Guideline for doing Business in the O.E.C.S.

with an Emphasis on Grenada

Page 1

Guideline for doing business in the OECS Caribbean Islands with an emphasis on Grenada

Historical perspective of Grenada and the Region
Christopher Columbus landed on the first of many small islands 1492, there were three groups of native Amerindian peoples inhabiting in the Caribbean the Arawak, the Carib, and the Ciboney. These Amerindians had migrated earlier from the mainland of what we now called South America. From 1536 to 1814 there were numerous battles between Britain, France and Spain over the Caribbean Islands, during this time there was an almost complete depopulation of the Amerindians in the West Indies. The Islands changed hands many times, but eventually the British claimed most of what is today the English speaking Islands. In the 1640's Sugar came to be known as "brown gold", which led to an estimated 10 million slaves being brought from West Africa to the Caribbean to work on these estates, thus repopulating this region. Slavery was abolished in the region between 1833-80; with Cuba being the last of the islands. After emancipation in the British colonies plantation labour was sought from various sources; Portugal, China and India. The largest number of indentured servants came from India who settled mainly in Trinidad and Guyana.

Caribbean Independence & OECS
Jamaica and Trinidad & Tobago were the first British colonies to gain independence in 1962, followed by the other English speaking islands over the next 21 years. In 1974 Grenada gained independence and like all the other Islands have since been governed on a Westminster Democratic System of Government. The OECS was established 1981 in an effort to deepen the sub-regional arrangements among the smaller English speaking Islands. The OECS is comprised of Antigua and Barbuda, Dominica, Grenada, Montserrat, St Kitts and Nevis, Saint Lucia, Anguilla and St Vincent and the Grenadines. The Objectives of the OECS are to: promote co-operation among its members and defend their sovereignty, territorial integrity; promote economic integration; assist them in meeting their international obligations and responsibilities; and establish wherever possible, arrangements for joint overseas representation and common services. (Caribbean Community Caricom Serctariat, 2009).

Grenada s Political Overview
From 1974 to 1978 Grenada enjoyed a democratic government, on March 13, 1979, the people's revolutionary government (PRG) ousted the existing Government and established a MarxistLeninist regime and established close ties with Cuba, the Soviet Union, and other communist-bloc
2

countries. In October 1983, a power struggle within the government ensued, which let to the intervention of the U.S Military and Caribbean forces , general elections were held in December 1984 democracy was restored.

Grenada's Profile at a Glance
Country Area Terrain Population Airports Ethnic profile Sea Airports Education Lies 12 degrees north of the equator and is made up of Grenada, Carriacou and Petit Martinique 120 Sq. Miles mainland Grenada with Carriacou and Petite Martinique 13sq miles collectively Volcanic and mountainous terrain, Avg Temperature of 80 degrees F, 103,000 people. 47% of the population is 15yrs 25yrs 1 International Airport on Grenada and a small airport in Carriacou Blacks 90%, Whites 1%, East Indians 3%, and other 6% Three main deep harbour sea ports, and several yacht berthing facilities Compulsory Education, Adult Literacy rate: 96% Roman Catholic denomination dominates; among others are Anglican, Presbyterian, Methodist, Baptist, Seven Day Adventist, Jehovah Witness, Menonite, Penticostical, Evangelical, Christian Scientist and Islamist. Free health care is offered by the Government Hospitals and there are 3 private hospitals 28% Processed food, Beverages, Machinery, Fuel, Equipment, Chemicals, Pharmaceuticals, Transportation, Building Materials Nutmegs, Cocoa, Fruits, vegetables, Horticultural plants, Apparel, Spices and Condiments, Paints, Paper products, Malt, Animal feed and Fish. Agriculture and Tourism St. Georges University Directly contributes 12% of the island s GDP

Religion

Health care Unemployment Rate Principle Imports Principle Exports Main Industry Services Utilities

Telecommunications

Water charges are comparable to other Countries. Energy costs in Grenada are amongst the highest in the region $0.95 per kilowatt per hour for commercial installations. Modern telecommunications system includes digital technology and fibre optic systems, international direct dialling and satellite telecommunications. High speed Internet is reliable and readily available in business places and most homes. Well maintained and networked road system 3

Infrastructure

Commercial rental space Work Permits

Rentals average is ECD $9.00 per square foot Application submitted to Ministry of labour. Fees charged are ECD $500.00 for Caricom nationals, $1000.00 for Commonwealth nationals, and for rest of world citizens $5,000.00 Apart from the 5 commercial banks, Grenada has a number of licensed Trusts, Co-operatives, Finance and Merchant banks Business Grenada Volume 05/2010/11

Banking

Overview of the Most Productive Industries:

(a) Agriculture In recent years in the Caribbean this sector has been faced with many issues presented by the current International trends and subsequent requirements. y y y Challenges - Trade Liberalisation and technical barriers; increased use of sanitary and phystosanitary barriers, and natural disasters. Concerns - Food safety, quality and pests. OpportunitiesRising food prices as a result of increased demand related to global population, possible diversification into high value products; agro-processing, and expansion of niche markets, such as organic and fair trade products.

