Diversifying into the knowledge economy - Cayman gets it right again
by Marla Dukharan (originally published June 22, 2022)
The Cayman Islands economy is driven mainly by the financial services sector and tourism, with the construction sector having the largest economic multiplier. The population of the Cayman Islands varies somewhat and reached roughly 70K pre-pandemic, with a GDP/capita close to USD90K. The overall unemployment rate was 3.5% in 2019, with roughly half the population classified as non-resident/work-permit holders. In other words, job creation for Caymanians is not a major challenge in Cayman. The challenge is in creating a shift towards higher-paid employment for residents, supported by a knowledge-based economy. And this is exactly what Cayman Enterprise City (CEC) has devoted the past 10 years to, demonstrating just how great a role the private sector can play in solving our socio-economic problems.
As a privately-run inward investment promotion agency, CEC recently celebrated 10 years since it welcomed the first special economic zone (SEZ) company to the Cayman Islands. Over the period, it has achieved an economic impact of USD662 million. After a decade of growth, CEC has improved the competitiveness of the Cayman Islands and is now home to the largest innovation ecosystem in the region.
Importantly, CEC does not rely on Government funding and is a purely private initiative. Additionally, CEC supports a strong economic and business framework and progressive ecosystem without posing additional administrative burdens on Government. In 2021, total government revenues from CEC amounted to USD5.3 million, bringing the total since inception (2011–2021) to USD23.17 million. CEC reports its financial statements and economic impact annually, and there is annual public reporting since 2013 on how Government concessions for CEC SEZ members are deployed.
Through its Enterprise Cayman initiative (which is now a stand-alone non-profit), CEC is actively preparing the local workforce for industries of the future, promoting lifelong learning and greater economic mobility. Enterprise Cayman has placed over 100 students in high-impact internships working directly with industry professionals, while 10 scholarships that fully support tech careers in the Cayman Islands were awarded in 2021. 255 students and adults benefitted from interactive workshops, mentorships, internships, and work placements through CEC in 2021. CEC won the Excellence Award in Environmental, Social, and Corporate Governance (ESG) Practices by the Financial Times’ fDi Intelligence Magazine in 2021.
CEC is now home to over 280 SEZ companies and features a wide variety of globally significant businesses including blockchain development companies, some of the world’s leading traders of virtual assets, three of the world’s top 10 Decentralized Autonomous Organizations, one of the world’s fastest growing web browsers, a world-renowned video production company, and the planet’s fastest growing precious metals royalties company. Advanced communications, biotechnology, artificial intelligence, virtual reality, and high-tech manufacturing are all examples of industries active at CEC.
One of the fundamental challenges we face in this region is that of irrelevant and bloated institutions. CEC is a perfect example of an institution created, not by the Government, but by the private sector, which contributes to broad socio-economic development, economic diversification, and growth in meaningful and lasting ways. This is exactly the kind of institution that every country in the Caribbean needs if we are to cement ourselves on a path of sustainable socio-economic progress.
