Citizenship by investment in Dominica: facts and figures

The Commonwealth of Dominica offers an immigration product that stands out in the “golden passports” market. There are two main reasons why the Dominican passport looks more attractive in comparison to the competitors’ passports. First, Dominica offers the least expensive citizenship-by-investment opportunity. Second, the country’s economic citizenship program is the most transparent one in the world. The latter claim is supported by the report published by PricewaterhouseCoopers (PwC) consulting company.

After Maria hurricane that occurred in 2017, the Government of Dominica has already spent hundreds of millions of dollars on restoring the infrastructure on the island and providing for economic growth. A large part of the necessary financial resources has been generated by the citizenship-by-investment program (CBIP).

Apart from the affordability of this program, it boasts a phenomenal level of transparency. This fact is confirmed in the PwC report whose findings we are going to share with you in this article. PwC experts visited Dominica in July last year and made an assessment of the local economic citizenship program with the assistance from Dominican officials.

Citizenship by investment in Dominica: General information

Historically, Dominica was an agrarian country that exported bananas and citrus fruits. However, some drastic changes in the international trade and the loss of certain key preferences led to a sharp decrease in the volume of the export of agricultural products from Dominica. The markets that the country had relied before became inaccessible.  

In 2007, hurricane Dean brought serious damage to the local farms cutting down the agricultural production even further. These shocks stressed the importance of the economy diversification. Thus, Dominica started developing the sectors of tourist and financial services. These diversification efforts were financed mostly by the international community but the local Government also took an active part.  

Nevertheless, tropical storm Erica that hit the island in 2015 and the long period of drought that followed it uncovered the true level of vulnerability of Dominica to natural disasters. Tropical storm Erica caused damage that was worth approximately 90% of the country GDP in 2014.

The storm and the consequent drought emphasized the necessity to take serious protective measures that could make Dominica more resistant to the climatic calamities.  

As the country was recovering from the storm in 2016, its GDP grew by around 2.5%. However, in September 2017 category 5 hurricane Maria hit the island bringing deaths and devastation. It was the most powerful hurricane in history to slam onto Dominica. The estimated cost of the damage caused by this hurricane was approximately 226% of the country GDP in 2016.

It was initially expected that Dominica would require dozens of years to fully recover from hurricanes Erica and Maria. However, now the prospects are more optimistic as the country’s CBIP makes a significant contribution to raising the funds needed for the restoration work.

The program was launched as long ago as 1993. Only St Kitts and Nevis has an older CBIP that started in 1984. At the same time, the Dominican program was not so popular at the beginning as it is now. Smart changes to the program requirements have facilitated the growth of its popularity with foreign nationals looking for a second passport.

The applicants to the Dominican citizenship-by-investment program have two options that they can choose from:

1. They can make a non-returnable donation of US$ 100,000 to the local Economic Diversification Fund. This fund is used to finance both public and private social projects aimed at infrastructure development and the construction of schools, hospitals, and residential accommodations in Dominica.
2. They can also make an investment of minimum US$ 200,000 into real property on the island. The property has to be approved by the Government of Dominica for the CBIP. The approved development projects include resort complexes that are built in the country in order to attract more tourists.

Several amendments to the initial layout of the program have allowed it to grow and develop rapidly. In particular, the stringent due diligence checks has made it one of the most secure immigration programs in the world. Apart from other requirements, the applicants to the program have to meet the following criteria:

• The applications for citizenship have to be submitted via immigration agencies that are licensed by the Dominican Government.
• All applicants have to have clean criminal records and be in good health.
• All applicants for citizenship of Dominica above sixteen years of age have to undergo security checks performed by the immigration agents, government officials, and independent international detective firms.

The graph below shows the number of applications for Dominican citizenship approved over the period between 2013 and 2018. Source: PwC.

The graph indicates that the demand for the Dominican passport is constantly growing. The number of applications grew by more than a 1,000% from 2013 to 2018. The opportunity to acquire Dominican citizenship via investment into real estate became available in 2014. Since that time, the popularity of this immigration route has also been steadily growing.