The OECS islands like Grenada, have found it difficult to compete against the world market due to the high cost of production (labour and utilities), low levels of mechanised and technological systems used in farming. The absence of those made the cost of production too high and thus Grenada and the region are unable to compete against the world market prices. Low export of crops, a lack of economies of scale and available funds for research and developmental support has drastically reduced the foreign income from agriculture produce to the region. As a result of Trade Liberalisation, and mainly the WTO ruling against the preferential treatment offered to bananas from the Caribbean by the European Union, Grenada has experienced a decline in foreign exchange earnings. Added to that, Grenada experienced a category 3 hurricane in 2004 which led to the destruction of the Nutmeg industry. Some short crop vegetables and fruit crops are exported within the region, however small quantities and high production costs currently do not allow the island to compete on the world market. The Government is now working with farmers to increase the agricultural production and adding value to the primary products by engaging persons into manufacturing agro-products.
4

(b) Tourism The global economic crisis caused decreased travel to Caribbean; however, the Caribbean tourism industry is now beginning to see a steady increase in numbers. Yahoo news reports that more than 23 million tourists visited the region in 2010, (DANICA COTO, 2011). This is close to a 5 percent increase from 2009. In Grenada the increase has been minimal. The contribution to GDP in 2009 was 71% which is a decrease over 92% in 2008; any increase seen in 2010 is largely due to the cruise ship passengers who spend less money when visiting compared to stay over visitors. Over the last few years there has been an emphasis to enhance the tourist product by adding Eco tourism which focuses on dive tourism, whale watching, river rafting and inline cable mountain tours.

(c) Trade Grenada s export is only 7% of its Gross Domestic Product (GDP), most of the business is generated by importing and trading goods and services. Between 1950 and 1997 Bananas were the main export if the Island, however USA and Chiquita bananas led the successful challenge against the World Trade Organization (WTO) with regards to General Agreement of Trade and Tariffs (GATT) and the Most Favoured Nation (MFN) clause which led to the decline of the banana industry in Grenada and the region. The Caribbean has embarked on a number of integration processes to better allow the region to compete with a global market. Overall the objective of these processes is to enhance competitiveness and to put the region at a better position to deal with International Trade.

Doing Business In Grenada The People
The social structure of Grenada is predominantly middle class and can be found throughout the island. The pockets of very low income persons are mainly in the rural areas and on the outskirts of the city, likewise there are a few affluent areas made up of expatriates and Grenadians themselves.

5

The family structure is basically nuclear family structure with some being headed by the father; however the percentage of single families headed by women has increased over the last 10 years. This trend is mainly due to the decline in traditional values where persons entered into wedlock before starting a family, for these reasons most women work outside the home. It is customary for adult children to live in the household until they marry; this is due to the loyalty to the family and for economic reasons. Many of the values in Grenada stem from the traditional European colonisers, high respect and regard is given to elders and senior persons in society, there is community collectivism in the rural smaller communities such as maroons (community clearing of land), the elderly are looked after by younger family members, and any negative social habits have a long lasting stigma against a family. There is an acceptance of sexual interaction between members of the opposite sex, however sexual activities within family members and of the same sex is not accepted. The racial profile of Grenada is Blacks 90%, Whites 1%, East Indians 3%, other races 6%; these races are a product of slavery, European colonization and later the indentured servants. However despite the mixture of races there is no prominent racism or ethnic divisions between groups in Grenada and most of the Caribbean Islands, except for Trinidad and Guyana who had larger quantities of Indentured servants from India. Generally Grenadians will reciprocate to the type of greeting extended to them. Religion plays an important role in the lives of Grenadians and Caribbean people as a whole. The predominant religion is Roman Catholic which was introduced by the French and Spanish colonisers and the other orthodox churches are scattered around the Island. Due to the historic British Colonisation of the Island the Anglican Church (Church of England) is the official church of Grenada. Religious values continue to govern the way of life, laws, and influence the public holidays. Sunday is considered a religious day of rest and most Business and services are closed.

