If St Vincent and the Grenadines (SVG) is to recover from the economic blows of the past two years, there is a need for the implementation of a massive capital project in the short term.
And the EC$600 million Port Modernisation Project earmarked for Rose Place, Kingstown fits the bill for generating this kind of transformation of the economy, a Vincentian professor has said.
“Ideally, a place like St Vincent needs a massive capital project or two. A massive capital project will have two positive effects,” said professor, Justin Robinson, pro vice-chancellor of the Board of Undergraduate Studies at The University of The West Indies.
“ One, there’s an instant shot to the economy and secondly, if it’s a project that builds long term capacity, it gives you future growth,” he said on the April 17 edition of WEFM’s Issue at Hand programme.
Robinson, who specialises in several areas of finance, including financial risk management and capital markets in developing countries, said that this country and its economic managers are facing “the single largest economic challenge in modern Vincentian economic history”.
This is as a result of the shocks felt in 2020 and 2021 caused by the COVID-19 pandemic and the volcanic eruption, which he said have wiped out several years of economic growth.
The financial economist, commenting on SVG’s need for a major capital project, said the Port Modernisation exercise is exactly the kind of project needed to kick-start a response big enough to tackle the country’s current economic challenges.
Agreements for this project were signed on May 4 between the government and Sellhorn Engineering based in Germany and the Canadian firm, Aecon Construction Group Inc.
A source close to the project told SEARCHLIGHT that the contract signed between Aecon Construction Group Inc and the government is valued at approximately US$170.4 million or EC$460.07 million.
Additionally, the contract signed with Sellhorn Engineering, the company tasked with supervising the overall project, is valued at EC$10.7 million.
Neither of the figures outlined in these contracts include provisioning of new equipment for the new port.
And this equipment for port operation is estimated to cost somewhere in the region of US$20 million, which amounts to just over EC$54 million.
The overall EC$600 million earmarked for this capital venture also includes other aspects such as the Lowmans housing project for the relocation of residents of Rose Place, where the project will be located.
When the keys were handed over in February this year, it was reported that the housing project cost approximately EC$4.8million.
In addition to what will be spent directly on the project, SEARCHLIGHT was told that there is likely to be a significant generation of economic activity over the 24-month period allocated for construction of the port project.
This economic activity will likely come through non-nationals renting homes and other spaces for work and other living costs, as well as Vincentians gaining employment on the various areas of the project.
“I would think pushing ahead with a project like that is absolutely the right thing to do,” Professor Robinson said on radio on April 17. “You need a response of some massive scale. It can’t be a small scale response. This is a big-time problem that needs a kind of big-time response so I think that a capital project around the port is the right medicine for the economy”.
The financial economist said there is likely to be debt involved in a project of that magnitude but that it did not outweigh overall effects.
“…My own view would be to find a way to drive this project forward because when you’ve lost 9, 10 per cent of your GDP in two years, you can’t let that gain momentum. You’re sort of in a negative cycle or spiral and you do need some sort of overwhelming response to turn that ship because that negativity creates its own momentum,” he pointed out.
“So if you recover by two, three per cent, it’s really not visible to the persons on the ground, it’s not making an impact so you do need that massive response…” Robinson said.