for business leaders and investors to manage or justify.
That’s where the public sector comes in. Governments have the power to lay the foundation for safer investments through catalytic funding, complementary investments, and other mechanisms that allow the private sector to mitigate risk and put their capital to work for development gains. So at USAID and across the U.S. government, we are innovating to help guide, shape, and enable the way private resources are invested to maximize development impact – and we are starting to see that impact around the world. Over the last seven years, INVEST, our global blended finance program, has demonstrated the power of such partnerships, unlocking nearly $1.6 billion in private capital to date to drive inclusive growth in countries where USAID works, including here in the Caribbean.
In the climate space, we are centering much of our work on connecting communities with international climate finance funds. We have focused on helping partner countries overcome barriers to accessing global resources to support climate change efforts, like the Green Climate Fund. Our assistance provides resources to our partners as they navigate complex requirements, work to establish financial and management integrity, and absorb the costs associated with proposal development.
These investments are showing clear dividends. For instance, through just over $40 million invested in USAID-funded climate projects, we have helped partner countries access nearly $800 million in climate finance. Here in the Caribbean, USAID is moving this work forward in a variety of ways.
Last summer, U.S. Vice President Kamala Harris launched the Caribbean Climate Investment Program, which seeks to unlock private sector investments in renewable energy and energy efficiency technologies, adaptation interventions, and natural climate solutions across the Caribbean. We're already delivering on the goals of this fund. In February, we launched a project preparation facility with an initial contribution of $3 million to help prepare small- and medium-sized enterprises for investment.
We also issued a grant to a climate resilience and renewable energy investment firm that will focus on strengthening the investment pipeline for small- and medium-sized women-owned businesses. And we're continuing to expand our reach, with a new grant awarded to Blue Circle Energy in Barbados, which will introduce 16 co-located battery energy storage systems to generation projects, contributing to the country's grid stability.
Earlier this year, USAID and the CARICOM Development Fund launched what we call the new Caribbean Community Resilience Fund together with the fund Sygnus Group, a fund manager. The Caribbean Community Resilience Fund is specifically designed to advance climate resilience investment in the Caribbean. It offers a unique, blended finance structure intended to unlock private-sector participation in building climate resilience, and to make investments in resilience-focused small and medium enterprises and critical infrastructure projects through flexible debt and equity investments. Moving forward, this fund will focus on six sectors that are key to building climate resilience: renewable energy, the blue economy, ICT, transportation, financial services, and climate-smart agriculture. The structure of the fund includes a first-loss tranche that acts as a catalyst, lowering investment risk and attracting crucial private and commercial capital to the region.
Beginning with an investment of $1.75 million, USAID helped the Caribbean Community Resilience Fund increase its capitalization target from $100 million to $135 million, based on an assessment of the market’s appetite for the product.
As another example of our efforts, with support from USAID, the Green Climate Fund recently approved the Government of Barbados’ proposal for $15 million for the Blue-Green Investment Corporation, which will become the first so-called green bank in the Caribbean region. To launch this effort, USAID contracted Pegasus Capital Advisors to establish the technological and operational infrastructure needed by the bank to accept capital from the Green Climate Fund, the Government of Barbados, and other initial equity investors.
Once operational, the Blue-Green Investment Corporation will provide a means to channel financing towards private and public initiatives related to climate resiliency, with an emphasis on low- and middle-income households and underserved populations.
In this way, the bank will serve as a key mechanism for achieving climate goals without deepening public debt. This work marks an important step toward reforming global financial systems to provide more support and funding for countries to tackle climate change and pursue sustainable development. The Government of Barbados plans to provide $10 million to capitalize the Blue-Green Investment Corporation, with USAID providing $5 million to help establish the bank’s management and administrative capacity. This investment is expected to leverage up to $210 million in private capital for green assets and climate projects that support the most vulnerable in Barbados and the wider Caribbean region – serving as a global model for climate-resilient investment.
Beyond USAID, other parts of the U.S. government are also dedicated to accelerating development finance. I’ll mention just two examples. First, the U.S. Trade and Development Agency, or USTDA, links U.S. businesses to export opportunities by funding project preparation, feasibility studies, pilot projects, and partnership-building activities that integrate U.S. private sector innovation into climate, clean energy, transportation, healthcare, and digital infrastructure projects. Second, the U.S. International Development Finance Corporation, or DFC, has been a leader in financing solutions to many of the most pressing challenges in development, including with respect to climate finance, environmental protection, and food security.
In one example of this approach, in 2021, DFC closed a $364 million deal to secure a Blue Bond for Ocean Conservation in Belize. Alongside DFC’s $610 million in political risk insurance, which covers loan principal and interest, this innovative debt conversion provides sovereign debt relief, while simultaneously funding marine conservation, coral reef and mangrove restoration, economic diversification, and sustainable tourism. This will support Belize’s commitment to protect 30 percent of its ocean.
Turning to our host country, four years ago, USAID and the Guyana Economic Development Fund partnered in establishing the Economic Development Accelerator, which supports Guyana’s agribusinesses in growing and reaching new markets – domestically, regionally, and internationally – thus contributing to Guyana’s economic diversification and inclusive growth goals.
For example, the Economic Development Accelerator produced the 'Buy Local at Bounty' initiative, a collaboration between Innovate Guyana and Bounty Supermarkets, which effectively boosted local agro-processors by giving them prime shelf space and increasing their visibility to customers. This initiative showcases the success of helping local businesses grow and scale by providing them with greater market access.
Since its inception, the Economic Development Accelerator has worked intensively with 30 businesses per year – 60 percent of them women-owned – providing management, finance, marketing, and compliance training and mentorship; facilitating access to seed funding; and improving participating businesses’ bankability for investment. Thanks to parallel funding from the Inter-American Development Bank, the Economic Development Accelerator has been able to draw in more participants, and further increase access to capital through a revolving fund.
And in light of its success, USAID plans to expand the model in Guyana, and replicate the approach in Suriname and Trinidad and Tobago. So today, I am pleased to announce that USAID will program approximately one and a half million dollars to extend additional opportunities to businesses in the three countries.
These are just a few of the ways we in the public sector are stepping up to support the kind of private investment we collectively need to fill the breach between development resources and development needs. USAID, and the U.S. government writ large, remain committed to creating opportunities for development investment around the world. And we’re urging other governments to explore ways to catalyze investment, absorb risk, and pave the way for private sector engagement in their own countries and communities.
While governments are not always equipped to make the kind of large-scale climate investments we need, they are often well positioned to devote public resources toward reducing the risk of these investments, cultivating a more promising environment for investors with available capital. This kind of synergy between the public and private sectors can produce incredible dividends, but it requires dedication – and often a greater risk appetite – from all sides.
To the government leaders here with us today, we encourage you to seek out opportunities to create a more promising investment ecosystem in your countries – by stepping in to shoulder risk, by embracing economic policy that promotes business and encourages economic growth, and by committing to the openness, transparency, and good governance required to create predictability and attract investment.
And to the business leaders and investors in the room, we invite you to join us, leveraging your resources and your expertise to drive economic growth and sustainable development at scale.
The future of development – and the only path to meeting the immense needs of our time – is a collaborative approach that links the public and private sectors as partners. In this approach lies great opportunity, increasing prosperity, and the kind of world we want to bestow upon generations to come.