Education
Education in Grenada is modelled on the British system. Education is mandatory and is free from preprimary to tertiary levels in public schools; in addition there are a number of private institutions that offer education from the primary to secondary levels. Approximately 80% of children leaving school complete the secondary education with a further 50% of these going onto tertiary levels. There are two universities on the Island, University of the West Indies (UWI) which offers distance and classroom learning, also the St George s University (SGU) which is mainly an on campus facility. Education is valued by the people and seen as an opportunity to improve personal and economic growth. Currently the SGU enrols approximately 500 regional undergraduates each year with enrolments increasing in their post graduate programs.
6

Cultural Characteristics of Business
Grenada lies within the southern chain of islands and in close proximity to the South American Boarders namely Venezuela, there is a common assumption that the Caribbean and Latin America are similar, however, the ascendants are different and as a result the two cultures are differ completely. Doing business in Grenada can be challenging due to the many bureautic procedures, inflation, high tax and duty structures and laissez aux faire business approach.

Greetings
In the Caribbean an acceptable business greeting for both male and female is to shake hands, if persons are familiar they may embrace or kiss each other usually on one cheek. Men generally shake hands and in familiar situations will tap each other s shoulders. In a more casual situation greetings vary among the younger generation of males (due to influences from North America) they will bounce fists and or give a brief half hug.

Names and Titles
Traditionally Grenada and the region adopted a more formal European business greeting. Persons who are senior in age and position were greeted by their title (Mr. Mrs. Dr or Miss). In recent years due to global influences a more casual approach has been taken to calling persons by their first name, this is widely accepted but not for an initial business meeting or when dealing with senior citizens.

Hospitality/ Entertaining/ Eating Habits
West Indians are generally known as being hospitable and fun loving people. It is not unusual for a business associate to invite you for a drink (alcohol) or a meal, this is seen as a friendly and welcoming gesture. If invited to a home it would be considered polite to take a gift in the form of a bottle of drink or sweets. If invited out for drinks (usually alcohol), it is considered polite if you offer to purchase alternate rounds of drinks and toasts are acceptable by saying Cheers . Traditionally there are three meals consumed in a day. Breakfast consists of cereals, grains and breads; lunch is the heaviest meal consisting of starch, protein and vegetables. Dinner is taken is similar to breakfast. Knife and forks is the cutlery used for dining and the British table protocols are observed when eating.
7

Although the different ethnic races exist within the region, the greatest influence on the food has come from the Africans and Indians. Heavy starched meals (Oil down -National dish) were required for field slaves and Indian curries and roti s continue to be a favourite Caribbean dish.

Appearance and Dress
Due to the proximity of the Eastern Caribbean to the USA, there has been an American influence in the appearance and dress. Generally due to the climate, a shirt and tie is accepted as business attire, while women will wear skirts or dresses at knee length or trousers with shirts covering their shoulders. It is acceptable for men to wear trousers and a polo or short sleeve shirt in casual situations; women will wear dresses or trousers in these instances. In formal situations males will wear a dark suit and tie and women will wear an elegant dress.

Gifts and Bribes
It is not expected for visitors or business associates to give gifts. Most Companies and institutions have established guidelines regarding gift giving and receiving, generally gifts can be accepted with the knowledge of the Company and within the parameters of the set policies and guidelines. Gifts are the form of Souvenirs is often exchanged as an acceptable gift between diplomats.

Time Management
In Grenada like the rest of the Caribbean time is not rigid, while established financial corporations operate on schedule many of the other business organisations and Government institutions are more flexible. Workers are usually relaxed, and being a few minutes late is not unusual. The occurrence of rain usually creates a delay. In social situations it is considered rude to arrive earlier than the appointed time however, it is not uncommon for persons to be up to half an hour late, and this is not considered rude to the host/hostess.

Communication (Verbal and non verbal)
English is the official language of Grenada and our written word follows the established English styles. in rural and informal situations a dialect of broken English/French/ is spoken. Due to the French influence many expressions are so derived ( i.e. Oui papa- my father, mama guy- to make a fool).
8

Animated hand movements, facial gesticulations, and head movements are used frequently in everyday communication. The communication level within Grenada and the Caribbean is a lowcontext , most communication is very explicit and the speaker attempts to verify the listener s understanding of the conversation by repeating and asking questions. Eye contact is generally maintained, and the fast speaking may cause a visitor to ask the speaker to repeat oneself.

