Introduction, Objective, Process
The Present Situation
Overseas Representation & Relationships with Nationals Abroad
Diaspora Promotional and Investment Roles
A. Letter of Endorsement from the Prime Minister
B. Terms of Reference
C. Draft Work Programme
D. Survey of Nationals Abroad (Questionnaire)
E. Survey of Returned Nationals (Questionnaire)
F. Copy of Letter to Overseas Missions
G. Response to Survey of Nationals Abroad (Tabulations)
H. Response to Survey of Returned Nationals (Tabulations)
I. Verbatim Comments from Nationals Abroad
J. Verbatim Comments from Returned Nationals
K. Submission from Dominica Association - Vancouver, B.C.
L. Draft Development Programming Concept
M. Comparison of OECS Overseas Representation(Tourism Offices)
N. Tabular Summary of Diaspora Report Recommendations
Related Reference Papers
Diaspora Committee Site
PART 4. DIASPORA PROMOTIONAL AND INVESTMENT ROLES
4.1. The Investment Environment
As part of the Draft Diaspora Policy Paper, it was decided to undertake an exploratory investigation into what functions might be undertaken by nationals overseas whether as private individuals, or as designated promoters or through overseas missions in generating interest among foreign investors in Dominica and similar jurisdictions. Candid discussions were held with a number of reputable business persons in Canada, some of whom had actually been to Dominica, others had been to one or more of the Organization of Eastern Caribbean States (OECS), and still others had investment involvements in small tropical micro-states, not dissimilar in their development challenges as those confronting Dominica. Those persons have contributed their ideas under no commitment to invest in Dominica, but have agreed to share their knowledge and experience in the hope of assisting the Dominica - Diaspora initiative.
Most discussions start with the premise that we are moving to a world without borders for transfers of investment, technology, skills and even human resources. This is typified by the concept of "business at the speed of thought". Investors are no longer willing to be kept waiting in ante-rooms until ministers deign to grant them audience. They cannot afford a six-months turn-around time on requests for simple information. They are unwilling to be held hostage to irresponsible industrial action when the authorities vacillate because of political repercussions. Plant and machinery are often the least cost component of investment and will seldom be the determinant of whether an investor stays or goes. Transactions cost, the cost of actually doing business, the cost of delivery, of meeting deadlines, of linkages with complementary products, of market promotion are much greater factors in deciding to invest, in success or failure.
A company, which chooses to locate its operation far from high consumption areas, in economically challenged jurisdictions, with weak or bureaucratic regulatory regimes may do so for a variety of reasons. This might include factors such as low wages, abundant labour supply, available technical skills, modern ports and airports, excellent access to the electronic highway. For some investments, it may be for reasons of unique natural endowment, low expense and high exposure. The ways in which these elements come together and are packaged to create a saleable location are as much a personality fit as they are an economic fit. People and business must feel comfortable with each other and that relationship cannot be taken for granted. When that confidence exists, success is the result of a combined willingness to exercise initiatives, to push the envelope, to be innovative, to run ahead of the pack. In a fast-paced, technologically driven world, the current becomes dated overnight and no one wants to be caught in the doldrums because of slowness in responding to change.
4.2. A Minimum Information/Delivery System
Microstates like Dominica have limited resources and those that they have must be intelligently utilized. Decisions pertaining to the best options for use of resources may not be the best decisions, if they are made only within the context of nationals resident at home. The existence of a widely dispersed Diaspora some of whom are located within some of the major metropolitan centres of the world allows for a more comprehensive pursuit of choices and for harnessing their own and other resources towards an appropriate pattern of growth. The issue then becomes, how can these energies be harnessed and put to use in a logical and functional manner. We have made the following assumptions:
4.3. A Pragmatic Framework
The preparation and formal adoption of a cogent and coherent development plan is essential for a responsible approach to economic transformation and sustainable growth. Without it, any proposal to undertake large scale development projects within small micro-states like Dominica is adventurist, foolhardy, ill-conceived or a combination of all three. By definition, micro-states do not have the luxury of size, extensive resources, surplus skills. Small failures reverberate with disastrous effects throughout the economy and society. Miscalculations are not easily corrected. Swift recourse to redundancies or back-up systems is impossible. Environmental damages even on a small scale may be catastrophic and long-lasting.
