Economy of Dominica

Although the financial services industry is increasingly becoming its largest income, agriculture, with bananas as the principal crop, is still Dominica's economic mainstay. Banana production employs, directly or indirectly, upwards of one-third of the work force. This sector is highly vulnerable to weather conditions and to external events affecting commodity prices. The value of banana exports fell to less than 25% of merchandise trade earnings in 1998 compared to about 44% in 1994.

In view of the European Union's announced phase-out of preferred access of bananas to its markets, agricultural diversification is a priority. Dominica has made some progress, with the export of small quantities of citrus fruits and vegetables and the introduction of coffee, patchouli, aloe vera, cut flowers, and exotic fruits such as mangoes, guavas, and papayas. Dominica has also had some success in increasing its manufactured exports, with soap as the primary product. Dominica also recently entered the offshore financial services market.

Because Dominica is mostly volcanic and has few beaches, development of tourism has been slow compared with that on neighboring islands. Nevertheless, Dominica's high, rugged mountains, rainforests, freshwater lakes, hot springs, waterfalls, and diving spots make it an attractive destination. Cruise ship stopovers have increased following the development of modern docking and waterfront facilities in the capital. Eco-tourism also is a growing industry on the island.

Dominica is a member of the Eastern Caribbean Currency Union (ECCU). The Eastern Caribbean Central Bank (ECCB) issues a common currency (the East Caribbean dollar) to all eight members of the ECCU. The ECCB also manages monetary policy, and regulates and supervises commercial banking activities in its member countries. Dominica is a beneficiary of the U.S. Caribbean Basin Initiative (CBI). Its 1996 exports to the U.S. were $7.7 million, and its U.S. imports were $34 million. Dominica is also a member of the 15-member Caribbean Community (CARICOM) and of the Organisation of Eastern Caribbean States (OECS).

Economy of Dominica
Street Roseau
Commercial street in Roseau.
CurrencyEast Caribbean Dollar
1 July - 30 June
Trade organisations
WTO, CARICOM
Statistics
GDP$1 015 million (2013)
Rank: 128th (2013)[1]
GDP growth
1.1% (2013)
GDP per capita
$14 300 (2013)
GDP by sector
agriculture (15.7%), industry (15.6%), services (68.7%) (2013)
1.8% (2013)
Population below poverty line
29% (2009)
Labour force
25,000 (2000)
Labour force by occupation
agriculture 40%, industry 32%, services 28% (2002)
Unemployment23% (2000)
Main industries
soap, coconut oil, tourism, copra, furniture, cement blocks, shoes
External
Exports$40.4 million (2013)[2]
Export goods
bananas, soap, bay oil, vegetables, grapefruit, oranges
Main export partners
 Japan 38.8%
 Jamaica 8.3%
 Antigua and Barbuda 7.7%
 Guyana 6.5%
 Paraguay 5.6%
 Trinidad and Tobago 4.2%
Imports$219.6 million (2013)[2]
Import goods
manufactured goods, machinery and equipment, food, chemicals
Main import partners
 Japan 39.3%
 United States 15.6%
 China 13.5%
 EU 5.1% (2012)
274.9 million (2013)
Public finances
Revenues$148.1 million (2013)
Expenses$185.2 million (2013)
Foreign reserves
$90 million (31 December 2013 est.)[2]

All values, unless otherwise stated, are in US dollars.

Primary industries

Financial Services

The Commonwealth of Dominica has become in recent years a major international financial hub, and is quickly becoming one of the largest banking centres in the world, and offshore services are also becoming its main source of income. There are a number of service providers. These include global financial institutions including Scotiabank, Royal Bank of Canada, Cathedral Investment Bank, First Caribbean International Bank, and The Interoceanic Bank of the Caribbean;

The largest Financial sectors are "offshore banking, payment processing companies, and general corporate activities". Regulation and supervision of the financial services industry is the responsibility of the Financial Service Unit of the Commonwealth of Dominica (FSU) under the supervision of the Ministry of Finance.

