Keeping it simple — how and why to do this CBI thing

By Guevara J. Leacock

Three of my erudite and learned friends have now chimed in on this ferocious debate in St. Vincent and the Grenadines (SVG) on citizenship by investment (CBI). All of them make very cogent points and what is clear is that any CBI initiative or programme needs to be well thought through before implementation. The robust debates over the past two days show one thing — Vincentians have views to share on CBI and it is time, therefore, that town hall meetings are held far and wide from Kingstown, to Chateaubelair to Georgetown (and beyond) to discuss this all-important topic. This is no longer a debate just for professional politicians.

In all of the smoke that is currently in the air, I want to bring things back to basics before we lose sight of what a well-crafted CBI initiative can do for SVG.

CBI initiatives have become increasingly prominent economic tools in several Caribbean countries, offering a mutually beneficial arrangement for both the nation state and global investors. These programmes allow individuals to obtain citizenship through a significant economic contribution, for example, in the form of a donation to a national development fund or an investment in approved real estate projects. It is crucial to note that CBI programmes can be tailored to meet the needs of the specific economy — there is no one-size-fits-all CBI programme and there is no prescribed way in which investments are to be or can be made. Any CBI programme in SVG has to be carefully and specifically designed to meet the country’s socio-economic needs.

Economic impact on host nations

CBI programmes generate substantial direct revenue for participating governments and, by extension, nations. This is true whether the economy of the relevant country is small or large. For smaller island economies, such as SVG, the OECS and the wider Caribbean, these programmes represent a critical source of government income and economic stability. In nations like Dominica and St. Kitts and Nevis, evidence shows that CBI contributions have accounted for a significant percentage of annual GDP, helping to reduce over-reliance on traditional industries like agriculture and tourism, which are becoming more and more tenuous as time goes on. CBI, as a source of revenue, enables governments to fund crucial infrastructure projects, including roads, schools, hospitals, police stations, and disaster resilience initiatives, some of which are so badly needed in SVG. The investments also support sustainable development goals while reducing national debt burdens. CBI literally reduces the amount of borrowing a government has to do to foster the development of the country.

Diversification and economic resilience

Any student of Caribbean history knows that the continuous diversification of the Caribbean economy is a feature of Caribbean civilisation. The Caribbean, blessed with an abundance of fertile, rich virgin soil, beautiful beaches and waterways and picturesque landscapes, has for centuries diversified its economy to engender economic growth. We have moved from cotton, sugar and tobacco to bananas to tourism, just to name a few. Therefore, for Caribbean economies which are historically dependent on agriculture and tourism, CBI programmes offer viable and meaningful economic diversification. This diversification has proven especially valuable during tourism downturns caused by natural disasters or global crises such as hurricanes, which often plague the region, and, most recently, the COVID-19 pandemic.

A well-tailored CBI programme, which contains, for example, real estate investment options, has and can stimulate construction sectors, creating employment opportunities and supporting ancillary industries. The influx of high-net-worth individuals as new citizens can also stimulate local economies through spending, business creation, and knowledge transfer. A well-crafted CBI programme can literally create the value-added economies we often hear about in political rhetoric.

CBI programmes attract substantial foreign direct investment beyond the initial citizenship contribution. New citizens often establish businesses or create investment opportunities that further benefit local economies. Unlike volatile foreign aid or loans with stringent conditions, CBI programmes can and have been shown to provide governments with flexible capital that can be strategically deployed according to national priorities and developmental goals.

Global mobility and business advantages for investors and locals

For CBI investors, Vincentian citizenship offers visa-free or visa-on-arrival access to numerous countries, including the European Union Schengen area, the United Kingdom, Singapore, and Hong Kong. These are some of the world’s major economic centres and so the enhanced global mobility that comes with CBI facilitates international business operations and enhanced economic opportunities, which, in turn, can benefit the Vincentian economy by providing access to these economies.

Several Caribbean jurisdictions also offer favourable tax environments, with minimal or no taxes on worldwide income, capital gains, wealth and inheritance. A well-crafted CBI programme allows SVG to improve its legislative frameworks to bring them in line with international tax, wealth management and banking laws. The opportunities this can open for the indigenous Vincentian are enormous. SVG can literally watch its onshore and offshore sectors grow abundantly.

Challenges and solutions

While CBI programmes offer significant benefits, I would be dishonest not to admit that they also face challenges regarding international perception, due diligence standards, and sustainability, but all of these are variables that can be controlled. There are several examples of CBI initiatives the world over, including in the Caribbean, that we can research and learn from. It goes without saying that CBI Programmes must balance accessibility with rigorous vetting to maintain international credibility and significantly reduce or prevent security concerns. These are things which are manageable and easy enough to put in place.

In order to ensure the long-term sustainability of these programmes a country (SVG) must establish and maintain high standards of governance, transparency, and value proposition in an increasingly competitive market.

In summary, CBI programmes represent innovative economic tools that, when properly managed, create mutual benefits for both host nations and global investors. For SVG, the initiative can provide vital economic diversification and development funding. For investors, they offer enhanced global mobility, tax planning opportunities, and potential business advantages in emerging global markets. We cannot be blind to the realities of globalisation, which are even more present now than when the concept first emerged. As global mobility and wealth planning continue to evolve, CBI programmes are likely to remain important elements of both sovereign economic strategy and individual financial planning.

St. Vincent and the Grenadines, which is in need of an economic boost, should not be left out.

Guevara J. Leacock is an academic, barrister-at-law and solicitor with experience in tax and wealth management, including advising on matters of economic crime and trusts. He enjoys weightlifting and making black cake.

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