Citizenship by investment in Dominica: the role of the CBIP as a source of income for the national budget

The Economic Diversification Fund (EDF) that we have mentioned above is a source of financing the economic and social development in Dominica. The money that the CBIP generates is used for the construction of residential accommodations, schools, clinics, sports facilities as well as road and other infrastructure improvement.   

Besides, the EDF finances private business initiatives if they are promising for the development of tourist, information and communication as well as agricultural sectors of the economy.

Citizenship by investment in Dominica: the main state projects financed by the EDP

The possibility to spend the money that foreign nationals bring in the form of non-returnable donations when acquiring citizenship of Dominica has had an impact on every sphere of the county’s economy. The table below describes the main results that have been achieved through the use if this money.

Residential accommodations	The funds raised by the CBIP have been used for the construction of 6,680 accommodation units between 2013/ 2014 and 2018/ 2019 financial years. (The financial year lasts from July to June in Dominica.) Fifteen development projects have been financed in total. Many of these buildings have been constructed with the use of climate-resistant materials and the corresponding construction methods.
Roads and transport	The funds generated by the CBIP have been used to restore 15 road sections and 19 bridges that were damaged by hurricane Maria.
Water supply and sewage systems	The program has allowed investing over 175 million east Caribbean dollars into the improvement of fresh water supply systems in the period between 2015 and 2019. The funds have also been used for dredging 11 rivers, which is very important for lowering the risk of floods in the future.
Healthcare	The program helped finance the repairs of three hospitals and six clinics that were damaged by hurricane Maria. In 2017/ 2018 financial year, 16 children were sent abroad to undergo complex treatment and the CBIP money was used for this purpose too.
Education	Hurricane Maria caused damage to 15 schools in the country. The EDF has financed their restoration.
Business and employment	The CBIP-generated money has allowed financing internships for 3,896 new graduates between 2013 and 2019. In addition to that, the money has been used to support 4.5 thousand private entrepreneurs over the same period of time.
Agriculture and fishery	Between 2014/ 2015 and 2018/ 2019 financial years, 32 agricultural and fishery projects have been financed with the EDF money. Most of these projects have been aimed at the increase of production and food security. Farmers and anglers’ employment rate has also been raised through educational programs and direct financial support from the EDF.

Source: PwC report.

Citizenship by investment in Dominica: The use of the EDF funds for state expenditures

Over the last five years, the use of the CBIP-generated money for national purposes has increased drastically. 9.1 million East Caribbean dollars was used for state programs in 2014/ 2015 financial year and 348.8 east Caribbean dollars was used for these purposes in 2018/ 2019 financial year. Thus, over the specified time period, the expenditures grew by 3,700%.

This dramatic growth can be attributed to two main factors. First, more money has become available for spending. Second, hurricanes Erica and Maria have forced the Government to spend more on important social projects.

On the graph below, the orange columns show the amount of the EDF money that has been used for state projects. The grey curve indicates the total amount of capital directed towards these purposes.

The graph shows that the percentage of the EDF money of the overall Government spending has increased from 2% in 2014/15 financial year to 41.5% in 2018/19 financial year.

The damage and the destruction that hurricanes Erica and Maria brought about has changed the priorities in the spending areas. The focus has shifted from the measures that stimulate the general economic development of the country to those that are aimed at the recovery and protection against future risks. Please see the table below.

Priority level	2014/15	2015/16	2016/17	2017/18	2018/19
1	Housing	Ports and airports	Commerce/ micro-business	Housing	Disaster risk reduction
2	Commerce/ micro-business	Commerce/ micro-business	Ports and airports	Disaster risk reduction	Housing
3	Cross sector	Cross sector	Housing	Commerce/ micro-business	Commerce/ micro-business
4	Tourism	Roads and transport	Disaster risk reduction	Cross sector	Roads and transport
5	Electricity	Sewage and water supply	Culture	Ports and airports	Culture

Source: PwC report.

Let us indicate the major changes in the structure of state expenditures after the natural disasters of 2015 and 2017 occurred. Naturally, the focus has been turned to the areas that suffered most of all.

