The use of technology will play a big role in digital financial services ecosystem development, employment generation and economic growth specifically driving key segments in the economy. By some accounts, this opportunity is so significant that estimates show successful adoption of digital finance could spark 6% (US$3.7 trillion) growth in the GDP of all emerging economies by 2025.
Nowhere in LAC is this more relevant than in the Caribbean, a vibrant economy comprised of diverse islands that offer diverse opportunities, but also face political, infrastructure and natural challenges to economic growth. At the same time, the Caribbean also offers the opportunity for a platform of thought leadership and a sandbox to experiment leapfrog technologies due to its size and potential. This is against a backdrop of headlines dominated by recent images of extreme weather events across the Caribbean, placing further pressure on infrastructure and government capacity to assign resources to deal with these challenges. With little doubt that these events are increasing in magnitude and frequency as a result of climate change, governments need to find new avenues to finance beyond tax receipt revenue, leverage technology advances in areas such as renewable energy and benefit from efficiencies in the digital finances ecosystem. Irregularities in the management of public spending compound the problem, as they do in many emerging (and developed economies), placing further stress on the ability to respond to the challenges.
As a result, governments have much to gain from increased digital payment adoption, potentially saving US$110 billion per year from reduced leakage in public spending and tax collection. Beyond economic growth, digitizing payments can help improve their traceability by creating a digital record and increasing visibility between buyers and sellers, curtailing crime and money laundering and building greater trust between businesses and consumers.
The Smart Islands Forum
Caribbean-Central American Action in partnership with Mastercard and the Inter-American Bank will host this first “Caribbean Smart Islands” Forum in Washington DC on June 26th, 2018 to discuss how public and private entities can partner in the digital payments ecosystem to generate economic growth in the Caribbean. This event will bring together global industry leaders, government, international organizations and NGOs and associations. The discussion will take form of three panel sessions. We will also share white papers and Mastercard research with our participants.
Discussion Topics and Objectives
As part of a global initiative to foster the partnership between public and private entities, the Economic Development Thought Leadership series looks to address specific issues in areas around the world, where a group of subject matter experts and stakeholders focus on pertinent topics and come up with a roadmap to address the issues with actionable solutions. Specific to this forum on the Caribbean, certain topics where chosen from discussion with key stakeholders in government and private sector in this region. The topics are not new to the stakeholders, and the objective is not to have a panel discussion that comprises of theoretical ideas that will never come to fruition. Each session will have a specific task, action and assigned responsibility to deliver a solution based on the identified pains, problems or items addressed. Panelists are selected based on their joint ability to influence and ability to deliver a concrete solution.
Theme 1: Smart Islands: Enabling the Ecosystem for digital payments
Many larger municipalities have embraced the “smart city” concept in recent years, but definitions of the term — and examples of the ways technology is being used to make cities “smart” — run the gamut. Mayors and city CIOs usually talk about using sensors to, for example, wirelessly manage streetlights and traffic signals to lower energy costs, and they can provide specific returns on investment for such initiatives — x millions of dollars saved over y amount of time. The smart city concept integrates information and communication technology (ICT), and various physical devices connected to the network (the Internet of things or IoT) to optimize the efficiency of city operations and services and connect to citizens. How can these principles be customized and applied to the islands of the Caribbean where mobilization, digitization of ID’s, and Big Data can transform local economies?
Session Objective: What “Smart” concepts are applicable to the Caribbean islands? What areas of the economy are benefited from the Smart concept? The session looks to provide examples of Smart Islands examples and their scalability to other markets.
Theme 2: Tourism as a catalyst for growth and resilience in the Caribbean
Tourism accounts for 15% of the Caribbean’s GDP, but this sector is particularly vulnerable to natural disasters, as was once again demonstrated by the devastating 2017 hurricane season. With the cost of adapting to and mitigating the impact of increasing climate change shocks rapidly outpacing the ability of governments to fund the necessary investments, there is growing pressure on the tourism industry to leverage capital from public/private partnerships to address a segment that provides 2.3 million jobs to Caribbean citizens. Against this backdrop, the lack of adequate access to capital presents singular challenges to the operators of small hotels and businesses –and they face unique difficulties compared to larger organizations. If, after disasters, the recovery of the tourism sector is critical to overall recovery, special attention should be given to facilitating this sector’s resilience.
Session Objective: Defining the problem and action steps to resolution for resilience, specifically from an SME perspective.
Theme 3: Harnessing Trade for Growth: Enabling Caribbean SMEs to enter global commerce
Small and medium enterprises (SMEs), engines of growth of economies worldwide, can gain the most from expanded digital trade. Critical to their survival and growth is finding new markets and having access to the platforms that can facilitate trade, as well as removing the friction points that have traditionally created roadblocks…from foreign exchange to speed-to-market. Today the fusion of technologies has blurred the lines between physical and digital commerce and made logistics and global supply chains more efficient. Cross border trade can, in fact, turn small firms into global players. And the possibilities will be multiplied with broader adoption of data and analytics and e-trade marketplaces, among others.
Session Objective: Outlining of the current situation and the introduction of a solution that is currently being developed in LAC; describing and discussing the opportunities in the Caribbean context.