I have recently returned from extensive visits to Latin America, taking in Panama, Costa Rica, Chile, Brazil and Cuba. What struck me most about the visits was the commonality I found between the UK and these thriving, diverse nations and the desire for us to work more closely together.
What were your impressions of Central America?
Visiting Panama and Costa Rica in the immediate outcome of the EU Referendum naturally meant that many of my conversations with Government and business focussed on the impact of a Brexit on the financial services sector in London and on the UK’s international relationships. It proved to be an excellent opportunity to reassure everyone that the UK is still very much “open for business.”
The visit to Panama was timed to coincide with the opening of the enlarged Panama Canal. This major infrastructure upgrade was completed in May 2016, with wider locks to accommodate the larger New Panamax ships. With my background in ship broking the visit had a strong maritime theme; focussing on the potential of London as a source of finance for future infrastructure projects, as well as the development of Panama as a logistics hub and financial services centre for the region.
In Costa Rica I met with President Solis, along with the Finance Minister, the Central Bank and the regulators of the insurance, pensions and financial services sector. This access permitted high-level discussion of the economic and regulatory challenges facing Costa Rica as it progresses through the formal accession process for membership of the OECD.
I also had a wide-ranging conversation with the regulators for the pensions, insurance and financial services sectors in Costa Rica, and considered the potential for collaboration with the UK on reforming supervisory structures, as well as the challenges caused by segmentation in the banking sector and by inequalities between the public and private pension providers. We also looked at the interaction of all of these sectors with infrastructure projects, and how best to access global capital.
How can UK finance get involved?
Earlier in the year, in April and May, I visited Chile, Brazil and Cuba. These three countries are markets at different stages of development and accessibility, each with its own opportunities and challenges. And while Chile and Brazil regularly feature on the Mayoral overseas itineraries, the visit to Cuba was the first by a Lord Mayor. Despite their differences, the primary purpose of visiting each country was to familiarise government and businesses with the capital and international advisory expertise available in London which we did very successfully. We also explored ways in which the City of London can support infrastructure growth and the development and professionalisation of the financial services sector. The potential role of alternative sources of London-based capital, such as green finance, in supporting ambitious infrastructure projects was widely discussed in meetings in all three countries.
The visit to Chile was timed to coincide with Expomin 2016, the country’s promotional trade fair for its globally important mining sector, and ahead of the visit to London of the President of Chile, Michelle Bachelet, a few weeks later. Although Chile is a very open economy, the fall in the price of copper and other commodities, together with a slow-down in economic growth and a decline in investor confidence, is provoking business and government to consider ways to build more efficient models into previously high-performing sectors to compensate for the declining prices. Here the UK’s burgeoning FinTech industry well-positioned to help. Green finance was particularly relevant to many of the challenges facing the mining industry, where energy use and water management are key considerations. The visit underlined Chile’s potential as the sophisticated access point for the Latin American markets and the increasingly economically integrated countries of the Pacific Alliance – Chile, Peru, Colombia, Mexico.
My visit to Brazil came at an economically challenging time for the country. I was keen to stress that the UK is not a fair-weather friend but that I see a strong bilateral relationship between our two countries. I was also able to have useful conversations with business and regulators, particularly on the issue of reform in the insurance and reinsurance sectors. The UK’s offering in green finance and FinTech also incited interest, and there are significant opportunities for further collaboration with Brazil’s asset managers and the family offices of ultra-high net worth individuals.
Cuba is a country quite unlike any other. My visit followed in the wake of the Foreign Secretary who had signed a Memorandum of Understanding with Cuba on financial services sector collaboration. Building on this, my discussions with the Cuban authorities centred on capacity-building and the possible support to be found in London as Cuba considers economic reforms. The merging of the two Cuban pesos – one used by Cuban nationals and one by foreign visitors – and the multitude of exchange rates associated with them, will be a significant hurdle to progress and a financial services sector will need to be built more or less from scratch. However, this poses exciting opportunities for Cuba and the UK to work together. Our financial services sector is obviously well established, and we have the global services and skills to help Cuba realise its ambitions. The visit came at a very interesting time, and the City of London looks forward to supporting Cuba in this pivotal phase of its development and growth.
Are you optimistic about UK plc in Latin America?
My visits to the Latin American countries generated much food for thought and for action. They afforded an excellent opportunity to raise awareness of what London has to offer, and I am confident we have the expertise, depth of capital and liquidity to help support the next century of Latin American growth.