THE STAR BUSINESSWEEK FEBRUARY 8, 2020
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IN THIS EDITION OF
SURINAME STRIKES BIG WITH NEW OIL DISCOVERY
January saw news of a potential major oil find in Suriname. The significance of this discovery will reshape plans for nation-building in the country’s capital of Paramaribo and could give the Surinamese new optimism around their future. It will also require a rethink among other stakeholders regarding the oil industry in the Caribbean‚ and around the world.
BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT
SBW THE STAR BUSINESSWEEK
Three Nations Leading the Caribbean’s Push to Go Green As a region threatened by some of climate change’s most harrowing consequences, the Caribbean must go green in future. This is a unifying goal recognised across the more than two dozen states that make up this part of the world. Page 3
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Costa Rica: Miravalles geothermal plant and solar plant (Source: ciee.org)
Disaster Area: Will 2020 bring more extreme Weather Events? The Caribbean may be known for its sun but, as anyone who lives in the region knows, the weather forecast can often turn sinister. Page 5
Suriname’s potential new oil wealth demands a fundamental rethink of its standing in the region, and how stakeholders engage with it. Satellite image of hurricane Irma, which devastated the Caribbean in 2017 (Photo courtesy NOAA)
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In 2019 Saint Lucia received over 400,000 stayover visitors for the first time ever. 2019 Stayover Arrivals
423,736
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CARIBBEAN BANKING IN 2020: Wendy Delmar — CEO, Caribbean Association of Banks BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT
Up by 7.3%
Caribbean Association of Banks CEO Wendy Delmar (Photo courtesy CAB)
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ntering a new year, the regional banking sector is still an industry under siege. External threats such as de-risking, blacklisting and volatile global financial markets continue to exert pressure on bankers while advances in technology provide both new opportunities and new risks. Despite the foreboding climate, Wendy Delmar, CEO of the Caribbean Association of Banks (CAB) is optimistic. The veteran banker, a former President of the Bankers Association of Saint Lucia, believes that rigorous training and education, greater collaboration with regulatory bodies and a focus on the future will ensure the sector’s survival and sustainability. She shares her thoughts with STAR Businessweek on last year’s challenges and what lies in store for the sector and the CAB in 2020.
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What were CAB’s biggest successes in 2019? WD: We held our first training day for CEOs and Directors, supported by our partners, Deloitte. We also had
our first pre-conference training day, which was facilitated in collaboration with the Florida International Bankers Association, and we signed a number of agreements which will raise the profile of the CAB. I am proud that our annual conference, which is really a trademark event, is also now an accredited event. We are delighted that we were able to host a number of training sessions. I am a big fan of education and having had those engagements was a huge satisfaction point for me.
What does your role as CEO of the CAB involve? WD: Identifying issues which will impact the regional financial services sector [and] developing strategic plans to present to the Board of Directors to address those issues. Also, engaging leaders at all levels to assist in bringing awareness to critical factors for the betterment of the membership and growing the membership. I’m also involved in planning and executing training activities for members Continued on page 6
RENEWABLES
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FEBRUARY 8, 2020
THREE NATIONS LEADING THE CARIBBEAN’S PUSH TO GO GREEN BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT
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s a region threatened by some of climate change’s most harrowing consequences, the Caribbean must go green in future. This is a unifying goal recognised across the more than two dozen states that make up this part of the world. In looking beyond this general aspiration and into the in-depth pursuits of each nation, it’s clear that some, more than others, can stake a claim as leaders in pushing for a renewable energy future. Recognising and commending these nations does not seek to decry others that have not made the same progress; indeed, it can be a lesson for them in what can be achieved. So let’s look now at three Caribbean nations that are showing leadership in the renewable revolution.
1. SAINT VINCENT AND THE GRENADINES Saint Vincent and the Grenadines previously declared that by 2020 it would draw 60% of its energy needs from renewable sources. Typical of many similar Caribbean states, it set this goal conscious that the potential was high for wind, geothermal and solar projects. Since then the nation has seen solid growth in its solar industry, including the commencement of its first solar battery storage microgrid system on Mayreau Island during 2018. The country has also researched the potential for its geothermal industry, with the surrounds of La Soufriere volcano viewed as a promising site for a new energy installation, exploratory drilling having begun in May 2019.