Starting in the mid-late 1990s, offshore financial centres, such as the Commonwealth of Dominica, came under increasing pressure from the OECD for their allegedly harmful tax regimes, where the OECD wished to prevent low-tax regimes from having an advantage in the global marketplace. The OECD threatened to place the Commonwealth of Dominica and other financial centres on a "black list" and impose sanctions against them.[3] However, the Commonwealth of Dominica successfully avoided being placed on the OECD black list by committing to regulatory reform to improve transparency and begin information exchange with OECD member countries about their citizens.[3]

Agriculture

About 22.6% of the total land area is arable. Agricultural production was on the decline even before the 1979 hurricane disaster. The main crop of Dominica is bananas, output of which had fallen to 29,700 tons in 1978. As a result of Hurricane David, production hit a low of 15,700 tons in 1979. Agriculture suffered a further blow from Hurricane Allen in August 1980. However, after outside financial support began to rehabilitate the sector, production rose to 27,800 tons in 1981 and totaled 30,000 tons in 1999.

Agriculture accounts for about 20% of GDP and employs about 40% of the labor force. Agricultural exports amounted to $19.1 million in 2001. Most crops are produced on small farms, the 9,000 owners of which are banded together in about 10 cooperatives; there are also several large farms that produce mostly bananas for export. Other major crops are coconuts and citrus fruits which are grown in commercial quantities. Production for 1999 included coconuts, 11,000 tons; grapefruit, 21,000 tons; lemons and limes, 1,000 tons; and oranges, 8,000 tons. Fruits and vegetables are produced mostly for local consumption.

Animal husbandry

There are about 2,000 hectares (4,900 acres) of pasture land, comprising 2.7% of the total land area. The island does not produce sufficient meat, poultry, or eggs for local consumption so there are large imports of animal products. In 2001 there were an estimated 540 head of cattle, 9,700 goats, 7,600 sheep, and 5,000 hogs. In 2001, production of meat totaled 1,300 tons; and milk, 6,100 tons.

Fishing

Before Hurricane David, some 2,000 persons earned a living fishing in coastal waters, producing about 1,000 tons of fish a year and meeting only about one-third of the local demand. The hurricane destroyed almost all of the island's 470 fishing boats; afterward, only about a dozen vessels could be reconstructed for use. In 2000, the catch was 1,150 tons, up from 552 tons in 1991.

There is a relatively large fishing industry in Dominica, but it is not modernized and almost exclusively serves the domestic market. A successful experiment in fresh-water prawn farming, supported by Taiwanese aid, has produced substantial amounts of prawns for the domestic and local markets. Japan has provided support for a fish landing and processing plant in Roseau.

Forestry

Dominica has the potential for a lumber industry. Some 46,000 hectares (110,000 acres) are classified as forest, representing 61% of the total land area. In 1962, Canadian experts produced a study indicating that over a 40-year period the island could produce a yearly output of 22,000 cu m (800,000 cu ft) of lumber. Before Hurricane David, annual output had reached about 7,500 cu m (265,000 cu ft). There are some 280 hectares (690 acres) of government land allocated to commercial forestry and about 100 hectares (250 acres) of forestland in private hands. Commercially valuable woods include mahogany, blue and red mahoe, and teak. Total imports of forest products in 2000 amounted to $10.3 million.

Mining

Dominica's mining sector played a minor role in its economy. Pumice was the major commodity extracted from the island for export, and Dominica produced clay, limestone, volcanic ash, and sand and gravel, primarily for the construction industry. There is some mining potential in Dominica, especially in the island's northeast where there are believed to be deposits of copper.

