By Nicosia Smith
Steps to economic recovery taken over the past few years have fallen back as Linden slides once more into a depression. The bauxite mining town is feeling the impact of the slowing global economy, as remittances decrease and jobs are slashed in an area that was already battling high unemployment.
There have been calls for a stimulus package for the community and increased infrastructural contracts to community contractors as a means to shore up the economic base, but there is no guarantee that these will occur.
Prominent businessman Dunstan Barrow of Cabs Hardware and General Store and Barrow’s Restaurant and Lounge currently has a multi-million dollar plaza under construction on Republic Avenue. “Generally, business is bad,” he offered. Asked how optimistic he was that business prospects will improve, Barrow said that with his level of investment, he has to be optimistic. However he was realistic noting that job cutbacks at the number one private employer, BOSAI, will put a further dent in business proceeds.
Stabroek News understands that apart from the job cuts the mining company is also cutting back man hours by some 30-40 hours. Efforts to contact Peter Benny, Personnel and Industrial Relations Superintendent at BOSAI Minerals Group for further information on this proved futile. However, it is believed that one reason for the cuts is the slowdown in demand for bauxite in the company’s main markets, like North America.
In addition, Barrow said BOSAI imports a lot of its supplies, which previous companies would have bought from merchants in the community. Barrow said that he has seen a decrease in purchases.
In April 2007, the Chinese-owned BOSAI began operating after striking a US$46 million deal with the previous owner of Omai Bauxite Inc, Canada-based Iamgold. A US$1 billion aluminium refinery was also projected to be set up by BOSAI, but the global financial crisis may well stall this move. As of last August BOSAI had around 650 employees, after taking over operations with around 500 workers. So far this year it has let at least 100 go, although the job cut figure is believed to be higher.
In addition, this newspaper has learned but was unable to confirm that there is just a skeleton staff at the Russia-based RUSAL subsidiary Bauxite Company of Guyana Inc (BCGI) that took over Aroaima Mining Company (AMC), in the Berbice River. One employee said as far as he knows the staff levels are normal. In December it was reported that 50 persons were laid off.
The manager of Bobby Noel Hardware and Furniture outlet, at 703 One Mile, Wismar said that usually by this time of the year business would show signs of picking up, after the slowdown in January, following Christmas shopping. But that has not been the trend this year. However, she is expecting some stability as the year progresses. The manager said sales had decreased, with walk-in customers mainly inquiring about prices with promises to return.
In a recent interview former president of the Region Ten Chamber of Commerce and Industry Basil Jaipaul and owner of Riverview Shopping Complex on Burnham Drive, Wismar said most of the business transactions being conducted were remittance-based and remittances had dropped some 10%-15%. This business has a Western Union franchise. According to him, there was a 35% drop in hardware purchases but the other areas remained constant. External issues like CLICO are also affecting economic attitudes in the community, he said, since a lot of Lindeners have policies with the insurer. He said people were not receiving the “right information”. CLICO operated a Linden branch. Jaipaul said that if the United States’ economy got a boost the whole world will benefit and once the US gets going the whole world will get back on its feet. Efforts to gain a comment from the current chamber president, Leonard Forde, proved futile.
Alternative economic drivers
Domestic income-generating activities within the community are also few. One major event that was a major economic pull, the Kashif and Shanghai Football final is no longer hosted in Linden. The next major event is the Linden Town Week, together with other initiatives like the Rockstone Fish Festival, but this year the fortunes of Town Week could be mixed.
Region Ten Interim Management Chairman Orrin Gordon believes that there will not be as many overseas-based Lindeners at the upcoming Linden Town Week, because of the downturn in the US. This means the event will not be as big. “I am quite sure it is going to have some impact on the event,” he said.
Gordon reiterated that a stimulus package as well as increased infrastructural contracts for the community can help.
Gordon also said that the “situation is severely challenged with LEAP [The Linden Economic Advancement Programme] set to end in June. Certain aspects of the seven-year European Union and Government of Guyana, over $2.2 billion economic programme have already ended, such as the Linden Economic Advancement Fund (LEAF) that gave micro, medium and small loans to residents of Region Ten. LEAF was worth 1.9 million euros. For this year, this newspaper understands no loans were issued.
A public-private partnership is expected to replace LEAP, but Gordon is concerned about where the money will come from to operate this new entity. It is expected that the loans repaid will be able to maintain the funding facility for residents of Region Ten (no new loans will be given out until the new entity takes shape), while the Region Ten Business Centre that houses LEAP’s office and business services is also expected to continue, under an entity called the Guyana Enterprise Corporation. But Gordon is unsure where the monies will come from to operate this aspect of LEAP. The new company is not getting any new money from the Consolidated Fund or from the Treasury, according to Gordon. In addition, he believes the “government should not be in the forefront.”
LEAP currently collects fees to render certain services to the business community such as business plans and rents out incubators to start up businesses. International Project Manager Kathleen Whalen had said earlier that this year those fees, along with the additional rental of office space at the Business Centre are expected to fund certain maintenance costs for at least one year.
It is also his view that at least 2,000 families in Linden should receive an additional $4,000 as an economic stimulus, for those earning less than $50,000, and this he called “a small …a little drop in the ocean.”
He stressed that while billions in infrastructural contracts are approved, less than one per cent goes to Linden contractors. For the around $300 million for infrastructural work expected for the fiscal year 2009 in the region, he would like to see 60%-70% of the contracts being awarded to Linden contractors. When asked if this was possible, he said a way must be found to achieve this. The small Linden contractors often cannot meet the requirements to bid for certain contracts and have been criticized for shoddy work.