Solar panels are just one avenue of many that Caribbean nations are utilising to go green
2. DOMINICA Dominica has undergone a colossal rebuild over the last few years. In September 2017 Hurricane Maria damaged an estimated 90% of buildings on the island. The response was an aim to become the world’s most hurricane-proof nation, redefining the country’s vision for a green future. Three hydro-electric power plants provide Dominica with 27.4 per cent of its electricity supply, and it intends to increase its green credentials by expanding its solar industry. Impressively, numerous solar sites have been installed post-Maria, and built in such a way that they are easy to remove and store if another hurricane threatens to hit. 3. COSTA RICA Another great green success story is the efforts of Costa Rica to bring renewables
online in its national energy grid. In 2015 the country pledged to become carbon-neutral. As of 2017 some 98.1 per cent of the nation’s energy came from green sources. The population of around 5.1 million draws its green energy from a diversity of sources including solar panels, wind turbines, geothermal plants, and more. Costa Rica is well-placed to build on this ambitious green agenda and serves as a leading example to states that seek to go green while servicing the energy needs of a substantial population.
THE INDIVIDUAL NEEDS OF INDIVIDUAL NATIONS The work done among these aforementioned nations is commendable but each nation in the region has its own strategic priorities
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to pursue, and energy needs to meet. Furthermore, the path towards energy independence and becoming a renewables-only nation is one that has more hurdles for some than others. The expectation that countries like Cuba and Haiti, with populations of over 10 million, could pursue the same strategy as a state like St Kitts and Nevis, with a population of under 55,000, is unrealistic. Nonetheless, larger nations can acquire a greater pool of revenue via taxation, and find an easier path to attracting foreign investment based on the size of their economy. Consequently, it’s not acceptable for any government to try to silence criticism of its inaction on the basis that a big country cannot operate in the same way as a small one. Certainly, large nations can face some unique challenges in pursuing renewable energy projects that small ones do not, but the reverse is also applicable.
A GREEN LIGHT FOR NEW PROGRESS The good news in 2020 for all nations, big and small, is that the costs of renewable energy sources like wind and solar have steadily declined over time. Indeed, in 2018 MIT declared that the costs of solar photovoltaic modules had dropped by 99 per cent over four decades. Jinko Solar announced in January that the maximum conversion efficiency of its bifacial solar modules had reached a new world record of 22.49 per cent. Such achievements are helping to push the international solar industry closer to global grid parity, and giving new momentum to the renewable energy sector as a whole. There is good news for nations that set renewable energy targets but whose progress simply ambled along or outright stalled; barriers to achieving their goals continue to disappear. The excuses for SBW failing to take action surely must, too.
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SURINAME
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SURINAME STRIKES BIG WITH NEW OIL DISCOVERY Continued from page 1
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here are three key questions regarding this news: How will it impact the average citizen of Suriname? What does this mean for Suriname on the world stage? And, closer to home, how does this reshape the dynamics of the regional oil industry, especially as it concerns Guyana?
WHO WILL REALLY BENEFIT FROM THIS FIND? The new untapped source of Suriname’s economic potential was found at the Maka Central-1 well, located on Block 58. It was discovered through the operations of the Noble Sam Croft drillship, with America’s Apache and France’s Total each taking a 50 per cent working interest. Beyond Maka Central-1, attention now turns to exploration of the Sapakara West-1, 20 kilometres southeast on Block 58. Just as Guyana’s oil wealth came in instalments as new discoveries were announced, so too are the odds strong that Suriname’s bright start to the year is just the first chapter in a series. This discovery creates a number of new calculations for Suriname regionally, as it does for countries further afield that maintain a strong influence locally. In particular, the possible emergence of Suriname as a big player in the oil industry is sure to be received with mixed feelings in Washington DC. The new revenue from oil could lift individual wealth in the nation of around 600,000 which last year had an estimated GDP per capita of US$6,310. However, Suriname has a troubled record of corruption, human trafficking, use of child labour and other offences which throw into doubt any possibility that this potential new wealth will translate into a widespread improvement of the citizenry’s opportunities and standard of living. Complicating the picture further is Suriname’s close ties with Beijing, especially financially. Neither government is keen to encourage a viewpoint that suggests the former is vulnerable to the latter, as Beijing and Paramaribo spin the relationship as one of investment and friendship. Leaders of the resource-hungry economic giant could view Suriname’s find as the perfect avenue to utilise its financial power over the Latin American nation in their bilateral relationship, and to leverage the Asian nation’s own standing and ambitions within the region generally. THE GUYANESE CONSIDERATIONS This discovery in Suriname also has many implications for Guyana‚
Location of block 58 offshore Suriname (Photo courtesy: Apache Oil Corporation)
especially with an election upcoming in March. Suriname is held to have secured a royalty deal of around 6.25 per cent, which is three times the rate acquired by Guyana for its Stabroek Block, and this means new pressure will be placed on Suriname’s neighbour to bring stakeholders back to the negotiating table. Politicians seeking to show why their vision of an oil-rich Guyana should see them occupy the seats of government will
The new revenue from oil could lift individual wealth in the nation of around 600,000 which last year had an estimated GDP per capita of US$6,310
now need to observe Suriname’s pursuits in the same space. Guyana will also need to reconcile with its history of political volatility that has given investors pause for thought, and could yet hamper its future. Conversely, it’s possible that Guyana could use Suriname’s new find to its advantage. In July 2019 GlobalData’s Alessandro Bacci issued a warning that if Guyana went ahead with a proposed hike on future oil royalties, its competitiveness in the industry would be diminished. That was last year, and now any adjustment to Guyanese royalties must factor in Suriname. Also, any new Guyanese government in March, with a fresh electoral mandate, may be ready to push hard for more favourable terms, based on Suriname’s agreement.
