Policy paper

UK–Caribbean region development partnership summary, July 2023

Published 17 July 2023

Introduction

The International Development Strategy places development at the heart of the UK’s foreign policy. It sets out a new approach to development, anchored in patient, long-term partnerships tailored to the needs of the countries we work with, built on mutual accountability and transparency. This approach goes beyond aid and brings the combined power of the UK’s global economic, scientific, security and diplomatic strengths to our development partnerships. Our 4 priorities are to deliver honest, reliable investment, provide women and girls with the freedom they need to succeed, step up our life-saving humanitarian work, and take forward our work on climate change, nature and global health. The Integrated Review Refresh reiterates that sustainable development is central to UK foreign policy and sets out how the UK will go further and faster on development to reduce poverty and reinvigorate progress towards the Sustainable Development Goals. This Development Partnership Summary details how the International Development Strategy and Integrated Review Refresh will be put into practice in the Caribbean.

Regional context

The Caribbean is an important partner for the UK – we share history, values and have close Commonwealth links. There is a large Caribbean diaspora in the UK and a significant number of British nationals visit, as well as reside in, the Caribbean. Although small in size and population, countries in this region have a significant voice on global issues and in international organisations, including in the United Nations. We have shared interests in areas such as tackling climate change, combatting crime and violence and fostering trade and inclusive economic development, including for women and girls and people with disabilities.

As Small Island Developing States, most countries in the Caribbean face structural constraints related to their small size, as well as high vulnerability to climate change and natural disasters. Although many countries are classified as middle-income (on a GNI per capita basis), many suffer from high levels of debt, poor business environments, weak infrastructure, high energy costs, a heavy reliance on imports funded by a narrow range of exports and extremely limited state capability. These long-term barriers to growth and resilience were heightened by the COVID-19 shock, due to a halt in tourism which forms the backbone of most Caribbean economies.

The Caribbean is amongst the most disaster-prone regions in the world, in terms of both disaster frequency and intensity. Between 1998 to 2017, the ten countries in the world most impacted by disasters (in terms of economic losses as a % of GDP) were all in the Caribbean.  The worsening impact from extreme weather events caused by climate change, coupled with sea level rise, threatens coastal infrastructure where most of the Caribbean population lives and works. Biodiversity and ecosystem changes, as well as heightened risks for the poorest and most marginalised groups, are key concerns. Many Caribbean countries have recently committed to net zero greenhouse gas emissions, and conservation of 30% of land and water resources by 2030, which provides opportunities for nascent blue and green economy growth.

Though limited data exists, extreme poverty levels in the region are lower than for other developing regions. Nonetheless, poverty remains a serious challenge and particular groups (such as female-headed households, rural populations and people with disabilities) remain over-represented among the poor. Food insecurity levels are rising from pre-pandemic levels that were already high and now more than half of the population in the region is food insecure. Rising prices have been further exacerbated by Russia’s war on Ukraine. Although the Caribbean performs relatively well in terms of health and education, circumstances vary by country. There are more acute gaps in Haiti, Jamaica, Guyana and Belize. Challenges faced by the region risk undermining gains made and migration and related ‘brain drain’ poses a problem.

Crime and violence (including gender-based violence) are a serious issue across the region, fuelled by gang activity and a proliferation of illegal firearms. A high involvement of young men aged 15 to 29, as both perpetrators and victims, poses a major challenge. Specifically, in Jamaica and Haiti, insecurity is the biggest barrier to development. Haiti is the poorest country in the Western Hemisphere, with a break down in rule of law and people lacking access to basic services and human rights also holding serious implications for the wider security of the region.

The UK’s development offer with the Caribbean

The UK is proud to support the Caribbean with its ambitions to become increasingly resilient, prosperous, inclusive, and safe. The UK is the lead bilateral donor to the English-speaking ODA-eligible Commonwealth countries (Belize, Dominica, Grenada, Guyana, Jamaica, Saint Lucia and Saint Vincent and the Grenadines). We work closely with a wide range of donors, such as Canada, the US and EU. The UK has a strong development track record in the region – we have helped to improve disaster risk management and response across the region, strengthen public financial management and develop a more sustainable energy mix. Our work has helped to diversify and expand Caribbean exports, develop skills and opportunities, in particular for youth, women and disadvantaged groups; tackle serious and organized crime, corruption and violence and reform the criminal justice system (particularly in Jamaica).