On another level, because of limited resources, it is essential that whenever investment (private or public) occurs, there should be an effort to derive the maximum spin-off benefits whether through vertical or horizontal integration. For example, the discarded pith from pressed sugarcane could be the basis for the manufacture of ceiling material (vertical integration). With two large hotels in place, a golf course may become feasible (horizontal integration). Without a plan which sets out the framework for similar types of cooperation and integration, together with necessary incentives, potential opportunities might never be realized. Worst yet, private decisions in a financially-strapped economy might even work at cross-purposes with each other!
In our discussions and attempts to discover a minimum acceptable framework we have come up with an illustrative context such as described above. In an attempt to take the discussion one step further and to see how this might translate on-the-ground format, a Draft Programming Concept has been tested which yielded sample results as demonstrated in Appendix L. An approach such as is illustrated provides an information base upon which trade, investment and promotion officers in consular offices overseas can properly market the country, can respond to common and relevant enquiries, can made presentations to interest groups. Nationals abroad can use it for making their own investment decisions and for approaching third parties to do the same.
4.4. Direct Diaspora Investment
It has commonly been assumed that nationals abroad are a ready, willing and able source of development capital and charitable donations that aid development at home. Further assumptions are that this capacity increases, the longer the national remains overseas and establishes him/her self in the adopted country. These assumptions must also take into account that the willingness and ability to transfer funds from secure and profitable portfolios in metropolitan countries to speculative, unstable and low-yielding ventures overseas may decrease as linkages with the homeland fade (parents pass away), and as second generation offspring consolidate their ties to the new country of residence.
4.5. Questionnaire Indicators
Some of these indications may tentatively be drawn from the survey conducted of nationals abroad, with strong qualifications placed on the definitiveness of these conclusions because of the small sample size. Of all respondents, the greatest proportion of emigrants who had emigrated earliest were Dominicans resident in Canada, 41% of whom had emigrated in the 1951 - 1970 period. During 1971 - 1990, 91% of the respondents had emigrated. This is in contrast to 17% and 54% respectively for their counterparts in the USA, and 20% and 48% respectively for Dominicans in the UK. (Attachment 3, Q1). Of the respondents in Canada, 91% had full citizenship of their new country, and this national group indicated the lowest intention to return home to settle at 5% (Q15), although they indicated the greatest willingness to volunteer their services (68% (Q18). Also, the responses in Q10 show that Dominicans in Canada made the lowest level of contribution to supporting family members at home in 2003, whether expressed in numbers or monetary value (Q11).
In contrast, the responses suggest that Dominicans resident in the UK nurture a greater affinity for Dominica, and a greater desire to return home, notwithstanding a relatively long period of residence abroad. Forty-eight percent (48%) of respondents had emigrated in the 1951 - 1990 period. Though relatively well-settled, 87% having UK citizenship, and having attained high employment and occupational levels (Q25), their high sense of home is demonstrated by strong bonding of various kinds (67%), knowledge and use of consular services (87% and 53% respectively), and a strong support for relatives at home (73%, Q10).
Somewhere in-between the two, the responses from Dominicans resident in the USA suggest relatively newer emigrants overall, with the lowest citizenship rates (54%, Q2). However, they have the highest proportion of professionals, moderate levels of financial support for relatives at home (50%,Q11), and the highest intention to subscribe to a possible bond offer, 75% in Q12(a), despite this evidence of "doing well", the respondents in the USA indicate the highest desire to return home, for reasons not evident in the data, except perhaps for uncertain citizenship status.