Housing

There is a clear tendency towards an increase in the spending on house reconstruction. A great number of houses on the island were destroyed or badly damaged in the hurricanes. Hence, the shift in the spending towards this area.

Much more money is now assigned to the housing sector in Dominica. While in 2014/15 financial year this sector received only 4 million east Caribbean dollars from the state budget, in 2018/19 financial year, 106 million dollars was allocated to it. The share of the EDF money in this financing is discussed below.

Ports and airports

Douglas-Charles airport (previously called Melville Hall) is the larger one of the two air hubs of Dominica. It suffered greatly in hurricane Erica. Because this airport is the main air gate in the country, its reconstruction became one of the top priorities of the Dominican Government. It allocated 15 million east Caribbean dollars to its rehabilitation in 2015/ 16 financial year and other 23 million dollars the next year.  

However, the airport was damaged again in hurricane Maria, so another 9 million dollars had to be allocated for more repairs.

After Erica, the restoration workers’ slogan was ‘make better’. That meant that the airport infrastructure was made stronger when it was rebuilt. This allowed incurring lesser losses when Maria came about.

The Government has also undertaken to build a new international airport in the northeastern part of the island. In 2016/17, 1.6 million east Caribbean dollars from the EDF was spent on investigating the possibility to construct the airport on the intended site. The exploration work has been completed by now.

The construction of the new airport promises to bring important benefits to Dominica. Currently, the tourists flying to the country from outside the Caribbean region have to use connecting flights departing from the neighboring islands. The new airport will allow travelling directly to Dominica, which certainly should contribute to the growth in the number or tourists and thus generate more income to the national budget.

Reducing the risks of natural disasters

The state spending on the measures that should protect the island and its people from natural disasters has increased drastically. Only 1 million east Caribbean dollars was spent on such measures in 2015/16 financial year while after hurricane Maria their financing reached 30 million dollars.

Dominican mountains in a combination with a large number of rivers on the island bring about high risks of floods in the country when a tropical storm occurs in the area. Both Erica and Maria had a serious impact on the Dominican rivers filling them with trash, sand, and stones, destroying their beds and hampering free flows of water.

The topography of Dominica makes it extremely hard to lessen the risk of floods in the country. The rivers need to be constantly dredged and the banks and the hillsides need to be strengthened.

After hurricane Maria in 2017, the best part of the money generated by the CBIP went to the restoration and reconstruction work. In 2018/19 financial year the total Government spending on such projects reached 347 million east Caribbean dollars, which is almost 50% more than the previous year. This sum includes the 110 million dollars spent on dredging and other measures that serve to protect the country from floods.

The graph below shows how the Government spending is distributed between the sectors. Source: PwC.

Citizenship by investment in Dominica: Geothermal energetics in Dominica

Even though the energy sector received only 2.3% of the total amount of financing that came from the CBIP in 2018/19 financial year, a large part of this small share (6 million east Caribbean dollars) was allocated to the exploration of the possibility to build a 7 MW geothermal station on the island.

This project is crucially important, as the price of electricity in Dominica is currently higher than in most other countries of the world (it is approximately US$ 0.33 per kilowatt-hour).

In addition to that, hurricane Maria caused major power cuts because much of the infrastructure was damaged. It has been reported that the hurricane damaged 75% of the power lines and other electrical equipment in the country.

In accordance with the Dominican strategy of becoming the first country in the world that is resistant to climate change, the construction of the geothermal station is aimed at lessening the island dependence on fossil fuels and decreasing the cost of electricity for the consumer. 

Citizenship by investment in Dominica: National employment programme

The Dominican National Employment Programme (NEP) was launched with the goal of increasing the potential of the human resources on the island, which should contribute to social security and economic growth proliferation.

The program is designed to help young people enter the job market. It involves internships for recent school graduates in different spheres of economy. All in all, around four thousand people have taken part in the programme since it was started in 2013.

The NEP puts interns into different positions in small shops, restaurants, salons, bars, schools, and so on. Such internships allow the youngsters to master the skills and learn how to earn a living.

