CBI scheme a “godsend” for storm-ravaged Dominica

Even among Caribbean islands, Dominica appears blessed. It has managed to maintain its own distinctive French Kwéyòl dialect, which locals switch in and out of as an alternative to English.

It boasts a thriving indigenous people, the Kalinago, who have preserved rituals and a way of life dating back to 3,000 BC. Beaches, rivers and rainforest are abundant, with fertile soil allowing cultivation of cocoa, bananas and plantain.

But with these riches comes the curse of tropical storms and hurricanes, periodically destroying housing and infrastructure and leading to mass migration.

The government’s efforts to mitigate the damage caused by these storms, constructing new housing, robust bridges and building a vibrant tourism industry have been massively boosted by funds from the Citizenship by Investment Programme (CBI), launched in 1993.

This offers citizenship to wealthy foreign families, in return for investment into local projects, vital to Dominica’s economy and society.

Larger countries around the world may see this as a controversial way to keep a nation afloat. But for a tiny island nation like Dominica, these new sources of funds can be a vital lifeline to help it stay on its own two feet.

Much of the challenge of rebuilding infrastructure and housing has fallen at the feet of Roosevelt Skerrit, prime minister of the Commonwealth of Dominica since 2004. He drew up strategies to mitigate the $500m worth of damage caused by Tropical Storm Erika in 2015 and the fallout from category five Hurricane Maria in 2017.

“CBI has made it possible [for us] to announce a project and within a year, you see actual construction being done,” says Daryl Titre, head of Dominica’s Government Information Service (GIS). “Not any other Caribbean country can say this at this time.”

Even though more than two years have passed since Maria, the government has not been able to access funds pledged by international donors for reconstruction, says Mr Skerrit. “The CBI has been largely responsible for underwriting all our reconstruction efforts thus far. It has been really, one could say, a godsend for us in Dominica.”

In addition to rebuilding housing, bridges and roads, the government has re-invigorated tourist infrastructure, with six five-star hotels currently under construction. Real estate developers are encouraged to go out to the international market, attending property, citizenship and migration shows in Dubai, Russia and China, to find wealthy individuals who wish to buy into their schemes through the CBI programme.

“Each developer has a product to go out and sell to market,” says Emmanuel Nathan, co-ordinator of the government’s CBI unit. “They are looking for the niche market in different areas where investors are available and because they are doing that, we have more and more of the Dominican programme being explained all around the world.”

Developers’ websites advertise the benefits of purchasing a unit of government-approved properties for as little as $220,000 to acquire Dominica citizenship within three months, promising visa-free travel to more than 130 countries.

But Caribbean countries have come under criticism internationally for granting citizenship to politically-exposed individuals from countries such as Russia, who may have questionable sources of wealth.

European hubs have profited even more from Russian oligarch funds, suggests Francine Baron, minister for Foreign and Caricom Affairs. “There are many Russian investors in the United Kingdom who have invested in many things – businesses, football clubs, real estate – and we would like to attract some of these investors to the Caribbean and certainly, to Dominica,” says Ms Baron, at the same time urging caution regarding the quality and probity of applicants.

This means going through “extensive background checks” carried out by due diligence agencies, followed by a second screening by Impax, the Caribbean law enforcement agency.

“There has been an agreement and a commitment by the Caribbean governments to work together in respect of the process for the CBI programmes,” says Ms Baron, who champions a pan-regional approach to due diligence issues.

She would also like to see a more co-ordinated regional policy around sustainability and climate change, citing Dominica’s decision to protect surrounding oceans by banning both Styrofoam cups and containers and single-use plastics.

“This is the trend that Dominica is on, to ensure we can be a guiding light for the Caribbean in terms of our eco-practices,” she says.

Dominica has ambitions, all of its politicians will tell you, to become the world’s first climate-resilient country, by building high-quality concrete-reinforced housing settlements to replace villages washed away by post-storm flooding.

The CBI programme has been crucial in this facilitating relocation of the Petite Savanne community to Bellevue Chopin. Although the first wave of buildings under construction after Erika were not yet finished when Maria hit in 2017, they managed to withstand the latest battering.

“We’ve designed the houses to be as climate resilient as humanly possible,” says Christopher Timmins, project director of MMCE, the government’s partner in the ambitious project to build 353 residencies, all being handed over free of charge to displaced families.

