Guardian (Trinidad & Tobago) – Peter Christopher
Justine Powell, Assistant Vice President of Investment Management, at Sygnus at the Caribbean Community Resilience Fund launch held in Jamaica.
Earlier this year, the Caribbean Community Resilience Fund (CCRF) was announced in Barbados.
Sygnus Group, the Jamaican alternative investment company, was disclosed as the fund manager of the CCRF at the institution’s official launch on January 26, 2024.
The CCRF, which is valued at US$135 million, is a 10-year impact investment fund which aims to deploy capital into critical sectors.
These sectors included renewable energy, blue economy, sustainable housing, ICT, transport, financial services, and climate-smart agriculture. The fund features two portfolios: equity and debt (EBT).
Mere weeks after the Jamaica leg of the fund’s launch in May, Hurricane Beryl’s impact across several Caribbean states underlined the fund’s importance.
Justine Powell, assistant vice president of Investment Management, at Sygnus explained, “The CCRF was created to address some of the challenges that we face in the Caribbean, as it relates to climate and economic resilience. And it’s not just a one-country thing. It’s right across the region, we have these challenges that we have to combat. So it’s no secret that in the Caribbean, despite our size, we’re one of the more vulnerable regions in the world when it comes to climate shocks. “
She noted that Hurricane Beryl, and the looming concern that this rainy season is projected to be among the worst ever recorded. were further signs that the Caribbean is about to bear the brunt of climate change’s impact.
“It’s unfortunate, especially when you consider what we contribute in aggregate to greenhouse gas emissions and what we contribute to carbonisation relative to the globe,” she said.
“So we see the rising sea levels, we see the stronger hurricanes. We had Beryl just a few weeks ago tearing us apart. We see more frequent earthquakes. We also see rising temperatures. So many examples of how we’ve been at the forefront of the impact of climate change.”
The fund is being seen as a resource to aid Caribbean countries in diversifying their economic base and in the process give them more options to remain stable in the face of these shocks.
This reality became especially apparent during the COVID-19 pandemic when several tourism-dependent Caribbean countries were adversely affected as that sector all but ground to a halt.
“We tend to have economies that are largely dependent on a single sector. So for example, you may have a country where the economy relies heavily on tourism, or it relies heavily on agriculture. And what that means is that it makes us even more vulnerable when we have these shocks because we don’t have a diversified economy,” said Powell, in a web interview with the Business Guardian.
“The investments that we’re going to be doing, they’re going to be geared towards two main aspects: There’s going to be climate resilience, and there’s going to be economic sustainability. So that’s essentially what we’re trying to achieve with the fund.”
Powell added, “There are some targets or key sectors that we plan to deploy this capital into. For example, renewable energy is one. Climate Smart Agriculture is another one. There is ICT, there’s financial services. The blue economy is another one. Transportation is also one. So those are some of the key sectors in which we plan to deploy capital.”
T&T is poised to benefit from the CCRF along with Caricom states Jamaica, Barbados, Antigua and Barbuda, Grenada, St Lucia, Belize, Guyana, St Vincent and the Grenadines, Suriname, Dominica, St Kitts and Nevis, Bahamas, and the Dominican Republic.
Powell said T&T is already home to some of the key potential investors for the fund, and she explained the fund can also aid T&T in achieving goals with funding not connected to the energy sector.
“Based on how the fund is designed, T&T will be in a position to benefit from investments in both sub funds. Whether it’s a debt investment or equity investment, T&T is an option,” she said.
“Trinidad is more known for its large reserves in petroleum and natural gas. At the same time, they also have sustainability goals that they’re trying to meet. I know one of them is achieving 20 to 30 per cent electricity from renewable sources by 2030. They would have been a part of the Paris Agreement as well. This fund, the CCRF is actually an opportunity for Trinidad and Tobago to get closer to those sustainability goals that they have set out to achieve.”
She said some of these investments, for example, could be in wind and solar farm projects which have been timelined in T&T recently.
She added that she was particularly enthusiastic about the fund’s potential development of the blue economy, which she felt had massive potential given the region’s resources.
“When we say blue economy, we’re talking about the use of our ocean resources. So a lot of times people may think it’s limited to just fishing. But, for example, if you do marine or are in the marine industry, you will be eligible to get some of the debt capital or equity capital from the CCRF. What you find with these types of investments, the blue economy, for example, tends to be very resource intensive,” said Powell.
The CCRF represents a collaborative effort by the Caricom Development Fund (CDF), Sygnus, USAID, Cross Boundary, and the Rocky Mountain Institute (RMI) Island Energy Program. The CCRF anticipates an initial capital injection of US$20 million, comprising contributions from CDF and Sygnus.
“We have the Caricom Development Fund, which you could say is the main sponsor. What these anchor investors have done is that they have provided us with capital that we consider to be patient capital, which is capital that we consider to be concessional capital and capital that we consider to be first-loss capital,” said Powell.
“Now when they say patient capital, what we’re basically saying is that the anchor investors are so confident in the fund manager’s ability to deliver on the mandate of the fund that they’ve said, Hey, I’m going to put my capital in first, but I’m going to take my capital last.”
Powell said the CCRF was now working on getting more investors on board and had already begun talks around the Caribbean, including discussion with T&T businesses concerning investing.
“We would have been having those discussions that generally include a lot of due diligence. They want to find out who’s going to be managing the fund and what is their track record like. They want to know the team that is handling all this money on behalf of investors. In addition to that, we have been building out a very robust pipeline,” she said.
That pipeline, Powell said is currently is at about US$250 million and she assured the CCRF will look to deploy capital into investments that will serve to strengthen the Caribbean economy in the long run.
Caricom Development Fund sets up new sustainability fund
