Housing for students. Solar and wind power. Loans for small and medium-sized businesses. Projects like these in the Caribbean may seem very different on the surface, but they have one thing in common: IDB Invest.
The private sector arm of the Inter-American Development Bank, IDB Invest is increasingly the go-to institution for funding major projects in the Caribbean.
“We are trying to bring to the table a package that goes way above and beyond what typical banks are able to provide in terms of financial products, knowledge and advice services,” says Elizabeth Robberechts, IDB Invest’s lead investment officer.
IDB Invest, which wins the award for Infrastructure Finance Bank of the Year: Caribbean, works in nine countries to help mobilize capital for infrastructure projects. As an institution, the goal is to earmark a minimum of 10% of its resources for the region.
Robberechts says the group’s approach helps catalyze investment. The bank is willing to go where traditional commercial banks are not. “We take risks that other banks do not want to take, providing long-term tenors and offering blended finance resources with other donors to help incentive investment,” she says.
IDB Invest’s work in the Caribbean should likely increase over the coming year years in part thanks to its $3.5 billion capital increase approved by its shareholder countries in March.
The region continues to bounce back from the huge blow it received from the Covid-19 pandemic that slammed the tourism industry, the economic mainstay of most of the small and island nations in the Caribbean.
It also needs to close major gaps in many sectors, including energy, transportation and water/sanitation infrastructure. And it has to work on making infrastructure more resilient, which was again demonstrated this year in the wake of Hurricane Beryl in July. The category 5 storm knocked out power for days in Jamaica and destroyed crops there, potentially leading to food shortages. According to the United Nations, Beryl completely flattened all housing on Grenada’s Carriacou island.
Among IDB Invest’s stand-out achievements over the past year was arranging financing for AES, a global energy company, in the Dominican Republic for a portfolio of six renewable energy plants. The development bank mobilized more than 20 other banks for a $368 million A/B loan. It is the largest loan for renewable energy to date in the Caribbean.
Another ground-breaking project was in Jamaica, where IDB Invest has been involved in the country’s first public-private partnership for a water and sanitation project. Another large loan in Jamaica, for $100 million, was for the Jamaica Public Service Company to improve power transmission and distribution. CIBC Caribbean, the co-arranger, mobilized $50 million for the Jamaica financing.
Over the past year, IDB Invest has helped structure a $50 million loan for ANSA Merchant Bank in Trinidad & Tobago to on-loan to small and medium-sized enterprises, $45 million for real estate development in Guyana and $40 million for a solar energy plant in Barbados.
It has made loans for university housing in Guyana, a road in Suriname and for improving port services in Barbados.
“There are many efforts to find creative ways to bring in the private sector to help fund investment. This is where IDB Invest has played a role, supporting the goal to fill infrastructure gaps,” says Robberechts. “There is still a long way to go, but we have made progress.”