Saint Lucia’s CIU is one of the most known in the world. Yet, its performance has suffered horribly in the past year.
Why? It all comes down to marketing.
The 2019-2020 fiscal year saw Saint Lucia renegotiating its agreements with many marketing agents.
The goal was to remove geographic exclusivity. And while the process does require much time and money, it would put the program on a better track.
In fact, the report for that year was positive by Ryan Devaux, Saint Lucia’s CIP Board Chairman.
His report discussed how much hard work went into the negotiation process, and how it was a success for the marketing sides of things.
In fact, the report praises, the repositioning efforts so that Saint Lucia’s marketing is available to multiple parties.
So Where Did the Problem Arise?
The change in marketing positing came at a heavy cost, this being the program’s performance and CIU financing.
How so? It has to do with application focus. Marketing agents focused more on efforts to push the program, and less on processing.
This led to an overall lower approval number, even though 2019-2020 had more applications submitted than the previous year.
In fact, 2019-2020 had 193, compared to the previous years’ 152.
Additionally, as mentioned by Devaux, the process included extra commission and settlement fees that the marketing agents would receive.
This added to the deficit experienced by the CIU in the previous fiscal year.
With a fall in approvals, the influx of investments also dropped. NEF contributions dropped to EC$36 million, compared to last year’s EC$62 million.
This isn’t a positive sign, where so far, Saint Lucia’s CIP has only raised EC$131 million in contributions starting 2015.
What’s worse is the net benefit for the program. 20% of the influx is kept by the CIU for marketing payments, which includes promotions and agent commissions.
Thus, the actual revenue for the program (after deducting the 20%) amounts to EC$29 million.
How Does Saint Lucia Divide its Expenses?
Saint Lucia divides its costs into multiple segments.
First, there are operating expenses (those required to run the CIU, paychecks, office rents, etc.).
Then, there are expenses required for processing, which include agent commissions, expenditures on due diligence, etc.
With all those expenses factored, the CIU shows a net deficit. In fact, the expenses haven’t changed by much from 2018 to 2019.
Combined with the fall of revenue, this leads to an annual deficit (this year) of almost EC$662,000.
Projections for the Program’s Future
So far, while the deficit paints a negative picture of the CIU, it’s expected that the situation should improve soon.
With the new marketing renegotiations, Saint Lucia should witness a massive increase in application volume.
This comes in light of Saint Lucia’s National Economic Fund growing in size. The 2019-2020 year did show positive outcomes, with a net EC$29 million.
Thus far, it’s only the CIU that’s underperforming. But being a temporary drop, we expect performance to pick up soon.