The financing of this programme has also been growing. In the year of the NEP initiation (2013/14 financial year), 3.8 million east Caribbean dollars was allocated to it. 14.3 million was allocated in 2014/15; 17.9 million in 2017/18; and 27 million east Caribbean dollars in 2018/19.

Citizenship by investment in Dominica: The contribution of the EDF to the solution of the housing problem

There are two residential accommodation construction programs on the island at the moment: Housing Dominica and Housing Revolution. Both of these programs are financed exclusively by the EDF. These programs have allowed restoring and building from scratch thousands of flats and houses for the people who lost their homes to the hurricanes. Between 2013/14 financial year and 2018/19, the citizenship-by-investment program has financed the construction of almost seven thousand accommodation units.

Tropical storm Erica caused serious damage to the housing resources on the island in 2015. Of the 25 thousand flats and houses in Dominica, 20% needed a replacement and 25% more needed major repairs after the storm.

The housing sector in Dominica incurred losses of more than 122 million east Caribbean dollars, which is approximately 14% of the total loss that the country suffered from the storm.

Hurricane Maria that hit Dominica two years later brought about even more devastation. 23.5 thousand homes were ruined, which is about 90% of the total amount of the residential accommodations on the island. The total loss that Dominica suffered from Maria is estimated at 995 million east Caribbean dollars. A large portion of this amount is the cost of the ruined houses.

The current strategic goal of the Dominican Government it to build new houses that will be more resilient to natural disasters. The total cost of the housing sector restoration in the country is estimated at 1.403 billion east Caribbean dollars (US$ 519.7 million).

The financial resources allocated to the construction and reconstruction of the ruined houses grew from 30 million east Caribbean dollars in 2016/17 financial year to 91 million in 2017/18, to 106 million in 2018/19. There are several development projects currently underway in Dominica. They are listed in the table below.

Development project name	Number of accommodation units
Bellevue-Chopin	353
Georgetown	68
Cotton Hill	68
Delices	66
La Plaine	66
Castle Bruce	66
San Sauveur	66
Grand Fond	66
Grand Bay	32
Stockfarm	32
Jimmit	33
Upper River Bank	30
River Side	70

Source: PwC.

Some of these projects have already been completed while others are still under construction.

In accordance with the Government strategy, the houses and the infrastructure around them are built in a way that will make them more resistant to tropical storms. When erecting the houses, the builders use climatically resilient materials and technologies that include the following ones:

• The buildings are aseismic and resistant to super strong winds;
• Both the walls and the roofs are made of reinforced concrete, which makes the houses sturdy and waterproof;
• The windows are made of shockproof glass;
• The buildings are equipped with solar panels that serve to heat the water.

Citizenship by investment in Dominica: The economic effects of the state projects financed through the CBIP

Dominican citizenship-by-investment program has contributed greatly to the restoration of the houses and infrastructure that were destroyed by hurricanes Erica and Maria. But in addition to that, the money that the program generates is used to finance the long-term strategic goal of transiting to sustainable economy. Thus, the EDF also serves the purpose of improving the overall macroeconomic situation in the Commonwealth of Dominica.

The increased Government spending has a positive impact on the demand for locally made products. The restoration projects create new jobs and thus more people have spending money. PwC experts estimate that between 2014 / 15 and 2018 / 19 financial years, EDF investments brought about an economic growth in Dominica of 135.3 million east Caribbean dollars. It is expected that during the current financial year the demand for home-made products will grow by another 15.3 million dollars.

In addition to short-term gains, the high Government spending will have a long-lasting effect. IMF experts believe that the high amount of investments should bring about production growth in Dominica that will exceed this amount by 300%.

Citizenship by investment in Dominica: Tourism development in the country  

In 2014, the Government of Dominica introduced the possibility to acquire citizenship of the country via investing into its real estate. According to the program requirements, the applicant for Dominican citizenship has to invest minimum US$ 200,000 into real property located on the island.

This is an attractive opportunity indeed, as it does not require making any non-returnable donations. The property can be resold after three years if the buyer is not a new applicant for Dominica citizenship. The property can be resold after five years if the buyer is such a new applicant. Only Government-approved development projects qualify for this program.