NEW PRIORITIES IN THE REGION The months and years ahead offer much promise for Guyana and Suriname in their quest for greater national profitability based on their oil finds. The two neighbouring nations could reap
the rewards of a greater interest in their resources‚ with new investment in one nation driving interest in doing the same in the other. Even so, each needs to be mindful of the competition just over the border. Any Caribbean government would like to be in the same shoes as Suriname and Guyana, given the immense revenue potential of oil discoveries. However, other nations around the world are seeking to expand and profit from their burgeoning oil industry going into the 2020s and beyond. As the accompanying piece on page 3 shows, the Caribbean is making many promising inroads in renewable energy that augur well for the future, but the community of nations can hold many different definitions for when exactly the ‘future’ will demand a renewable-only economy. In the meantime, Suriname will find the potential growth of its oil industry will have countless parties seeking to capitalise on it. All that remains unclear is whether this will actually translate into much meaningful benefit for the Surinamese people as a whole.
DISASTER PREPAREDNESS
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FEBRUARY 8, 2020
DISASTER AREA: Will 2020 bring more extreme weather events? BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT
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he Caribbean may be known for its sun but, as anyone who lives in the region knows, the weather forecast can often turn sinister. Flooding, tsunamis, tropical storms, earthquakes and hurricanes are all an unfortunate part of island life, making the Caribbean one of the most disaster-prone regions in the world. LIFE-THREATENING Over the last decade, 152 million people across Latin America and the Caribbean have been affected by 1,205 natural disasters, according to the UN Office for the Coordination of Humanitarian Affairs. This staggering number includes 548 floods, 330 storms and 75 earthquakes. In the Caribbean, the biggest concern is hurricanes which can develop with minimal warning and devastate entire islands. The climbing frequency and intensity of these storms mean that Caribbean nations now have insufficient time between occurrences to fully recover, ensuring that the lasting economic and social effects are felt for years. UN figures reveal that Cuba, Mexico and Haiti have been the most affected by storms since 2000 with 5,000 deaths (more than 85 per cent of which occurred in Haiti) and a total of US$ 39bn in damages. While storms such as category 5 Hurricane Dorian make the news, weaker weather can be just as devastating. In 2015 Tropical Storm Erika passed over the north of Dominica with winds of just 50mph. The seemingly innocuous storm also brought a torrent of rain, however, which triggered flash floods and landslides that affected just under half of the island’s population. By the time Erika had rained herself out, Dominica was left with a US$ 483mn clean-up. Hurricane season may be over, but earthquakes can strike at any time. In 2010 Haiti was rocked by a magnitude 7.0 earthquake that proved catastrophic, killing 222,570 and injuring 300,000. The fall-out from an earthquake is largely dependent on human factors; poor building codes, inadequate response capacity and limited preparedness all amplified the damage in Haiti. Haiti’s quake may be a decade ago but earthquakes remain a threat to the region, as recent incidents show. A few weeks ago a 7.7 quake was
Devastation in Haiti following the 2010 earthquake (Photo courtesy United Nations Development Programme)
reported in the Caribbean Sea between Jamaica and Cuba and, last month, Puerto Rico suffered a magnitude 6.4 quake, following a week’s worth of smaller warning tremors. The US Geological Survey (USGS) estimates that around 500 tremors shook the island over 10 days. Shortly after Puerto Rico, a 5.2 magnitude earthquake hit several islands in the Eastern Caribbean. With the epicentre to the south of Dominica, shaking was reported in Martinique, St. Vincent, Barbados and Saint Lucia. Earthquakes aren’t just potentially devastating in themselves; they can also cause tsunamis. While the Caribbean has thankfully avoided these giant waves over the past few decades (the last major tsunami in the region struck in 1946), the potential is high as long as earthquakes keep occurring and, given that 70 per cent of the region is in low-lying coastal areas, the impact could be catastrophic. EXPERT PREDICTIONS The USGS has warned that there may be more earthquakes to come as the Caribbean remains an active seismic zone. Much of the region lies above the uneasy meeting point between the North America and Caribbean tectonic plates. The USGS has stepped up its efforts to predict and track earthquakes in the region, saying: “After the devastating Hurricane Maria occurred in Puerto Rico, the federal government invested in rebuilding damaged seismic stations in the region. These stations have made it possible for the USGS and our partners at the Puerto Rico Seismic Network to provide more accurate and rapid information about the earthquakes and their possible impacts, along with better forecasts of potentially damaging aftershocks.”
