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Grenada

Executive Summary

Grenada’s legal framework for business is strong. The country is a parliamentary democracy, has a functioning court system, relatively low crime rates, and no political violence. The presence of a comprehensive investment incentive regime, stable economy, existing trade agreements, responsive investment promotion experts, and a robust citizenship by investment program contributes to a healthy and attractive investment climate. However, Grenada’s tourism-driven economy was severely impacted by the global COVID-19 pandemic.

The COVID-19 pandemic posed unparalleled challenges for Grenada by creating macroeconomic instability that threatened to undermine years of consecutive socio-economic progress since 2013. The government’s main revenue earners – tourism and international education — were severely impacted and continue to struggle amidst efforts to revive the economy. Growth in construction, private sector projects, and the country’s Citizenship by Investment (CBI) program is fueling economic activity and forecasted to drive recovery in 2022. Following a 13.8 percent decline in growth during 2020, Grenada experienced a slower-than-expected real GDP growth of 4.8 percent compared to an initial projection of 6 percent. Grenada’s recovery is driven by growth in several sectors including construction (22.8 percent), agriculture (12.5 percent), wholesale and retail (4.4 percent), and financial intermediation (3.5 percent). Tourism and private tertiary education, which once accounted for more than 60 percent of GDP, continues to lag, but the government hopes for an uptick as students return to classes and tourists resume travel.

Government finances remain significantly lower than the 2019 pre-pandemic era, but 2021 saw some positive developments compared to 2020. Revenue collection in 2021 surpassed that of 2020 but remained below 2019 performance. Grenada continues to depend on the country’s citizenship by investment program as a significant source of revenue generation. At the end of October 2020, the program received 437 applications compared to 303 the previous year. By the end of 2021 the CBI program earned more than $55.4 million in revenue – a 40 percent increase compared to the previous year. The debt-to-GDP ratio fell from 108 percent in 2013 to just under 60 percent by the end of 2020. Due to an increase in borrowing and long-term concessionary loans to finance the country’s COVID response, the debt to GDP ratio currently stands at 69 percent.

The government of Grenada has a strong interest in climate resilient initiatives, renewable energy, and developing the blue economy (broadly defined as the sustainable, environmentally sensitive use of ocean resources for economic growth and job creation). Other international investments include projects in construction, manufacturing, retail, duty free outlets, and agriculture. Parliament continues to review legislature governing value added tax, property transfer tax, investment, excise tax, customs (service charge), and bankruptcy and insolvency. The government has an innovative investment incentives regime which assists with streamlining bureaucratic and legal processes to increase the attractiveness of FDI and improve the ease of doing business in Grenada. This regime ensures transparency, equitable treatment of investors, and adherence to the rule of law, thus bolstering Grenada’s marketability as an investor-friendly climate.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 52 of 175 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 N/A https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $41M – Outward

(D) – Inward

https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 USD $9,410 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

4. Industrial Policies

5. Protection of Property Rights

6. Financial Sector

7. State-Owned Enterprises

Grenadian state-owned enterprises (SOEs) are legislatively established by acts of Parliament. These enterprises all have boards of directors appointed by the government and answerable to the relevant ministries. Twenty-five of the 28 authorized SOEs are operational. They secure credit on commercial terms from commercial banks. SOEs submit annual reports to the Government Audit Department and are subject to audits shared with their parent ministries. SOEs manage transportation infrastructure (ports and airports), housing, education, hospitals, cement production, investment promotion, and small business development, among other functions. Generally, where they compete with the private sector, they do so on an equal basis.

Grenada, like its neighbors, acknowledges the OECD guidelines. Corporate governance of SOEs is established and regulated by founding statutes. Local courts show no favoritism toward SOEs in the adjudication of investment disputes.

For additional information on SOEs in Grenada see:http://www.oecd.org/countries/grenada/

8. Responsible Business Conduct

Corporate social responsibility (CSR), interchangeably used with responsible business conduct, is a concept that was introduced to Grenada relatively recently by multinational and regional corporations. Local businesses are slowly incorporating this principle into their operations.

Some social responsibility initiatives undertaken by the private sector and non-governmental organizations include education programs, fitness programs, sporting activities, and cultural endeavors. These are predominantly implemented by the telecommunication companies Digicel and LIME, along with financial institutions. There is also a recent push towards environmentally friendly business practices and development projects.

While firms that promote CSR are more favorably viewed by the community, there is little familiarity with international CSR standards. Activities are deemed to be responsible business conduct if they are lawful, not a threat to national security, and not detrimental to the environment, health, and culture of the Grenadian people. Other than this being a requirement for any company operating in Grenada, CSR is not built into the laws governing the operations of a company.

