WBG Edx Course Financing for Development March to April 2017

1. An Inter-Island Fast Ferry Service
31 March 2017

2.  The establishment of an Inter-Island Fast Ferry Service with
financing from the World Bank’s International Development
Association’s Private Sector Window (IDA PSW).
 The target audience is the constituents/citizens of the multi-
island state of St. Vincent and the Grenadines (SVG).
 Additional buy in or support is needed from the
Governments and citizens of the nearby island states of
Dominica, Grenada, St. Lucia, Barbados, and Trinidad &
Tobago since these countries will be serviced as well.
 This project fulfills Sustainable Development Goal 8 (Decent
Work and Economic Growth).
 This project also fulfills Sustainable Development Goal 9
(Industry, Innovation, and Infrastructure).

3.  There is no Inter-Island Fast Ferry Service in
the Eastern Caribbean.
 Past attempts never came to fruition or were
short lived.
 Lack of coordination between governments
 The more popular mode of transportation for
inter-island travel within the region is by air
and this is dominated by the regional airline
LIAT whose service is often unreliable and
costly.

4.  The Government of St. Vincent and the Grenadines
(GOSVG) will fulfill its role of providing a public good
which will enable the movement of people and goods, the
fostering of regional integration, and the achievement of
Sustainable Development Goals (SDGs) 8 and 9.
 The International Development Association (IDA), the
Official Aid Provider, will be able to unlock development
financing for Sustainable Development Goals (SDGs) 8 and
9.
 The Private Sector will get involved because this venture is a
business opportunity and enables the participation of
businesses in the OECS Economic Union and the CARICOM
Single Market and Economy (CSME).

5.  Official aid providers normally or historically will not
fund a project of this nature because SVG is classified
as a middle income country or has graduated. Hence,
it does not qualify for concessional loans and grants.
 The Government of SVG (GOSVG) is reluctant because
this is seen as a venture solely for the private sector to
undertake.
 The private sector is hesitant to invest because an Inter-
Island Fast Ferry Service is seen as too risky and it is
assumed that any return on investment or profits will
be too low.
 The ports are not configured properly in order to
facilitate an Inter-Island Ferry Service.

6.  The focus of the IDA is on less developed and low-income countries
but since it works in the poorest countries it offers grants and
concessional loans and it offers the least expensive forms of financing.
 SVG along with the other intended service destinations of Dominica,
Grenada, and St. Lucia, and even though they are classified as Middle
Income Countries, are deemed eligible for exceptions in order to
access concessional financing for development under the IDA.
 In other words, SVG and the others are considered to be blend
countries and not only are they eligible for IDA grants and loans but
also they are credit worthy for borrowing funds from the Bank’s
International Bank for Reconstruction and Development (IBRD).
 Since SVG and the other countries are small island developing states
they are also eligible for exceptions in order to access concessional
financing from the IDA.

7.  The IDA Private Sector Window (IDA PSW) in
December 2016 was able to raise and obtain a
commitment of US$75 billion from a coalition of
more than 60 donors and borrower governments
for projects to cover the next three years.
 The Cascading Approach being advocated by the
IDA is helpful in this process.
 The Cascading Approach prescribes that private
sector solutions are considered first, then Public
Private Partnerships, and - if the first two are not
feasible then only then – public sector solutions are
pursued.

8.  SVG through the Inter-Island Fast Ferry Project can
benefit from the IDA three pronged approach to
mobilizing resources for financing development.
These approaches are as follows:
i. To help governments create an enabling
environment for business and private investments;
ii. To continue to explore different ways of risk-
sharing with the private sector in order to align
opportunity to their risk appetite;
iii. To support the development of domestic capital
and of instruments suitable to institutional
investors, so that a country can mobilize domestic
resources and foreign investments

9.  The funding from the IDA can pay for the
procurement of the ships
 The funding from the IDA can pay for the
configuration of the ports in the various islands
in order to provide Fast Ferry Services
 The funding from the IDA can pay for any
technical studies such as a proper cost benefit
analysis; environmental impact assessments;
the harmonization of laws, regulations, and
administrative mechanisms across the islands.

10.  The population of SVG is 109, 991 and the total population
of SVG, Barbados, Dominica, Grenada, St. Lucia, and
Trinidad & Tobago is 1, 948, 353 (1.9 million people)
 Many regular weekends and even holiday weekends along
with various festivals, carnivals, regattas, conferences,
meetings, sports activities and other events within the
various islands are opportunities for people to travel often.
 Easier to foster regional integration and specifically to
benefit from the OECS Economic Union and the CSME if
people travel frequently intra-regionally.
 Ferry Operators in SVG are exempted from Import Duty on
purchasing a ship, and exempted from taxes on passengers
and cargo.
 Ferries are cheaper than flying.

11. Let us go forward with this project, our people need this
service.