One year in: Caribbean Joint Action Plan (CJAP) ahead of schedule

Caribbean Development Bank, DEG, European Investment Bank, FMO, IFC and PROPARCO have committed more than US$960 million, surpassing pledged three-year amount

Through unprecedented collaboration, six leading development finance institutions have committed more than US$960 million in the past year to sustainable private and public sector projects in the Caribbean. Last year, in response to the impact of the global financial crisis on the economies of the region, six development institutions agreed to a Caribbean Joint Action Plan (CJAP) to commit up to $950 million to the Caribbean over a three year period.

The CJAP includes the Caribbean Development Bank (CDB), the German development finance institution Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG), the European Investment Bank (EIB), the Netherlands Development Finance Company (FMO), the International Finance Corporation (IFC) – the private sector arm of the World Bank Group — and PROPARCO, the private sector arm of the Agence Française de Développement Group.

In the first year of the three-year CJAP, the partner institutions have committed over 100 percent of the $950 million pledged three-year amount, including loans and equity investments. The CJAP aims to enable more effective use of financial and technical assistance by encouraging better coordination among the participating institutions and a stronger focus on each one’s experience and strengths.

While the CJAP commitments covered many countries and sectors, not surprisingly infrastructure accounted for about half of such commitments, with 47 percent, and is also the area where the CJAP partners collaborated the most. Financial markets, with focus on promoting access to finance for small and medium enterprises and trade, are also benefiting significantly from the initiative, with about a quarter or 28 percent of commitments going to this sector. On the other hand, commitments were spread throughout the region, with Jamaica receiving 33 percent, regional transactions representing 20 percent of commitments and the Organization of Eastern Caribbean States (OECS) receiving 18 percent of commitments.

During the first year, the development institutions that partnered in the Joint Action Plan demonstrated continued support to Haiti following last year’s devastating earthquake. This included technical assistance and reinforced coordinated financial engagement that focused on rebuilding the private sector and strengthening its role in Haiti’s economic development.

In Haiti, CJAP partners have committed to ten projects under the initiative so far, making significant investments to improve Haiti’s power generating capacity, health service delivery and primary education, as well as creating more than 5,000 new jobs and preserving 5,000 existing jobs. IFC and FMO commitments to E-Power S.A., which will operate a 30MW power plant, will help aid the restoration and enhancement of Port-au-Prince’s electricity supply. Partners have also invested in the health and human capital of Haiti’s neediest by helping 45,000 poor children attend primary school (CDB’s Education for All grant) and by co-financing construction of a new 114-bed surgical hospital where Haitians can receive medical services free of charge (EIB’s grant to Medecins sans Frontieres in Tabarre).

Additional collaborative investments under the Joint Action Plan include an IFC-DEG joint financing of the expansion of the Caucedo Port in the Dominican Republic and a joint IFC, EIB and PROPARCO financing to the extension of the TransJamaican Highway with a total cost of US$205.4 million..

“CJAP’s commitment of an estimated $960 million in only its first year of operation is remarkable and testament to the potential contribution that continued collaboration between the member institutions of CJAP can bring to the development in the Region,” said Dr. Warren Smith, CDB President. “The Region’s public and private sectors both require considerable resources if they are to play a role in growth and development of the Caribbean; and CJAP offers a unique opportunity for its members to participate collaboratively in that process.”

“The aim of CJAP is collectively to boost private enterprise in one of the most unstable regions of Latin America and contribute towards sustainable growth. This involves every institution bringing forward its own geographical, product- and sector-specific knowledge,” said Justus Vitinius, First Vice President Latin America of DEG. “The particular aim of DEG is to finance small and medium-sized companies in the region as well as projects that aid climate protection.”

“In only a year, the Caribbean Joint Action Plan has demonstrated the clear value of enhanced cooperation between development finance institutions to support projects essential for economic growth across the Caribbean and our engagement in the region has surpassed targets. Through the CJAP, the European Investment Bank has been able to work with experienced counterparts to fund infrastructure projects in the Dominican Republic and Jamaica, and enable a new start for the financial sector in post-earthquake Haiti,” said Plutarchos Sakellaris, European Investment Bank Vice President for Africa, Caribbean and Pacific.

“CJAP’s unparalleled results in this first year show just how committed the participating DFI partners are to providing access to finance in the Caribbean region,” said Jurgen Rigterink, Chief Investment Officer of FMO. “The action plan is certain to make its mark in the region’s long-term economic development, which continues to be imperative to current and future generations there.”

“This collaboration among international financial institutions bodes well for the future development of the Caribbean,” said Thierry Tanoh, IFC Vice President for Latin America and the Caribbean, Africa and Western Europe. “IFC strongly supports development of critical sectors such as infrastructure and financial markets in the Caribbean, and the strength of this partnership has provided IFC with the opportunity to provide more than double our original pledge to this important initiative.”

“Increased collaboration between DFI’s is critical for unlocking the development impact of our actions. We are especially pleased to be part of this effort in the Caribbean, a region whose specific problems have long been overlooked by the development finance community. We also hope to foster, through this effort, a better cooperation between the French departments and the various islands,” said Laurent Demey, PROPARCO Deputy CEO.

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