Recently the United Nations Conference on Trade and Development (UNCTAD) published a report which dealt with, among other things, some of the challenges faced by the world’s Least Developed Countries (LDCs) in attracting foreign investment. The report spoke specifically to 48 countries only one of which, Haiti, is a member of the Caribbean Community. (Caricom).
While the report was prepared specifically to help contribute to the discussions that will take pace at this month’s Fourth United Nations Conference on LDCs scheduled for Turkey later this month, its contents on the subject of factors that inhibit investment in poor countries are deserving of attention beyond the confines of the conference hall in Istanbul. Moreover, while the report is based on an examination of the extant circumstances in a specific group of countries, the observations that it makes certainly apply, in varying measures, to several other developing countries including Guyana.
The essence of what the report had to say about the ability of LDCs to attract foreign investment had to do with what the authors of the doccument believe are limitations that inhere in the underdevelopment of the countries. Potential foreign investors usually precede their investment pursuits by undertaking political and economic risk analyses that seek to answer questions about the pros and cons of pouring what in most cases are considerable sums of money into their investment ventures. The UNCTAD report clearly recognises that there are far too many cases in which the feedback which derives from those analyses point to limitations that are often likely to inhibit the viability of their ventures.
In its report UNCTAD cites a number of infrastructural challenges which are common to LDCs and which, it argues, must be addressed if prospects for foreign direct investment are to improve. It cites, among others, an absence of reliable power supply, roads and reliable trandsportation and communication all of which, of course, are essential requisites to investor confidence in a country. And while, as we stated earlier, Guyana is not included in the 48 countries which the report takes account of, no one can deny that some of the hindrances to investment listed in the doccument apply to Guyana in considerable measure.
Electricity, of course, comes immediately to mind. The challenges which we have faced over the last three decades and more in the quest to provide a reliable electricity supply and the consequences that have derived therefrom have been well-doccumented in the media and elsewhere over the years. The failure of the manufacturing sector to grow beyond what is still a stage of infancy is one of the more pointed consequences of the lack of a reliable power supply. No less significant is the loss of competitive advantage which our manufactured products continnue to suffer as a result of what is, in most cases, added power costs, resulting from the need to invest in alternative power supply.
Successive political administrations and the changing of hands of the local power company from state ownership to private ownership then back to state ownership again has made little difference. In fact it sometimes appears that we have now come to take our electricity dilemma for granted and may even have resigned ourselves to the consequences. One may well ask whether our power woes will not, sooner rather than later, be solved through the acquisition of oil ot the completion of a hydropower facility. The fact is, however, that those are not short-term solutions and while we await those hoped-for developments, we slip further and further behind so many other countries in terms of both attracting foreign direct investment and improving the competitiveness of what we manufacture.
One of the possible solutions posited in the UNCTAD report is the creation of LDC infrastructure development funds in those deficient countries. These funds are intended to improve the deficient facilities in order to create a more convivial investor environment.
While the government never seems to tire of pointing to such investment as it has attracted during its tenure in office, it is no secret that some of the limitations pointed to in the UNCTAD report – and a few more – have served as a deterrent to many potential investors. The point about all this is that the government must be reminded about how much we have lost and continue to lose on account of our electricity woes and redouble its efforts – with or without private sector support – to remove this serious obstacle to real development.