Secondary industries

Dominica's small manufacturing sector is almost entirely dependent on agriculture, and the island has built up a handful of successful industries specializing in soaps and other agricultural byproducts. The largest manufacturer is Dominica Coconut Products, controlled by Colgate-Palmolive, which produces soap from coconuts. The factory has an agreement to sell an estimated 3 million bars of soap each year to Royal Caribbean Cruise Lines. Dominican soap is also exported throughout the region, but has recently encountered intensified competition from other regional producers, especially in the important export markets of Jamaica and Trinidad and Tobago.

There are four plants to process limes and other citrus fruits; two bottling plants; two distilleries; four small apparel plants; and four small furniture factories. Dominica exports water to its Caribbean neighbors; shoes, cement blocks, furniture, and soap and toiletries are also exported. Home industries produce some leather work, ceramics, and straw products.

Since the 1990s, the small manufacturing sector has been expanding at a modest pace, including electronic assembly, rum, candles, and paints. The Trafalgar Hydro Electric Power Station is now operational, making the island virtually energy self-sufficient. Industry accounted for 23% of GDP in 2001.

Dominica has not yet been able to attract significant numbers of foreign manufacturers, partly because its wage rates are relatively high and partly because its infrastructure is not suited to high-volume manufacturing. Like other islands, it seeks to attract investors with tax concessions and other financial inducements, but several offshore manufacturing plants have closed after their duty-free concessions expired, normally a 10-year span.

Tertiary industries

Tourism

Tourism in Dominica is mostly based on hiking in the rain forest and visiting cruise ships.

Financial services

Dominica has tried to expand its base by building up offshore financial services. So far, a relatively small number of offshore banks and other international business companies have registered in Dominica, but the government is trying to attract more by making registration economical and easy. A Dominica-based International Business Company (IBC) can, for instance, be formed over the Internet, and the government has also granted operating licenses to several Internet gambling companies. The ease with which such companies can be formed and the secrecy surrounding their operations have led some critics to allege that Dominica may be facilitating money-laundering and tax evasion.

Facts at a glance

GDP: purchasing power parity - $485 million (2006 est.)

GDP - real growth rate: 3.2% (2007 est.)

GDP - per capita: purchasing power parity - $3,800 (2005 est.)

GDP - composition by sector:
agriculture: 17.7%
industry: 32.8%
services: 49.5% (2004 est.)

Population below poverty line: 29% (2009 est.)

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices): -0.1% (2005 est.)

Labor force: 25,000 (2000 est.)

Labor force - by occupation:
agriculture: 40%
industry: 32%
services: 28% (2000 est.)

Unemployment rate: 23% (2003 est.)

Budget:
revenues: $73.9 million
expenditures: $84.4 million (2001)

Industries: soap, coconut oil, tourism, copra, furniture, cement blocks, shoes

Industrial production growth rate: -10% (1997 est.)

Electricity - production: 80 million kWh (2005)

Electricity - production by source:
fossil fuel: 50%
hydro: 50%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 74.4 million kWh (2005)

Electricity - exports: 0 kWh (2005)

Electricity - imports: 0 kWh (2005)

Agriculture - products: bananas, citrus, mangoes, root crops, coconuts, cocoa; forest and fishery potential not exploited

Exports: $94 million f.o.b. (2006)

Exports - commodities: bananas 50%, soap, bay oil, vegetables, grapefruit, oranges

Exports - partners: United Kingdom 24.8%, Jamaica 12.3%, Antigua and Barbuda 9.8%, Guyana 8.3%, China 7.9%, Trinidad and Tobago 5.4%, Saint Lucia 4.5% (2006)

Imports: $296 million f.o.b. (2006)

Imports - commodities: manufactured goods, machinery and equipment, food, chemicals

Imports - partners: United States 25.3%, China 22.7%, Trinidad and Tobago 13.8%, South Korea 4.8% (2006)

Debt - external: $213 million (2004)

Economic aid - recipient: $15.17 million (2005 est.)

