by Yao Atunwa
What better use can there be than to utilise the revenues generated from Grenada Citizenship by Investment Programme to develop the housing stock of our tri-island state is the question that I would humbly pose at this juncture, in our nation’s desire to reap greater economic and social benefit for all its people, particularly the segment that is not earning nearly enough despite its efforts.
While I ask such question, I am mindful that many citizens from all sectors of the society may wish to know how such can be done insofar as the state of Grenada being able to afford a major home development/ownership programme.
If the cost of such an initiative is the primary concern as to whether or not we can successfully engage in a comprehensive home ownership programme as outlined in The Butler Plan & Project, which aims to construct 20,000 homes within a 20-year span to directly benefit workers of limited means, let us talk about cost and affordability to the state of Grenada.
To provide you with a summary of The Butler Plan & Project before we proceed, it is a proposal currently being put to the Grenadian people by myself and other nationals, The Butler Group, with the clear intention to not simply raise the living standards and thus the quality of life of our populace but to create the conditions that will grow our economy in the most meaningful and tangible way for generations to come. The projected cost of the project is $2.4 billion over the 20-year period, to construct 1,000 homes per year at a unit cost of $120,000. $120 million, therefore, would be the annual cost to our national budget.
One would be eligible to be awarded a 3-bedroom home granted he/she, of course, is a Grenadian citizen (non-CBI); he/she is at least 24 years of age and is employed; or is less than 24 and is employed for the greater portion of 7 years and is a current resident of Grenada; or resides in the diaspora and has attained a bachelor’s degree and is seeking to return on a permanent basis. The asset value to be eligible is $100,000, a figure that would render the great majority of workers eligible. And that is precisely the goal.
Most workers, including civil servants, are not high earners, and would be currently living paycheck to paycheck, including many of our teachers and attendants in the tourism sector. There is also the stubborn issue with a double-digit unemployment rate for decades that such a plan and project also seeks to tackle head-on, for it aims to put many of the unemployed youth of our nation in the capacity to be earners over the long-haul. With 250 homes slated for construction every 3 months, to be constructed by some 25 construction companies, with 10 subdivisions staffed with 20 workers spread-out across the tri-state, some 5,000 persons would be directly employed as construction workers. Material sourcing, food preparation and sales, other construction-related fields such as engineering, architecture, electrical installation, as well as general retail, given the increase in the circulation of money, all are projected to increase employment over fivefold. In other words, such project has the potential to serve as our most immediate economic engine. There is no other project of such scale intended for Grenada, or to render the social benefit it is intended to deliver.
Please indulge me in perusing Grenada’s finances, in seeking to shed light on where we are economically and thus gauge the affordability of such a project. But allow me to do so while drawing a comparison between Grenada and Dominica, our fellow OECS and Caricom member state, which was devastated by 2 major storms in recent years causing havoc to the economy and people of that country; however, is committed to using all of its CBI programme revenues to construct homes, commercial and government units: some 5,000 dwelling units set to be completed by December, 2019, after commencing construction in 2015.
From the outset, it appears that both countries are doing quite favourably well with their respective citizenship schemes. Grenada generated $347.1 million in 2017 (the latest figure provided): an amount that is substantial in relation to Grenada’s total expenditure in the said year, with the general figure being $600 million; and $753.3 million, with net lending (as reported by the IMF).
Grenada’s revenue for 2017 was reported to be $657.2 million. With grants added, total revenue was reported to be $809.1 million. A surplus of $149.1 million was also reported for 2017; also reported by the IMF.
Another bit of information to consider that was provided directly by the NNP administration is that 40% of the CBI funds generated in 2017 was used to pay down on the country’s debt; that would be $138.8 million. Moreover, 71% ($246.4 million) of the revenue generated by the CBI programme for 2017 was reported by the CBI Unit to be made in the form of cash donation as opposed to real estate or other business ventures.
Bear in mind that Grenada’s expenditure for 2017 would have included the monies used to pay down on the country’s debt, which was reported to be at 74.8% of GDP: some $837 million, the lowest it has been post-1995, given the rate of borrowing thereafter. (Dominica’s debt to GDP ratio stands at 67%, the lowest in the sub-region/OECS).
As a general observation regarding Grenada’s revenue and expenditure, somehow the figures do not add up. For instance, without including the revenue from the CBI programme, there should have been a primary surplus of $209.1 million. There is an obvious discrepancy in those figures. It must be stated that such could be as a result of the fact that the IMF report from which those figures was obtained, pertaining to gross revenue, expenditure, and primary surplus for 2017, was published May 2017. Nonetheless, a surplus was reported/projected for 2017: $141.9 million, as cited earlier. How much of an actual surplus is another question.
As far as Dominica’s overall situation in terms of affording its housing development programme, the Dominican prime minister reported in July 2017 that Dominica expected to collect half of his country’s revenue in fiscal year 2018/19 from its CBI programme. This was Prime Minister Skerrit showing up confidence in his country’s CBI programme, because in 2017 Dominica only made good on 16.5% (or $91.7 million) of its GDP from its CBI programme, as it fell from 22 % to 16.5% of GDP.
In 2017, Dominica’s GDP was $560 million, in comparison to Grenada’s $1.119 billion for the same period. In other words, Grenada’s economy is currently twice the size of Dominica’s. To add, our population is also greater by a margin of 34,000.
The Dominican home development programme’s target is some 5,000 units, as well as commercial and government units, over the span of four years, from 2015 to 2019. As such, it is not quite on the scale of the proposed Butler Plan and Project. Nevertheless, the commitment to use its CBI funds to do so, when its GDP is at its current size, is remarkable. I suspect that Dominica will continue to build new homes and commercial units post-2019. In other words, continue with such programme. This very month, after the first publication of this article, we learn that an additional 33 units are planned, going into 2020.*Updated by the author 26 April 2019.
If Dominica can use 22% and 16.5% of its GDP, which has not risen over $580 million in a span of nine years, with a population of over 70,000 to Grenada’s 109,000, how is it not affordable or feasible for Grenada to devote 30 or 35% of its CBI revenues towards a comprehensive home development/ownership programme, even withstanding a debt to GDP ratio difference of 8 points (or even less than 4 points when accounted for the last debt restructuring by the IMF)?