Customs
Manners Tone Popular Entertainment Music Health Festivals Business Holidays Driving Competitiveness C Attitudes toward work Generally loud boisterous behaviour is seen as rude in business environment Warm pleasant and friendly Dancing, Cricket, Football and Movies Calypso and Reggae (more recently pop music from 1st world influences ) Generally health conscious and exercise is a daily part of life Carnival, Rainbow Emancipation, Independence, ( all marked by public holidays and accompanied by food and music) Christmas, Easter, Carnival, Corpus Christi, Emancipation, Thanksgiving, Independence, New Years, Whit Monday Left hand side, buses do not observe road courtesy Very low competitiveness, generally motivated by social aspects and not monetary gains. Caribbean People work to live not live to work. Social importance takes equal priority to work, works hours are normally fixed. Unacceptable Acceptable Acceptable Acceptable Acceptable

Women s Roles and Male outlook
Women play crucial roles in the community as mothers, educators, and provide health care and emotional support to the family. Traditionally women in Caribbean have been micro enterprisers , this still exists in the majority but with more access to education women have seen this as being an effective means for improving their economic wellbeing. In families where two parents are present the male is still seen as the head of the household (influenced on our cultural and religious upbringing). Improvement in the status of women has influenced children to be raised recognising the equality of gender. This realization and the Global drive for women s rights have afforded women in Grenada participation in all business fields. Women
9

in Grenada can be found in upper management levels, directorships, and in political positions, however, it is still rare to find women in Chairmanship positions of larger Companies.

Today Grenada s Labour laws outline procedures and the Ministry of Women s & social affairs assist women ensuring that women and their families receive fair treatment as regards to child care, equal pay for equal work, maternity entitlements and other such matters. The International labour Organisation (ILO) has influenced these changes by sensitisation through organisations and by setting certain criteria within loans and grants.

Business Environment
Business in Grenada at a Glance
Utilities Commercial rental space Work Permits Energy costs are the highest in the region, applications take up to approximately 3 weeks for new connections Average cost is $EC9.00 per square foot Application submitted to Ministry of labour. Fees charged ECD $500.00 Caricom Nationals, $1000.00 Commonwealth Nationals, Rest of World citizens $5,000.00 Graduates with at least a Bachelors degree are allowed to move freely in the region for work purposes, with no work permits required. Others allowed free movement are Media Workers, Musicians, Artists, and Sports Persons) Crime in Grenada mostly opportunistic, relatively low compared to neighbouring Islands and other countries. There are available for new business start up costs, application must be made to the Grenada Industrial Development Corporation (GIDC). Consumers are charged 15% on goods and services, which is payable to Government by the proprietors A published customs tariff outlines the duties to be paid on port of entry for various classifications of goods. ( EVL 1% , CSC 5%, CSE 2%) 40% jobs in Grenada are generated from small and medium enterprises. OECS countries, Caricom Countries, EEC Countries, USA, and China Business Grenada Volume 05/2010/11

Caribbean Single Market Economy (CSME) Crime Duty Free Concessions Value Added Tax (VAT) Port Duties Employment Major Trading Partners

Economics
10

Grenada is an open economy and is structurally dependent and vulnerable to any downturn in the world economy. The economy is based mainly on export of services and agricultural products as the island lack any form of natural resources. The export however, consists of primary products and does which has potential to increase revenue once value is added to the products. At the moment the country s import far exceeds its export and as a result the debt owed by the country is 95% of its Gross Domestic Product (GDP) way above the recommended 60% by the WTO and other international financial institutions. Grenada like most third world country depends largely on foreign aid from donor organisations.

Environmental Changes Influencing Change in Business in Grenada
Influences
Global Sourcing

Changes Occurring
Business are seeking produce from non-domestic sources because of cost & quality even though it may be produced locally/regionally Providing unique and different business opportunities Grenada has been unable to meet the quantities that would give them the competitive advantages in price. Unable to compete with prices. Grenada's was negatively affected when the USA successfully challenged World Trade Organization (WTO) with regards to GATT under the Fair Trade act and won the ruling that the West Indies Bananas could no longer receive protection by being the primary supplier of bananas to the UK. Falling prices and improved services as a result of new technologies and competition ( 10 years ago there was only one provider and the prices were 60% more costly than it is today). This has been costly for Grenada as many int'l standards have been introduced and systems and equipment need to be purchased and training programs developed to satisfy these requirements.

Businesses or Industries Affected
Poultry, chocolate and Coffee Eco Tourism i.e. River rafting and inline mountain sports Farming & Agriculture & Shipping containers

New Markets

Economies of Scale

Government Tariffs and Taxes

Banana Industry

Telecommunications

Lime, Digicel and Flow

Homogeneous Technical Standards

Agriculture, export, manufacturing and

Human Resource

11

The government has recognised the need to develop a Human Resource policy that is in line with global business needs. Various training programs have been developed to address this at the tertiary school level and skills training continue between the private sector and public sector programs Technical Professional less available, due to the brain drain that these small Islands suffer (educated persons leave Islands for larger Countries perceived as having more opportunities). New Business projects can source upper level management by advertising these positions or by networking. Rarely would employment agencies contain portfolios for available upper level management.