Predicting earthquakes is a tough business. Scientists may be able to measure plates and pinpoint unsteady fault lines but knowing exactly when those plates will shift is harder to determine. The technology is not yet sophisticated enough and the variables are too high. Even the best early warning detection systems may only buy a few minutes to seek shelter. Hurricanes are easier. By closely monitoring climatic conditions such as El Niño/El Niña, scientists can create a fairly accurate picture of how busy the June to November period will be. The National Oceanic and Atmospheric Administration (NOAA) doesn’t usually publish its Atlantic Hurricane Season Outlook until spring, but the consortium Tropical Storm Risk, which is comprised of experts on risk management and seasonal forecasting from University College London, published its extended range forecast in December. The group predicts an average season this year, based on near-to-average wind speeds, but stresses that the accuracy of a forecast six months in advance is not always reliable. The Caribbean Climate Outlook Forum (CariCOF) takes a more short-term approach, monitoring weather conditions over 3-month and 6-month periods. Its latest bulletin, covering up to the end of March, warns of short-term and longterm drought in the region, particularly in Belize. From April to June 2020, CariCOF is expecting an intense transition from the dry season to the wet season as islands experience hotter and wetter weather than the norm. Flash floods could threaten Belize and the Greater Antilles in May while heatwaves are predicted for Belize and Trinidad.
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INSURING RESILIENCE Climatic uncertainty and the Caribbean’s inherent vulnerability pose a problem for the agencies charged with insuring against these risks. Governments can take advantage of the Caribbean Catastrophic Risk Insurance Facility (CCRIF) which covers them for tropical cyclones, hurricanes, earthquakes and even excessive rainfall. Since 2007 CCRIF has paid out US$ 152mn to thirteen member governments, including US$ 12.8mn to the Bahamas following Hurricane Dorian. For citizens, it may not be so easy to access funds. Throughout the Caribbean, costly coverage for natural disasters is out of reach for many homeowners and businesses. Unless required by lending institutions, property owners often decide to forgo insurance coverage or delay signing on the dotted line for their policies. Soaring insurance rates and growing fiscal constraints have only exacerbated the problem. But even considering this protection gap, the regional insurance industry unavoidably takes a substantial hit in the wake of natural disasters. The Bahamian insurance industry absorbed an estimated US$ 1.5bn loss thanks to Dorian, according to analytics group AIR Worldwide. The huge burden that disasters place on insurers can be offset by the reinsurance market, where multiple insurance companies band together to share the risk. Companies purchase policies from other insurance firms to limit their own exposure and the premiums are shared among all the insurers involved. Dorian has made the reinsurance market nervous and ratings agencies are predicting that this hurricane’s impact, as well as the likelihood of future events, will drive up reinsurance renewal rates by as much as 5 per cent in 2020. According to data from UBS, the reinsurance industry has excess capital of around US$ 30bn although an estimated US$ 70bn of natural catastrophe losses in 2019 is likely to erode that figure. As the threats increase, insurance and reinsurance will only become more costly unless there is corresponding innovation in how those threats are mitigated. Senior Natural Catastrophe Specialist at the Swiss Re Institute Michael Gloor explains: “Today climate change is a manageable risk for reinsurers. However, the rising threat is alarming. In response, the industry needs to improve risk models to better assess climate hazards. Insurers can also play a key role in advancing the transition to a low-carbon economy by providing solutions to manage risks associated with large-scale investments in new technology and innovation.” SBW
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CARIBBEAN BANKING IN 2020: Wendy Delmar - CEO, Caribbean Association of Banks Continued from page 2
in line with changing needs and demands on the industry, and creating a platform which encourages sharing of news, information, best practices and successes within the industry and industry leaders through effective networking.
