‘Still among leaders’: But Bahamas’ FDI down 60%


Hubert Edwards

• UN body: Inflows fall over $500m to $360m

• ORG chief: ‘Large drop-off’ no real concern

• Confident of ‘robust’ rebound to over $900m


Tribune Business Editor


The Bahamas is “still among the leaders” despite a United Nations (UN) agency yesterday revealing that foreign direct investment inflows to this nation declined by 60 percent year-over-year in 2021 to $360m.

Hubert Edwards, the Organisation for Responsible Governance’s (ORG) economic development committee head, told Tribune Business that while the World Investment Report had disclosed a “dramatic” and “large drop-off” in a key Bahamian economic driver there should be no cause for immediate alarm as the numbers have to be set in context.

Pointing out that many major investment decisions had been placed on hold due to the uncertainty associated with the COVID-19 pandemic, he added that the fact The Bahamas remained the third most-popular foreign direct investment (FDI) destination among small island developing states (SIDS) globally - and the leader in the Caribbean - “underlines the attractiveness” of this jurisdiction for global capital.

And, although 2021’s $360m inflow was the lowest for five years, Mr Edwards voiced optimism that The Bahamas will soon “see a rebound that is robust enough to take us beyond the $900m annual range we would have seen in the last five years”.

He spoke out after the World Investment Report, unveiled yesterday by the United Nations Conference on Trade and Development (UNCTAD) agency, disclosed that inbound FDI flows to The Bahamas fell from $897m in 2020 during COVID’s peak to $360m last year.

The latter figure was the smallest for five years, falling well below the $901m and $947m FDI inflows attracted in 2017 and 2018, as well as the $611m received in 2019. The numbers have been released at a time when the Davis administration has made attracting greater levels of FDI central to its post-COVID economic recovery plans, yet there appears to be a disconnect with the $2bn in investments the Prime Minister says have been approved since he took office.

“FDI inflows to the SIDS in 2021 rose by 17 per cent to $3.3bn, continuing to hover around 0.2 per cent of global FDI. Reflecting differences in levels of development and factor endowments, a handful of SIDS continued to attract the bulk of inflows,” the World Investment Report said.

“The top five recipients - Maldives, Fiji, The Bahamas, Trinidad and Tobago and Mauritius, in that order - accounted for 56 per cent of FDI flows to the group. The 2021 increase represented only a partial recovery, as pre-pandemic levels were about 25 per cent higher than current levels. This reflects the multiple problems that several of these countries face resulting from the pandemic, including stagnant international tourism.

“Inflows to the 10 Caribbean SIDS rose by 4 per cent to $1.7bn, after dropping 27 per cent in 2020. In The Bahamas, inflows decreased by 60 per cent to $360m. However, there was a rise in announced greenfield projects and international project finance deals.” So-called “greenfield” projects jumped from $5m in 2020 to $43m last year, the report added, suggesting a growth rate of 750 percent for The Bahamas in this area.

Chester Cooper, deputy prime minister, and who has Cabinet responsibility for investments, did not respond to Tribune Business messages seeking comment on the World Investment Report’s findings before press time last night. However, Mr Edwards said the report’s data was no cause for panic despite FDI’s vital role in job creation and the overall Bahamian economy.

“In the first instance, we have to put everything in context,” he told Tribune Business. “2021 was 2021. We were in the midst of the pandemic, and obviously serious investment decisions were being delayed and there was a high level of uncertainty. That large drop-off is not unusual nor should it give cause for any concern.

“Now that we’ve seen the local economy opening up, the global economy bouncing back subject to the challenges it has, I think The Bahamas will get its share of foreign direct investment. When you look historically at The Bahamas’ performance in this particular area, it’s been in many instances well above average and well above its peers, so I would not have too many concerns.”

Noting The Bahamas’ third place among SIDS FDI recipients, and its leadership standing in the Caribbean ahead of Trinidad & Tobago’s $342m, Mr Edwards added: “That underlines the attractiveness of The Bahamas to FDI even in a year where there was a dramatic fall, because 60 percent is a significant drop. The Bahamas is still among the leaders.

“I think that underlines the attractiveness of the jurisdiction, and I think it underlines the potential interest we see in coming to the country. Although there are some infrastructure challenges, there’s a huge upside in coming to The Bahamas, so I don’t have a concern. The Bahamas is going to continue to be a leader in that regard. I don’t think that’s going to change.”

Pointing to the Government’s recent investment promotion trips to Qatar, Saudi Arabia and elsewhere, the ORG economic development chief said this was likely to eventually stimulate FDI and send it in The Bahamas’ direction. “We will definitely see at some point a rebound that is robust enough to take us beyond the $900m range we would have seen in the last five years,” he told this newspaper.

“That would position The Bahamas given the nascent recovery we are experiencing, and the need for greater growth, diversification and utilisation of resources. It positions the country well for a sustained recovery. The way The Bahamas is poised, and the desire and need for growth, positions us really well over the next 12-18 months in this FDI market.”

Mr Edwards added, though, that The Bahamas needs to ensure there is a “reasonable balance” between local and foreign investment so as to maximise the benefits of capital being injected into the economy through the empowerment of Bahamian entrepreneurs.

And he also urged the Government and its investment agencies, especially the proposed Invest Bahamas, to “be very strategic in the areas they pursue”. Rather than the previous narrow focus on tourism, Mr Edwards said The Bahamas needed to target value-added, high-margin industries that can provide jobs and spin-off opportunities, while also diversifying the economy and developing new sources of foreign exchange.

“We know persons out there may have a great interest in tourism and the areas they see themselves operating in, but the Government has to take that a bit further,” he added. “We need to take a step back and see what The Bahamas has to give for the long-term, and areas where we can develop economies and industries.”

Using FDI to “jump start” Family Island economies and agriculture were among the strategies that could be pursued, Mr Edwards said. “It’s one thing to gain significant dollar value, but if that investment is concentrated in areas that do not filter down to Joe Public and does not result in major gains on the ground, then the country will not be better off and people will not be better off.

“Strategic targeting is the way to go. I really think that when we look at The Bahamas in the context of the Caribbean or the context of SIDS, we must start to readily accept there is something special about it from an FDI perspective. Persons are going to come. That attractiveness is a good thing, but it can be a negative long-term if it attracts investment in concentrated areas.”

Mr Edwards said more strategic FDI targeting could also reduce pressure on the amount of tax breaks and other incentives that The Bahamas currently grants to investors. “Throw money at areas that are lagging and need development, so you can be more strategic in fiscal policy and more strategic in jump starting economic activity outside New Providence, maybe Grand Bahama and Abaco to a lesser extent,” he added.

“The upside is exciting and a glowing opportunity. If our strategy is good, the country can gain over the medium to long-term.”


Maximilianotto 8 months ago

Where are the $2 bn FDI stated by the PM? Hot air as always. Remember PM Christie’s Chiidren Bay project? Grandchildren.


JokeyJack 8 months ago

Nobody gonna invest in FPO until we have an airport. A shack sitting next to a long road, ain't gonna cut it.


Maximilianotto 8 months ago

Oooooooh did you miss the fantastic Our Lucaya sale? The next disaster - wait for the disclosure of the hundred millions gifts to the buyers….if the deal ever happens. Chester Cooper said September.Watch out for explanation of his failure.


tribanon 8 months ago

Saw his photo and ZZZZZZZzzzzzzz........


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