He proudly walks visitors through the spacious, high-spec rooms, all with commanding views of the lush Dominican countryside, already planted with bananas and yams by incoming residents. “These structures will last for the foreseeable future.” 

In addition to this reconstruction and renovation of many areas, including the atmospheric island capital of Roseau, the government has also overseen transition to a much cleaner, greener energy supply through its development of a hydrothermal energy plant around the country’s volcanic springs. This has been particularly beneficial in a region where near neighbours enjoy abundant natural gas and oil resources.

Cheaper electricity, ventures the prime minister, not only reduces operating costs of hotels by nearly half, but also boosts the economy by putting money in the pockets of average consumers.

While most of the materials for the country’s vast array of construction projects, along with the labour which puts them together, are imported from Asia, the government says every opportunity is taken to employ local labour.

An agreement is signed with every developer to employ a certain percentage of islanders. But it can be challenging to find enough workers in a country inhabited by just 72,000 people, an estimated 10,000 of whom left after the storms. 

Many of these migrants are now returning, according to the GIS, lured by jobs in the new developments, especially in the tourism industry, where hoteliers are instructed to ensure “skills transfer” from more experienced hands to newer local workers.

Sam Rafael, owner of the Jungle Bay resort, rebuilt in a new location in Soufriere after being hit by Tropical Storm Erika, not only kept the same leadership team for the new incarnation of his project, financed by CBI money, but also many local hotel staff.

Developers say it is impossible to build anywhere in the Caribbean without CBI money. “This is the best way of raising capital for us to do this and all the hotels are benefiting from it and the entire island will also benefit from it,” says Ian Edwards - also known locally as ‘Sugar George’ – a partner in the Tranquility Beach development backed by the Hilton hotels brand.

The CBI programme was used by another local developer, Gregor Nassief, who made his money through the computer software business in Latin America, as an equity financing opportunity to facilitate the expansion of the Secret Bay villas, typical of the “low volume, high yield” model which the country offers to a select band of intrepid, wealthy tourists. 

The transformation of the island from a three-star to a five-star destination, with the help of CBI money, was behind the construction of the Kempinski apartments, surrounded by the Cabrits National Park. 

“The main thing for us was to create jobs and make [Dominica] a known destination,” says Michael Shoonewagen, general manager for the Cabrits Resort & Spa Kempinski Dominica, expected to open at the end of 2019.

The role of this programme in changing the orientation of the country’s economy is also key. “Dominica is in transition from an agricultural economy to a service-oriented economy in which hotels and tourism play an important part,” says Alick Lawrence, owner of the Marriott-backed Anichi Resort.

The CBI programme is “critical” to this transformation, asserts Mr Lawrence, while warning that the current structure is “vulnerable” to international criticism. “So we have to seize the moment and do the best that we can while it lasts.”

Common to this set of high-end resorts is their promotion of Dominica as the “nature isle”, boasting of clean lakes and rivers and home to the indigenous Kalinago people, who guide tourists round their self-governing enclave, demonstrating how to build dug-out canoes and fish with bows and arrows.

“It’s a really unique experience and we embrace them because they are part of us and we are part of them and provide them with as much support as possible,” says tourism minister Robert Tonge, who stresses the importance CBI money has played in building stronger houses for the Kalinago in a safer environment.

Speak to any child of school age in Dominica and they will tell you about the role CBI has played in transforming their island. They will also tell you about the importance of Chinese money in the transformation. Hospitals, bridges and the sports stadium in Roseau – hosting international football and cricket fixtures – have been built with funds from the east. This is in exchange for the government’s support of the “One China” policy, which recognises the People’s Republic, rather than Taiwan.

“We have very good friendly relationships with the People’s Republic of China and they have been very supportive of our development efforts,” says Ms Baron. Whether through the CBI programme, or key political relationships, storm-ravaged Dominica has opened itself up to foreign investments from a number of locations. This means that, unlike other developing countries, it no longer has to go cap-in-hand to international institutions. 

As well as economic benefits, there is a second, even greater dividend attached to Dominica’s strategy. For a developing country, the sense of national conscience and pride attached to the CBI programme adds a value to society that cannot be defined simply in monetary terms.