New Business
The Grenada Government and the Caribbean are generally very welcoming to new investment projects. The injections of funds into the small economies by foreign investors are viewed as opportunities to circulate new monies into the small economies. In Grenada due to the various laws and berauuracy that exist, the Government has developed agencies to assist new businesses and investors in opening and operating businesses on the Island. The Grenada Industrial Development Corporation and The Business development unit within the Ministry of finance will work with investors to assist in this process. It is also advisable that investors dialogue with business groups and the Chamber of Commerce to get the support and business information as current statistics may not always be readily available and many of the guidelines need to be updated.

Negotiating
Rules governing negotiating are flexible especially within the private sector. However, Government has some standards procedures regarding negotiations and often select a negotiating team which may include one or two political ministers along with personnel who has expertise in the field or area of potential business. Government s interest is often in the quality and number of jobs which can be generated from a project and also the viability and the linkages the project can contribute to other sectors of the economy.

Socio Political
Grenada has enjoyed a stable political environment for almost the last three decades. Residents enjoy a democratic environment where two main parties dominate. Persons do not
12

shy away from voicing their political opinions or show their preference to a political party, freedom of the press is enjoyed by all. Prior to the global economic downturn the average Grenadian fell into the lower spectrum of the middle-class. Today the poverty level of the population is 37.7% with an additional 14.8 % in the vulnerable line. The economic crisis has had a significant impact on the lives of Grenadians and major investments are sought after to generate jobs and economic activities within the country. Grenada is considered as one of the few countries that live outdoors . This is said in light of the low crime rate and the level of security that is generally enjoyed within the island.

What is needed to do business in your Country / Region
Business negotiation Understanding Pride Direct and always in person Do not speak down to or of negatives of Country to a businessman especially on first meeting Learn and appreciate the Taxes and costs structures of commodities and utilities. This will give you a good reference of the costs of goods and not cause you to be suspicious when quoted prices that you would seem unusually high compared to your home Country. is low-context , most communication is very explicit in the words spoken and the speaker attempts to verify the listener s understanding of the conversation by repeating and asking questions. Friendly and open, relatively informal do not adhere to explicit codes of behaviour Polychromic time setters - Stresses on completion of task rather than stress on the schedule time Usually very centralized, head of Companies or Business make the decisions. Generally trust the accuracy and assume desirable negotiations, however more recently becoming sceptical due to numerous scammers. Very conservative risk takers Deals can be concluded with a handshake but are always formalized by written agreements. Loud Boisterous banter and bartering is not desirable. Conservative and not inclined to "close the deal" at whatever costs

Understanding of costs

Communication Protocol Value of came Decision making

Bases of trust Risk taking propensity Conclusion of contracts Body language meetings Competitiveness

13

Conclusion
This was done to give a brief insight to potential business investors of the, culture and social structure of the people within the region. The OECS is a democratic, religious and small economy compared to Asia, North America and Europe. Grenada like most of the other countries economy is based on agriculture, tourism and services and has a small production capacity. As a small undeveloped country there are certain challenges with regards to trade like the economies of scale, technology and adequate human resource. However, investors can tap into the region and develop the potential that lies within thus assisting small economies to place themselves in a better position to complete globally. Global links have made foreign investment and business alternatives more accessible such opportunities have facilitated changes in the economy offering improved services and competitive pricing for consumers. This competition has also diminished local market share and profits of existing business. According to Drucker one must know the business environment he or she will be engaged in. He also went on to say that effective management is about coaching than managing and if this is applied in any work environment it should be rewarding. Another world renowned management leadership expert Max De Pree says to be successful in business one must understand the mission, the competition and the environment; both the human environment and the physical environment. The Challenge for the region and Grenada is to be able to compete successfully in the global market place and to make Grenada the number one place for doing business in the region.

Definitions Westminster parliamentary system: based on the British ) model, with a governor general appointed by and representing the British monarch (head of state) and a prime minister who is both leader of the majority party and the head of government.

Oil down -National dish consisting of breadfruit, dumplings, coconut milk, salt meat and callaloo (green leafy vegetable) Oui papa- my father,
14

Mama guy- to make a fool off EVL environmental Levi CSC - customs service charge , CSE 2% O.E.C.S. Organisation of Eastern Caribbean States

15