There has been no high profile, controversial instances of private sector impact on human rights or resolution of such cases in the recent past. Grenada generally enforces domestic laws in relation to human rights, labor rights, consumer protection, environmental protection, and other laws/regulations intended to protect individuals from adverse business impacts. Local labor unions play a role in promoting and monitoring responsible business conduct. Grenada uses private security companies but is not a signatory to The Montreux Document or the International Code of Conduct or Private Security Service Providers.

There are no alleged/reported human or labor rights concerns relating to responsible business conduct, that foreign businesses should be aware of, and neither has there been claims in the last five years by indigenous or other communities that a government entity improperly allocated land or natural resources, or arrests of and/or violence against environmental defenders.

9. Corruption

Grenada is a party to the Inter-American Convention against Corruption. The Integrity in Public Life Act (Act No.24 of 2013) requires that all public servants report their income and assets to the independent Integrity Commission for review. The Integrity in Public Life Commission monitors and verifies disclosures, although disclosures are not made public except in court. Failure to file a disclosure should be noted in the Official Gazette. If the office holder in question fails to file in response to this notification, the commission can seek a court order to enforce compliance.

The Office of the Ombudsman received 29 complaints in 2020, compared to 59 in 2019 and 64 in 2018. Of the 29 complaints, one was closed, 12 are ongoing, 7 received advice/referrals, and 9 were outside the jurisdiction of the ombudsman. Private entities received the highest number of complaints totaling 9, followed by the Ministry of Labor with 6. Of the 9 complaints, advice/referrals were given to 3, and 6 were beyond the jurisdiction of the Ombudsman. Of the 6 complaints against the Ministry of Labor, 3 are ongoing, 2 received advice/referrals and1 was beyond the jurisdiction of the Ombudsman.

Bribery is illegal in Grenada. For the most part, the enforcement of anti-bribery laws and procedures is effective and non-discriminatory.

Grenada is not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The country accepted and acknowledged the UN Convention against Corruption but has not yet signed or ratified it.

U.S. firms have not identified corruption as an obstacle to FDI in Grenada.

10. Political and Security Environment

Grenada has a stable parliamentary representative democracy free from political violence. There have been no examples over the past ten years of damage to projects and/or installations.

11. Labor Policies and Practices

Grenada signed and ratified all the International Labor Organization’s (ILO) recommendations and enshrined these rights into its labor laws, including the Labor Relations Act No.1 of 1999 and the Employment Act No. 1 of 1999. Grenadian law protects the right of workers to be represented by a trade union of their choice.

Employers are generally expected to recognize a union that represents most workers but are not obligated to recognize a minority union if most of the workforce does not belong to said union. In accordance with the Trade Union Recognition Act No 29 of 1979, investors shall grant union representation at any site of employment if most employees indicate the desire for union representation. Investment enterprises are also required to contribute to the social insurance and welfare programs for their workers in accordance with the National Insurance Act.

The Ministry of Labor may refer disputes regarding workers in essential services to compulsory arbitration. Essential services include employees of utility companies, public health, and protection sectors, including sanitation, airport, seaport, and dock services.

Grenada does not restrict the legal activities of trade unions. Most of the workforce is unionized, and labor relations are generally stable.

Article 32 of the Employment Act prohibits employment of children under the age of 16 except for temporary holiday employment. Part 7 of the Employment Act provides for the protection and regulation of wages, and article 52 mandates the minimum wage. Minimum wage schedules are set by occupation. In the second quarter of 2020, the unemployment rate was 28.4 percent compared to 15.1 percent during the fourth quarter of 2019. In 2020, more than 14,000 jobs were lost from a labor force of approximately 50,000 due to the global COVID-19 pandemic and its impact on the tourism sector.

There have been strikes in the past year, but none posed an investment risk, and negotiations toward a satisfactory resolution continue. There are no gaps in compliance in law or practice with international labor standards that may pose a reputational risk to investors. No potential gaps were identified in law or in practice with international standards by the ILO.

No new labor-related laws or regulations were enacted during the last year, and no bills are pending.

The government does not legally define the informal sector and there is no data on the number or percentage of persons in this sector. Street vendors, agricultural workers, farmers, construction workers, and domestic workers are often considered small/micro businesses and were protected by wage, hour, and occupational safety and health laws.

14. Contact for More Information

Breanna L Green
Deputy Political and Economic Counselor, U.S. Embassy Grenada
Tel: (246) 227-4000
Email: GreenB2@state.gov 

Rachér Croney
Political & Economic Specialist
Tel: (473) 444-1173
Email: croneyrr@state.gov 

Contacts for Investment-Related Inquiries:

Ronald Theodore
CEO, Grenada Investment Development Corporation
Tel: (473) 444-1035
Email: Invest@grenadaidc.com or rtheodore@grenadaidc.com
Website: www.grenadaidc.com 

Cathyann Alexander-Pierre
Senior Specialist, Investment Promotion Agency
Grenada Investment Development Corporation
Tel: (473) 444-1033-35, Ext.-236
Email: calexander@grenadaidc.com 

Investment Climate Statements
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