The UK was instrumental in the establishment of the Caribbean Catastrophe Risk Insurance Facility, the first ever regional parametric insurance facility (which pays out based upon trigger events), and the Climate Resilient Execution Agency of Dominica, which has led Dominica’s recovery and reconstruction following Hurricane Maria. The UK has upgraded over 50 health facilities in the region to be greener and more climate resilient. The UK also provided major support for humanitarian responses following Hurricanes Maria and Irma which devastated several Caribbean countries in 2017, Hurricane Dorian which struck the Bahamas in 2019, the volcanic eruption in Saint Vincent and earthquake in Haiti in 2021 as well as Hurricane Lisa which hit Belize in 2022. On the global level, the UK has helped to raise the profile of the unique challenges faced by Small Island Developing States and ensure greater recognition of their climate vulnerabilities.

In order to deliver the International Development Strategy, the UK will build further long-term partnerships tailored to the needs of countries. We will prioritise systemic reforms wherever possible. Where we need significant breadth and depth of expertise combined with concessional finance, we will work with and through multilateral development banks of which the UK is a shareholder, namely the Caribbean Development Bank, World Bank Group and Inter-American Development Bank. Where we need to help build coalitions to advance development priorities at a global or regional level, we will use UK convening power and work closely with bilateral partners and regional organisations such as the Caribbean Community and Organization of Eastern Caribbean States. We will also build partnerships with UK-based academia, research institutions and business. The UK Government has the largest diplomatic footprint across the region with seven British High Commissions and four Resident British Commissions. We have staff with a range of development expertise based in Barbados, Belize, Guyana and Jamaica.

Our specific priority areas for 2023 to 2025 are that we will:

Build critical climate resilient, socially inclusive, economic infrastructure

This includes building roads, ports, energy networks, agricultural systems and water supply in eight countries and one UK Overseas Territory. To do so, we will continue to work through the Caribbean Development Bank and spend approximately £190 million in International Climate Finance. Much of this infrastructure will help open up markets, unlock economic growth and ultimately help realise greater benefits from trade, including from the UK-CARIFORUM (Caribbean Forum) Economic Partnership Agreement. We will share lessons learnt (including from other UK supported initiatives such as ‘SMART’ (safer and greener) health facilities) to improve standards for infrastructure design and implementation across the region.

Support countries in the region with sustainable debt management

This will contribute to greater macroeconomic stability. Nine out of the twelve English-speaking Caribbean countries currently have above 70% debt-to-GDP ratios. Underlying structural constraints (low revenues, inefficient public expenditure and limited private sector development) must be tackled to ensure long run debt sustainability. Our work through the International Monetary Fund’s Caribbean Regional Technical Assistance Centre will help countries strengthen human and institutional capacity to design and implement sound macroeconomic policies to promote growth and reduce poverty.

Accelerate the transition towards renewable energy in the region

90% of electricity in the region is generated from imported fossil fuels. Dominica, Montserrat, Saint Vincent and Saint Lucia are at varying stages of geothermal energy exploration, thanks to UK investment, and there is potential for offshore wind, for example, in Trinidad & Tobago, Jamaica and the Eastern Caribbean. However, countries need to cooperate regionally to secure the best prices and make the region energy secure. We will explore with British International Investment, multilateral development banks and the Caribbean Centre for Renewable Energy and Energy Efficiency ways to expand renewable energy finance, including through the use of Special Drawing Rights and a potential UK guarantee. As the UK is a global leader in offshore wind, the Department for Energy Security and Net Zero will lead on research and the Department for Business and Trade will promote business solutions, including working with UK Export Finance.

Support governments and locally accredited bodies to access more climate finance from global funds

Global funds include the Green Climate Fund, Global Environment Facility and Blue Planet Fund) and to explore and replicate innovative uses of natural resources to leverage climate finance, such as through blue bonds, carbon offsets, debt-for-nature swaps and other approaches such as the Eastern Caribbean Central Bank’s green finance facility. The UK co-chairs the Taskforce on Access to Climate Finance, with Jamaica as a pioneer country, and we will explore further partnerships with the City of London.