You are a past President of the Bankers Association of Saint Lucia. How is it different running a national body in comparison to a regional group? WD: The responsibilities of the CAB CEO are far more robust and, as such, one must remain very much aware of what is happening locally, regionally, internationally and globally, as all of these events can have far-reaching implications for our relatively delicate economies. My role now requires that I maintain high involvement with all the Bankers Associations of the region as opposed to having only a bird’s eye view of what obtains locally. As we move into not just another year but another decade, what were the challenges of the previous decade and what do you predict will shape the sector in the years to come? WD: The principal challenge of the past decade would have been de-risking, and the loss of correspondent banking relationships. It is critical that we find short-term and long-term solutions to this vexing problem. Presently, we can say that Caribbean banking is evolving. We are witnessing the departure of Canadian banks, and an interesting landscape is emerging. As we see consolidation among smaller banks, larger Caribbean banks extending their reach and new foreign ownership is coming in with fresh approaches. A recent roundtable brought the US and Caribbean together to discuss de-risking. How hopeful are you that these discussions will lead to real solutions? WD: Every engagement with the persons and entities who can shape change will hopefully be met with a level of seriousness and with well-researched discussions being brought to the table. I am hopeful that as the recognised voice
human resource to position ourselves as leaders in financial technology, and we are seeing some of that already emerging with tech start-ups in Barbados, Curacao, Jamaica, Saint Lucia, and Trinidad and Tobago, among others. Beyond commercial banking, it is exciting to see that central banks across the region, led by the Eastern Caribbean Central Bank (ECCB), have been embracing the concept of digital currency. This will not only place the region in the global vanguard, but also be of significant benefit to our economies. CAB has gone on the record congratulating the ECCB for taking this bold step.
CAB Board members (Photo courtesy CAB)
of the banking sector, we can strengthen the relationships with all participants to also become part of the discussion process or, at the least, be in a position to contribute information which we believe to be pertinent discussion points, as part of the preparation process for our regulators and governing bodies.
Despite all efforts to appease the Caribbean Financial Action Task Force and its international counterparts, the threat of blacklisting is still very real in the Caribbean. What must jurisdictions do to reassure international regulators? WD: Firstly, I think that we must work not only to appease the regulators but most importantly we must work to keep our industry and our economies safe. We must ensure that we revamp and revise regulations as and where necessary, to stay abreast of and, in most instances, ahead of the changes that impact us as a region. Regulatory updates are a critical part of the ability of the islands to respond swiftly to changes and external shocks which impact the perception of the islands, as well as our ability to trade on the world market. Assessments done in countries with action items must be seen as more than just a form-filling exercise or a check-box exercise and become part of our DNA to show our willingness to keep up with changes impacting our participation on the world stage.
How much has technology impacted banks in the region, and where are you seeing innovation? WD: Globally, the banking sector is one of the leading investors in artificial intelligence. We have an unparalleled opening to be not just early adopters, but leaders in that sphere, with the right investments, not just in solutions and technology, but in people. It can, of course, be challenging for small organisations – which most Caribbean banks are – to justify spending large amounts on technology. But it is clear that canny spending in that sphere is necessary. Without a doubt, the Caribbean has the
The theme of the 2019 CAB Conference was ‘Shaping a New Era in Caribbean Banking’. What does that mean to you? WD: The paradigm is changing. Caribbean banking, and how it fits into the global industry, is changing. It was in that regard that we opted to talk about redefining the way we do business, and how we can innovate for success, at our 2019 conference in Sint Maarten. How banks work with government regulators, what the future holds in terms of fintech, how we mine and use data, how the emergence of data as the world’s leading commodity is revamping the way we think about security, and how we can use technology to enable and enhance compliance – those are all examples of how we must redefine the way we conduct our affairs in the modern era.
The Saint Lucia Registry of Companies & Intellectual Property Company Incorporations Name: Samuel’s Ministry Inc. Description: Christian ministry Directors: Andre Samuel, Theresa Samuel Joseph, Marie Jane Alexander Date Incorporated: 13/1/20 Chamber: Natalie Da Bero Chambers
Name: Authentic Cigar Distributors Inc. Description: Import and distribution of authentic cigars Directors: Timothy Wallis Date Incorporated: 23/1/20 Chamber: Dentons Delany
Name: Travelsmart (SL) Ltd. Description: Provider of ancillary travel services Directors: Stephen Hunter, Frederick Baker, Alberto Garcia Date Incorporated: 13/1/20 Chamber: McNamara & Co.
Name: Cabot Saint Lucia Golf Club Inc. Description: The operation of a membership golf club Directors: Ben Cowan-Dewar Date Incorporated: 23/1/20 Chamber: McNamara & Co.
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