The Ministry of Telecommunications, Science, Technology and Industry is the principal institution responsible for shaping Government’s policy in respect of the country’s industrial development. Through the Industry Division, it monitors and assesses the national, regional and international business environment, so as to interpret their influence on national efforts and inform policy decision accordingly.
The economy of St. Vincent and the Grenadines has undergone structural changes since the mid 1990s. The contribution of agriculture to Gross Domestic Product (GDP) declined significantly after 1993 mainly as a result of price and marketing problems faced by the Banana Industry, in addition to the decline in the pound sterling resulting in lower revenue for banana exports. The advent of the rules based World Trade Organisation (WTO)
with doctrines of trade liberalization and the end of protectionism, meant that the country’s major earner of foreign exchange, bananas, which was sold in a protected market in the United Kingdom; now faced competition in price and quality from dollar bananas in Latin America.
Manufacturing, which was never a major contributor to begin with, but nevertheless provided much needed employment in enclave assembly-type industries, declined further as international market conditions for the products and lack of competitiveness led to the closure of several industries at the Campden Park Industrial Estate.
During the latter half of the 1990s the tourism sector began to emerge as both a major employer and earner of foreign exchange. The Hotels Aid Act of 1989 no doubt provided the fillip for this growth. Tax-free importation of material for upgrading of plant and services was a major factor in this development.
By the end of the 1990s it became clear that economic diversification must be pursued as a policy initiative in both the medium and long term. It was seen that the country’s comparative advantage would lie in the area of services and that the non-tourism services sector must play a leading role. The sector was targeted to provide jobs and government revenue. Financial and telecommunication services were targeted to lead the diversification thrust.
The telecommunications sector had its own problems. The monopoly provider, Cable and Wireless, had an exclusive licence for most services up to June 2004. Although high capital expenditure in Transatlantic cabling and other systems development led to an increase in the number of phone lines and the introduction of international direct dialling using the touch tone telephone, competition, which would have driven prices close to marginal cost, was absent. Rates, especially for international calls, were expensive and contributed to the high cost of investing in the country. Teledensity outside the main population centre, i.e. the southeast to the southwest corridor, remained low.
In terms of computer access, although government instituted a policy where taxes on computers were removed, the number of homes having computers and internet connection per thousand population remained low. Jobs created in information processing and information technology never surpassed 500 at any time.
Prior to April 2001, there was no Government agency that was specifically responsible for information communication technology, although matters pertaining to science and technology, broadly speaking, and telecommunications, mainly fixed and mobile telephony fell under the mandate of different ministries. By extension, there were no plans for the development of the ICT infrastructure and capacity building within the sector. Network development was the prerogative of the monopoly provider and private tutors as well as the Training Division of the Service Commissions Department provided adhoc and uncoordinated training in various software applications.
The Information and Communication Technologies (ICTs), in general, and e-Business, in particular, can bring very important benefits and opportunities for enterprise, and as a matter of fact, for whole economies in the developing world. ICTs have already been and will continue to affect the economic relations between and within countries and companies. The biggest issue and fear here is not so much the lack of knowledge and expertise in introducing and engaging in it, but rather of not engaging in it.
The Information Communication Technology sector in St. Vincent and the Grenadines has been marred by slow growth. This has been partly due to little understanding of the industry, generally underdeveloped infrastructure, and lack of experience, which may, to some extent, explain the hesitancy to take risks. Notwithstanding those retarding factors, there are exciting prospects for job
creation and revenue generation. However, before St. Vincent and the Grenadines can fully maximize the benefits of ICT, it needs to develop the technological capacity and build capability specifically through developing the human resource.
The diverse challenges and complexities surrounding traditional industries such as agriculture and manufacturing make it mandatory for small states like St. Vincent and the Grenadines to explore all possible options, including the development of non traditional services, and thereby augment their competitive position. The decline in traditional industries has created numerous problems, which has engendered a number of negative economic and social effects. Among the social ills is unemployment, particularly among young people. However, one area that can provide tremendous employment opportunities is Information Communication Technology.
ICTs if correctly utilised for development can be major instruments to ensuring future sustainable economic growth. The deep impact of ICTs on the economy of St. Vincent and the Grenadines will in time improve economic efficiency, competitiveness and profitability, (for those engaging in it), and therefore result in the development of the information society. E-Business and the new emerging digital technologies and services can be real tools for development and help improve the livelihood of people, by linking up remote regions and bringing together scientists, administrators, health professionals, managers and people in projects and programmes to promote economic and social development. While success with e-commerce can lead to growth for an economy, utilisation and power of e-commerce and ICT can be utilised for addressing the basic issues of poverty reduction, healthcare, universal education and good governance.
The services sector in recent years has emerged as the leading foreign exchange earner and contributor to GDP and is seen as the new engine of economic growth. Compared to agriculture, ICT is likely to be more labor intensive, exciting and stimulating and attractive to young people. At the same time, it is an area where a large number of jobs can be created to arrest the unemployment problem.
With the streamlining of the Banana Industry and its future uncertainty, Government is therefore forging ahead with its economic diversification programme so as to absorb the excess human capital created in the economy due to the multiplier effect of the decline in the Banana Industry. One area that provides an opportunity for economic diversification is Information Communication Technology (ICT).
While the contributions from manufacturing and the other traditional sectors have been continually declining, the contributions from the services sector, on the other hand, have been significantly increasing so much so that it has now been recognised that the opportunities offered by this sector are endless. The services sector while echoing the diversification emphasis and thrust of the Government, is at the same time seen as the new engine of growth that will propel the wheels of development here in St. Vincent and the Grenadines as we journey along the roads of globalization and trade liberalization.
A sectoral analysis of the contributions to GDP for the period 1995 to 2001 clearly indicates that services are the leading contributor to GDP and that they play a major role in the economic and social development of St. Vincent and the Grenadines.
Since the last budgetary exercise, available data form the fourth quarter of 2001 and onwards indicates that the pace of economic activity in St. Vincent and the Grenadines, appears to have remained slow - consequent upon the regional impact of the events of September 11th in the USA.
This assessment was based on declines in the agricultural and construction sectors, a relatively flat performance in manufacturing and mixed performance in the tourism industry and
other non-tourism services.
Central Government fiscal operations generated an overall deficit of 5.2 million dollars. International transactions between St. Vincent and the rest of the world resulted in a visible trade deficit of 88.4 million. According to the ECCB, total monetary liabilities of the banking system grew by 0.5% to EC$654.9 million, while commercial bank liquidity increased during the period under review.
This Ministry has observed mixed performance in the manufacturing sector during the same period. Increases are reported in the production of flour and rice of 7% and 23.4%, respectively. While contractions were reported in the production of beer, malta, and feeds of 2%, and 1.1%, respectively.
Over the period 2001/2002, value added in the manufacturing sector appeared to have increased, as expansions were recorded in three of the major products. Output of flour grew by 15.4% while output of feed, beer and malta grew by 1%. A contraction of 17.2% was reported in rice production, due to competition on the local and regional markets from imports of the other MDC CARICOM members.