At the moment when this text is written, all such projects are hotels and eco-resorts. This fact reflects the general Government strategy of making the country more inviting for foreign tourists. The Dominican authorities are aiming to attract those tourists who seek relaxed vacations, who appreciate the wild nature, and who are interested in the cultural heritage of this exotic tropical country.  

Citizenship by investment in Dominica: An overview of Government approved development projects

The construction of three eco-resorts is currently financed through the CBIP. The money has also been used to build two more resorts that have already been put into operation so tourists can book suites there.

• Cabrits Resort & Spa Kempinski is a luxury hotel with 161 suites located close to the city of Portsmouth in the northern part of the island. The guests can find a spa-salon there, three restaurants and several tennis courts. Cabrits Resort & Spa Kempinski was put into operation at the end of last year.
• Jungle Bay Resort is one more functioning resort that is located in the southern part of Dominica. It is a complex of villas sitting in the tropical jungles. Jungle Bay Resort is perfect for those who are looking for tropical adventures. The complex continues growing.
• Anichi Resort is a luxury hotel located to the south of Portsmouth. It has 201 suites, two swimming pools and a spa. It is scheduled to open later this year.
• Tranquility Beach Resort is expected to be completed in 2021. This resort complex will offer standard rooms, luxury suites, penthouses, and villas. The total number of accommodation units is going to be 73. The resort is located at the edge of a cliff so the guests will be able to enjoy fantastic views of the sea.
• Secret Bay Residences is another villa complex that is expected to be completed by October 2021. The project is an extension of the already functioning 5-star Secret Bay Hotel located on the west coast of Dominica.

The table below shows the resort complexes whose construction is already completed and those that will be built by 2022. All the resorts are approved for the CIBP. When all the hotels are put into operation, the number of suites available in Dominica will grow by almost 70%. These resort complexes will add 628 new hotel rooms to the existing ones. It should be especially noted that these are going to be premium class accommodations of which there are quite few on the island at the moment.

Developer/ hotel name	Expected date of completion	Number of rooms	Number of people working on the construction	Number of employees (when the hotel if functional)
Range Developments — Cabrits Resort Kempinski	Completed	161	605	250
Oriental Developers (Caribbean) Ltd — Anichi Resort (will work under Marriott management)	December 2020	201	60	281
AyAy Holdings Caribbean Ltd — Jungle Bay Resort	Partially functional (booking available)	120	210	150
Sunstone Inc. — Tranquility Beach Resort (will work under Hilton management)	2021	73	42	120
Secret Bay Development — Secret Bay Residences	October 2021 (partially already functional)	73	50-100	140-160

Source: Government of Dominica

The newly built resort complexes are expected to make foreign tourists leave more money in Dominica. In 2016, the tourist expenditures amounted to 406 east Caribbean dollars per night. This is considerably less than those in St Lucia or Antigua and Barbuda located not far away from Dominica. In 2016, foreign tourists spent 619 and 659 east Caribbean dollars per night in these countries, respectively.

The table above shows that the development projects have created about a thousand jobs in the construction sector. One more thousand jobs will be created in the service sector when the hotel construction is completed.

Besides, the hotels will have a positive impact on the regional economies when they all are put into operation. With the increase in the number of tourists staying at the hotels, the demand for farmers and anglers’ products will also increase. In addition, more guides, taxi drives, street vendors, etc. will be able to sell their products and services to the tourists.

The approximate total amount of capital generated by the CBIP and invested into the construction of these resort complexes is US$ 477 million. The developers note, that the possibility to use Government investments when building the complexes spares them the need to apply for bank loans. Obtaining a credit for real property construction can be quite problematic in the Caribbean region.

Besides, the fact that the Government of Dominica has approved these development projects for the participation in the CBIP is a sure indication of the high quality of these accommodations. Thus, a foreign national buying property in Dominica can simultaneously obtain both the passport of the country and a top-class suite or villa if he or she opts for this immigration route.