Historically, Dominicans abroad have not hesitated to subscribe to share offerings in public companies at home. One needs only to review their participation in companies like Dominica Coconut Products (before its sale), Dominica Electricity Corporation (before its sale), Marpin Telecom (before its present financial difficulties), Fort Young Hotel (before its restructuring), and the National Commercial Bank (whose performance appears to be a subject for scrutiny). In all cases, these ventures were promoted on the basis of attractive returns, competitive investment, sound management practices and a responsible governmental oversight through appropriate regulations and a conducive economic climate. These promises have not been realized in all cases. From our survey responses to Q11, it is clear that the expectation of dividends from a proposed bond issue are suggestive of highly risky ventures (42% of respondents expecting a return of 5% pa and above). Therefore, it would appear that to attract substantial and sustained investment by non-resident nationals who have access to more secure and higher yielding alternatives in their hostlands, development proposals at home must assure:
From the responses received in our survey, there are indications of some capital available to be mobilized in the metropolitan countries among the non-resident nationals. It is not clear how much of these funds are savings required to address the needs of retirement years, as opposed to discretionary funds available for investment. At least in the United States and Canada, the growing costs of health care which is being off-loaded from the public system to individuals, combined with an aging first generation emigrant group is sobering. Conscious and concerted efforts have not been undertaken to involve second generation nationals in the interest of Dominica, despite the fact that they are likely to be better educated and higher income-earners than their parents. Accordingly, the answers to the Survey, Q19(a) and (b) showing an interest by 72% of second generation children in vacationing at home and a 21% interest in settling is not surprising.
4.6. Calculating Investment Potential
It has been estimated that there are roughly 150,000 adult Dominicans resident abroad. This does not include children who may have grown into adulthood and may have formed households of their own, or persons of other national groups who may be joined to Dominicans by marriage. Assuming a 33% conversion of individuals to households (50,000 households), and a willingness to invest based on a $1000 (EC) p.a. modal value from our survey (Q13), there is a likelihood of a steady and sustained investment potential of $50,000,000 conservatively assuming the investment climate previously described, and a sound conceptual and promotional approach.
This figure is not inconsistent with estimates provided by local financial institutions. It is reported that approximately $80,000,000 (EC) is transferred annually via Cable and Wireless to Dominica from nationals abroad. If this amount is assumed to include monies to support relatives at home, as well as funds for such purposes as family support, land purchase, home building and renovation etc, as well as savings, it is not unreasonable to conclude an investment potential such as we have estimated. It has also been reported that without an appeal or promotion, an estimated $4,000,000 was deposited in local institutions within the island by Dominicans abroad in 1996. By 2001, this figure had grown to $12,000,000 or at a simple averaged rate of increase of $1,500,000 pa. This rate projected would suggest a potential deposit of $16,500,000 by 2004. We conclude that these funds might more properly be intended for capital goods such as land purchase, housing renovation or new home construction, in anticipation of retirement. If so, these monies are technically not available for true investment purposes and should be subtracted from the potentially available capital leaving an estimated $33,500,000.
The fact that such funds might conceivably exist does not make it available. Much will depend on the instruments that might be used to invite investment including their degree of security and rate of return. Secondly, investors may be deterred by a local taxation regime on earnings, if that were to be similarly subject to risk of double taxation in their former host countries from which they will continue to draw their pensions and where they might be obliged to report such "foreign earnings". If relief were given locally in this respect, investment might prove more attractive.
Finally, it is not clear what is the relative appeal of pure investment over volunteering of time and skills or donations and charitable support for deserving causes and institutions on the island among non-resident nationals. These are as developmental in nature as are mega-projects since they relieve government and private local funds from having to provide them. The funds so released can then be applied to local projects. Donations to a school, hospital, fishing cooperative; instructors in nursing, computer programming, trainers in the hospitality industry; funding for a road/bridge construction, playground or sanitary convenience; books for a library, equipment for a laboratory, computers for a college are all developmental in nature provided they feed into, support and contribute to a nationally designed framework for progress. It is here that the data from the Survey indicates that Dominicans abroad are most ready and willing and able to come to the rescue. It is here that the authorities and agencies at home might urgently identify opportunities for contributions, support and service.
Go to Part 5