Currency: 1 East Caribbean dollar (EC$) = 100 cents

Exchange rates: East Caribbean dollars per US dollar - 2.7 (2007), 2.7 (2006), 2.7 (2005), 2.7 (2004), 2.7 (2003)

Fiscal year: 1 July - 30 June

References

  1. ^ https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html
  2. ^ a b c CIA. "The World Factbook". Retrieved September 10, 2014.
  3. ^ a b "Haven or havoc?". Pbs.org. Retrieved 2011-07-31.

See also

Dominican dollar

The history of currency in the British colony of Dominica closely follows that of the British Eastern Caribbean territories in general. Even though Queen Anne's proclamation of 1704 brought the gold standard to the West Indies, silver pieces of eight (Spanish dollars and later Mexican dollars) continued to form a major portion of the circulating currency right into the latter half of the nineteenth century.

Britain adopted the gold standard in 1821 and an imperial order-in-council of 1838 resulted in Dominica formally adopting the sterling currency in the year 1842. However, despite the circulation of British silver coins in Dominica, the silver pieces of eight continued to circulate alongside them, and the private sector continued to use dollar accounts for reckoning. The international silver crisis of 1873 signalled the end of the silver dollar era in the West Indies and silver dollars were demonetized in Dominica in the wake of this crisis for fear that a silver standard might return. Even though the British sterling coins were made of silver, they were fractional coins of the British gold sovereign and hence they maintained their gold value. This left a state of affairs, in which the British coinage circulated, being reckoned in dollar accounts at an automatic conversion rate of 1 dollar = 4 shillings 2 pence.

From 1949, with the introduction of the British West Indies dollar, the currency of Dominica became officially tied up with that of the British Eastern Caribbean territories in general. The British sterling coinage was eventually replaced by a new decimal coinage in 1955, with the new cent being equal to one half of the old penny.

The fixed exchange rate of $4.80 = £1 sterling (equivalent to the old $1 = £4 2s 0d) continued right up until 1976.

Financial Service Unit of the Commonwealth of Dominica

The Financial Service Unit of the Commonwealth of Dominica or (FSU) is the main financial regulator in the Island of Dominica, it is one of the most stringent financial authorities in the Caribbean and is quickly becoming a major participant in the offshore regulatory framework.

Dependent on the Ministry of Finance the Financial Service Unit regulates all Offshore Banks, Credit Unions, Insurance Companies, Money Service Businesses, Gaming Companies and Other Financial Entities

Index of Dominica-related articles

The following is an alphabetical list of topics related to the nation of Dominica.

National Bank of Dominica

This article refers to the National Bank of the Commonwealth of Dominica and not the Dominican Republic.The National Commercial Bank of Dominica was created by Act No 27 of 1976 by the Parliament of Dominica (under the name National Commercial and Development Bank of Dominica) The bank officially opened for business on March 15, 1978 with the Agricultural Industrial and Development Bank (AID) bank as a wholly owned subsidiary. In January 1982, the AID Bank was made a separate and independent entity. In 1994, the bank invested in NCB Grenada, jointly, with two other OECS indigenous banks to own 12.5% of that bank. An investment in the Caribbean Credit Card Corporation for the issuance and processing of local and international credit cards was also made. Additionally, the Bank acquired shares in the newly privatized Liat (1974) Ltd and East Caribbean Home Mortgage Bank.

By letter dated October 10, 2003, National Commercial Bank of Dominica was advised by the Government of Dominica of its decision to divest itself of its majority holding in the National Commercial Bank (NCB).This was part of Government of Dominica's strategy to privatize NCB. This decision meant that the NCB Act Chapter 74:02 was repealed and a new company, the National Bank of Dominica Ltd was incorporated to succeed the NCB.

