Attracting private investment to the Caribbean water and sanitation sector
thesisposted on 07.08.2015, 08:12 by Norline A. Martin
The investment needs of the water and sanitation sector and the financing constraints facing many developing countries were important catalysts for the promotion of private investment during the 1990s. Towards the end of the decade however, the flow of private capital began to decline primarily due to the poor performance of some investments and difficulties encountered during these transactions. Regardless, private investment is still considered an important financial resource for the sector which has resulted in considerable attention in addressing governance, economic and socio-political factors which can discourage investment. The aim of the research is to develop a strategic framework for attracting private investment to the Caribbean water and sanitation sector. Using a multiple-case study approach, the research examines the phenomenon of private investment in the water and sanitation sectors in Jamaica, Barbados and Trinidad and Tobago by assessing the environment for private investment and determining the specific drivers and deterrents to this type of investment. The implications of small size in the Caribbean context for institutional requirements to support private investment in the sector are also examined. Primary data for the research are obtained from public officials involved in the management, operation and regulation of the sector, local and international private service providers and local financial institutions through interviews and survey questionnaires. Documents are used to contextualise, corroborate and augment the research. The research found that in addition to traditional strategic and financial criteria in terms of provisions of the operating environment and investment performance, behaviour-related factors such as interest in job security, recognition and comfort were also important to the investment decision in the sector. Investors' perceptions of the utility were also found to be a statistically significant determinant of investment. Besides emphasising the importance of creating a conducive environment for investment, the research highlighted a need to simultaneously focus on generating specific investment opportunities to build investor confidence. The most important consequence of small size to negatively impact on creating conducive conditions for investment was the effect of limited professional capacity on institutional arrangements in the sector. Accordingly, sharing professional expertise to address capacity constraints emerged as the most feasible opportunity for regional cooperation to improve the environment for private investment in the sector.
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