Help countries in the region better prepare for natural disasters

For every £1 invested in disaster preparedness up to £10 can be saved in recovery costs. The World Bank and Inter-American Development Bank have developed a range of disaster risk finance instruments, however, countries need help to navigate them. The UK has significant expertise in this area, not least through the Centre for Disaster Protection, an independent organisation in London wholly funded by the UK Foreign, Commonwealth and Development Office. This year the UK, together with the Inter-American Development Bank, are supporting the creation of a new Caribbean Water Utilities Insurance Company to fund repairs and ensure critical service continuity in the aftermath of natural disasters.

Work for reform of the global financial system to better address the needs of the region

We will work with governments and other partners on key proposals such as those set out in the Bridgetown Initiative, spearheaded by Barbados Prime Minister Mottley. We support recommendations from the G20 Capital Adequacy Framework Review and, through the Resilient and Sustainable Islands Initiative, ways to improve the conditions under which Small Island Developing States can achieve financial sustainability, environmental justice and equitable societies.

Continue to lead global efforts to crack down on lost and stolen money and help counter corruption and illicit finance

This is critical to effectively tackling serious and organised crime and insecurity in the region and has a wide range of benefits for the region and UK. With the UK National Crime Agency, Home Office and Foreign, Commonwealth and Development Office support, Jamaica is making progress on these issues and is sharing those lessons with the rest of the region. Support is also being provided to enhance broader regional cooperation on these issues, to Eastern Caribbean countries on criminal justice reform (in partnership with the US), and to other countries on a bilateral basis where specific issues arise that the UK is well-placed to help address.

Support our Caribbean partners in addressing key challenges facing women and girls

In line with the UK International Women and Girls Strategy 2023 to 2030, we will promote women’s economic empowerment and tackle violence. Through our work on trade and economic development, we will work to maximise opportunities and positive outcomes for women and girls; and we will continue to promote gender equality in the design and delivery of our projects. We will also support research and analysis on effective approaches to address gender-based violence in the region, building on global evidence and tailoring it to the Caribbean context. In Jamaica, we will directly provide the Government with targeted capacity building support for violence prevention.

Finally, the UK’s development offer with the Caribbean will remain flexible and responsive. Given the serious and worsening situation in Haiti and its regional impact, in addition to the UK’s support through multilaterals, we will explore providing more direct humanitarian and/or development assistance working in support of Caribbean and other international partners. We will also scope opportunities for where the UK can help tackle the increasing challenge posed by food insecurity in the region.

Who we work with

We work with a wide range of partners starting with the people most in need, their communities, and diaspora, the private sector, civil society, governments and multilateral and regional organisations. We provide non-budget-support financial aid directly to the Government of Jamaica for security and justice reforms and, until recently, the Government of Dominica for its successful Climate Resilient Execution Agency of Dominica initiative. We work with and through a range of multilateral organisations such as the Caribbean Development Bank, World Bank Group, Inter-American Development Bank, International Monetary Fund and United Nations. We work with civil society, particularly around values, human rights and inclusivity. Our main regional partners include the Caribbean Community Climate Change Centre, Caribbean Disaster Emergency Management Agency, Caribbean Catastrophe Risk Insurance Facility, Caribbean Centre for Renewable Energy and Energy Efficiency, Caribbean Community and Organization of Eastern Caribbean States. Lastly, the UK is also a major contributor to global funds and initiatives, such as the Green Climate Fund, Global Environment Facility, Blue Planet Fund, Early Warnings for All, Coalition for Disaster Resilient Infrastructure, Coalition for Climate Resilient Investment, Global Shield, Risk-Informed Early Action Partnership and the Pilot Programme for Climate Resilience.

Key programmes

The UK currently has 6 bilateral ODA programmes in the Caribbean. One of them, the UK Caribbean Infrastructure Fund, is our flagship initiative comprising approximately £350 million (80% of our bilateral portfolio) and 4 of the 6 programmes will come to an end during the period from 2023 to 2025.