Outline of Dominica

The following outline is provided as an overview of and topical guide to Dominica:

Dominica – sovereign island nation located in the Caribbean Sea. In Latin, its name means "Sunday", which was the day on which it was discovered by Christopher Columbus. Dominica's pre-Columbian name was Wai'tu kubuli, which means "Tall is her body". The Carib Territory was established for the indigenous people of the island. Because the island lies between two French overseas departments, Guadeloupe to the north and Martinique to the south, and because it was colonized by France for a time, it is sometimes called "French Dominica". However, its official language is English, though a French creole is commonly spoken. Dominica has been nicknamed the "Nature Isle of the Caribbean" for its largely unspoiled natural environment. It is one of the youngest islands in the Lesser Antilles, still being formed by geothermal-volcanic activity, as evidenced by the world's second-largest boiling lake. The island features lush mountainous rainforests, home of many very rare plant, animal, and bird species. There are xeric areas in some of the western coastal regions, but heavy rainfall can be expected inland. The sisserou parrot, the island's national bird, is featured on the national flag. Dominica's economy is heavily dependent on both tourism and agriculture.

Tourism in Dominica

Tourism in Dominica consists mostly of hiking in the rain forest and visiting cruise ships.

Dominica's tourist industry is in its infancy compared to other Caribbean islands. For many years its rugged terrain, lack of white beaches, and underdeveloped infrastructure prevented large-scale tourist development. In recent years, Dominica has successfully marketed itself as the "nature island of the Caribbean," seeking to attract eco-tourists interested in landscapes and wildlife. The government realizes that intensive tourism is incompatible with preserving the island's eco-system and in 1997 signed an agreement with Green Globe, the environmental division of the World Travel and Tourism Council, to develop the island as a "model ecotourism destination." The 3-year program provided technical expertise on environmental management as well as helping to market Dominica through specialist travel companies.

At the same time, the government has encouraged a steady increase in Dominica's tourism capacity, with numerous new hotels being built and considerable investment in cruise ship facilities. The new cruise ship jetty at Prince Rupert Bay, near Portsmouth, has dramatically increased the number of ships calling annually and brought significant tourism-related opportunities to the formerly depressed community of Portsmouth. Annual tourist arrivals are estimated at approximately 200,000, of whom about 75,000 are stay-over visitors. The great majority are cruise ship visitors who spend limited time and money on the island. Revenues from tourism reached US$49 million in 1999.

Compared to many other Caribbean islands, Dominica's tourism industry may be considered to be underdeveloped (65,000 visitors per year). It does not have any world-famous chains of hotels.

However, Dominica has a few famous tourist spots, such as the Indian River in Portsmouth, Emerald Pool, Trafalgar Falls, Scotts Head (where the Atlantic Ocean meets the Caribbean Sea), and the world's second-largest boiling lake, which is inside Morne Trois Pitons National Park. The national park, itself, has been designated a World Heritage Site. A 2005 New York Times article reported that locals, who believe an earthquake to be the most likely culprit, claim the boiling lake had diminished in volume and effect (in the sense of impressing visitors) in recent years.This island country also has many diving spots with steep drop-offs, healthy marine environment, and reefs.

In 2004, because of its natural environment, Dominica was chosen to be one of the primary filming locations for Pirates of the Caribbean: Dead Man's Chest and its follow-up, At World's End. Hampstead Beach, Indian River, Londonderry River, Soufriere, and Vieille Case, which is situated on the island’s northern tip, were among the places selected for filming. The production ended on May 26, 2005. The cast and crew and their island hosts had a "Dominica Survivor Party".

Celebrity Cruises, Carnival Cruise Lines, Princess Cruise Lines and Oceania Cruise Lines have made Dominica one of their ports of call. The pier is located in the capital city of Roseau and is a simple pier. Other Caribbean islands -- such as St. Thomas, Barbados, St. Lucia, and Antigua -- have more extensive cruise pier facilities.

The Dominica straw markets open on Tuesdays when the cruise ship docks. These shops are operated by locals and are located on the main street directly in front of the pier, as well as directly behind the Dominica Museum. No other straw markets are located on the north side of the island.

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