Citizenship by investment in Dominica: The expected growth of tourist spending

According to PwC experts, the increase in the number of high quality hotel suites in the country that is financed through the CBIP should stimulate the growth of the total tourist spending from 87.5 million east Caribbean dollars per year to 142.1 dollars per year.

The growth of the tourist spending will largely depend upon the room occupancy rate. Looking at the neighboring Antigua and Barbuda, PwC specialists recon that the rate is going to constitute 61%.

Another factor that should contribute to the growth of tourist spending in Dominica is the orientation of the local tourist industry towards eco-tourists. Recently, a research has been completed that shows that the average eco-tourist coming to the Caribbean is above 35 years of age and has a medium or a high income. Such tourists usually look for high-quality accommodations, which further improves the chances of Dominica to generate more income from tourism as the eco-resorts that are currently under construction will offer their guests luxury suites and villas.  

In the future, the Government of Dominica plans to approve more development projects for the participation in the citizenship-by-investment program. These new projects will also make a considerable contribution to the attractiveness of Dominica to tourists and, therefore, the overall economic growth in the country.

The local Government has also undertaken to build a new international airport on the island that will be able to accommodate direct long-distance flights. In addition to that, it also intends to build a new seaport for cruise ships. The goal of the latter construction project is the same: to make Dominica more accessible for foreign tourists.  

These investment projects in a combination with the establishment of a Hospitality Institute on the island (that will train personnel for the tourist sector) should contribute to the transition of Dominica to the economy that is based on providing services rather than the one that relies on the export of agricultural products.

Citizenship by investment in Dominica: Conclusions

The financial resources generated through the citizenship-by-investment program supply the funds necessary for liquidating the consequences of the hurricanes. In the long-term perspective, however, they contribute to the transition to the service-based economy in Dominica. The tourist sector will be in the center of the new economy in the country.

The CBIP’s share in Dominica Government spending is extremely large. In 2018/ 19 financial year, this share reached 41.5% of the total spending.

Over the period between 2014/ 15 and 2018/ 19 financial years, the program-generated funds provided for the growth of Dominican economy by 150.5 million east Caribbean dollars. The demand for the locally made products has increased as the program-sponsored projects create more jobs and pay wages.

The money from the EDF has been allocated to all sectors of Dominican economy, not only to the restoration work after hurricane Maria. At the same time, the availability of the capital required for the restoration work has raised the local people’s spirits. This fact has made the reconstruction efforts more effective and the results more rapid. In addition to that, the CBIP has allowed many families to move to new, hurricane-resistant homes.

Experts expect that the positive impact of these investments will be even more tangible in the future. They will facilitate the transition to sustainable economy in Dominica and allow developing climate-resilient infrastructure in the country.

The program-generated funds are also making a considerable contribution to the development of the tourist sector in Dominica. According to PwC specialists, when the resorts become fully functional, they will be bringing between 21.9 and 35.5 million east Caribbean dollars to the state budget of Dominica every year.

The Government of the country is also working with private entrepreneurs including farmers, anglers, small business owners, small service providers, and so on. The educational programs initiated by the Dominican authorities will allow the entrepreneurs to make full use of the new opportunities that arise with tourism development on the island.

The Government has also announce the plans to use the EDF for financing the modernization of the air and marine services and equipment in the country.

Moreover, the citizenship-by-investment program contributes to the provision of energy security in Dominica. Its funds have been used to finance the initial – exploration – stage of the geothermal station construction project. The station will be built with the financial support from the International Development Association, World Bank, and the Ecologically Friendly Technologies Fund of Great Britain.

This investment project will increase the share of renewable energy used in Dominica, which will make the country less dependent on the volatility in the international fossil fuel markets. Dominica can even become an exporter of clean energy in the future.

The combination of all these Government programs and investment projects is bound to make the Commonwealth of Dominica a prosperous Caribbean country and a truly independent state in the near future.

If you would like to obtain more information about Dominica and the possibility to become an economic citizen of the country, please contact our specialists at [email protected]. We will be happy to answer your queries and assist you in acquiring a second passport of this beautiful and very friendly tropical country.