1. UK Caribbean Infrastructure Fund

£350 million from 2016 to 2026. Building climate resilient, socially inclusive, infrastructure across eight Caribbean countries and one UK Overseas Territory.

2. Caribbean Economic Development Programme

£20 million from 2016 to 2024 – supporting countries to strengthen public financial management systems and improve their business climate.

3. Renewable energy and energy efficiency

£19.3 million from 2015 to 2023. Increasing the use of renewable energy and energy efficiency measures in the Eastern Caribbean.

4. Serious Organised Crime and Anti-Corruption

£17.25 million from 2020 to 2025. Building capability of the Government of Jamaica to combat grand corruption and serious organised crime.

5. Violence Prevention Partnership

£15 million from 2023 to 29. Supporting Government of Jamaica to tackle violence, particularly against women and girls, and to better protect those at risk.

6. Youth Skills for Economic Growth

£10 million from 2016 to 2023. Improving the quality, reach and sustainability of technical and vocational education in the Eastern Caribbean.

The UK also has in place an arrangement with the Caribbean Disaster Emergency Management Agency to quickly deploy emergency response teams if needed.

In addition, the region benefits from a range of UK centrally managed initiatives including, but not limited to:

Global Risk Financing Facility

£140 million UK contribution (global) from 2019 to 2027. Testing and scaling up disaster risk finance instruments, such as catastrophe bonds.

Small Island Developing States capacity and resilience

£40 million from 2021 to 2026. Improving the capacity of these states to draw down climate and wider concessional funding.

Sustainable Blue Economies

£36 million from 2022 to 2027. Part of the Blue Planet Fund, supporting Small Island Developing States with ocean management and nature-based solutions.

Forest Governance, Markets and Climate Programme

£281 million from 2019 to 2023. Developing partnerships to sustain forests that deliver for poor people and build climate resilience.

Taskforce on Access to Climate Finance

Co-chaired by the UK, increasing support for countries to adapt to climate change, with Jamaica as a pioneer country receiving £7 million.

Financial information

Initial allocations have been set internally to deliver the priorities set out in the International Development Strategy (May 2022) and the Integrated Review Refresh 2023, based on the FCDO’s Spending Review 2021 settlement.

The department’s spending plans for the period 2022-23 to 2024-25 have been revisited to ensure His Majesty’s Government continues to spend around 0.5% of Gross National Income (GNI) on ODA. This was in the context of the significant and unexpected costs incurred to support the people of Ukraine and Afghanistan escape oppression and conflict and find refuge in the UK, and others seeking asylum. The Government provided additional resources of £1 billion in 2022 to 2023 and £1.5 billion in 2023 to 2024 to help meet these unanticipated costs. The Government remains committed to returning ODA spending to 0.7% of GNI when the fiscal situation allows, in line with the approach confirmed by the House of Commons in July 2021.

The CDPSs include the breakdown of programme budgets allocated to individual countries for 2023 to 2024 and 2024 to 2025. These allocations are indicative and subject to revision as, by its nature, the department’s work is dynamic. Programme allocations are continually reviewed to respond to changing global needs, including humanitarian crises, fluctuations in GNI and other ODA allocation decisions.

These figures do not reflect the full range of UK ODA spending in each individual country/region. This is because they do not include spend delivered through core contributions to multilateral organisations - and country allocations do not include regional programmes delivered by the FCDO’s central departments. Other UK Government departments also spend a large amount of ODA overseas. Details of ODA spent by other UK government departments can be found in their Annual Report and Accounts and the Statistics for International Development.

FCDO Official Development Assistance allocation

The UK Foreign, Commonwealth and Development Office Caribbean Regional ODA commitment is £430 million. Expected spend for 2023 to 2024 and 2024 to 2025 in line with International Development Strategy priority areas is as follows. In addition to this, in 2023 to 2024 funds previously deposited for the UK Caribbean Infrastructure Fund will be drawn down and spent.

Allocated ODA budget for financial year 2023 to 2024	Indicative ODA budget for financial year 2024 to 2025
£16,315,462	£ 49,000,000

Breakdown by Theme: 2023 to 2024

Figure 1. Breakdown by Theme from 2023 to 2024: Climate, Nature and Health, 77%; Investment, 15%; Women and Girls, 8%