Guyana’s economy has been the focus of attention over the past two weeks with the recent Investment Conference. In the keynote address by the President of the CDB, Dr Warren Smith, Guyana’s economic progress was commended. Recent growth figures, though modest, have been a cause for optimism, especially since most countries in the region have been struggling. However, this must be assessed on the basis of the past. The economic problems triggered by mismanagement, corruption and the oil crisis from the early 1970s were only interrupted between the second half of the Hoyte years and the Jagan presidency when it showed some growth. Thereafter growth again slowed for nearly a decade and resumed about four years ago.
The economy bequeathed to us in 1966 consisted of the export of sugar, rice and bauxite. Over forty-five years later, in 2013, the economy consists essentially of the same features, exporting mainly sugar, rice, bauxite, forest products and gold. Bauxite exports have reduced substantially since the 1970s and sugar is struggling. Our exports have little or no value added. In other words, there has been no significant structural change in our export profile for nearly fifty years. While the buoyant prices for commodity and raw material exports and remittances have been the main reason for our economic performance over the past four years or so, the dangers of reliance on this model is palpable. The sharp and continuing drop in gold prices speaks to the dangers.
Guyana therefore needs to develop new strategies and the government is obviously aware of this. The consensus is that we must develop new economic activities and export more to more countries, especially to those which are showing economic growth. President of the IDB, Luis Alberto Moreno, said two weeks ago at the Caribbean Growth Forum in the Bahamas that if countries had been exporting to Brazil, they would have been showing higher growth. While the previous government arrived late to the Brazil strategy, it did arrive, but at the rate it is unfolding, the potential benefit of closer economic relations will not be here for a few generations yet.
Tourism has been promoted over the past few years as a new growth potential. Much work and effort has gone into the development of this industry. But there are great, almost insuperable, hurdles. Investment in promotion and facilities is negligible. Air transport, crime, the state of the city, to name a few are obstacles.
The service sector has lacked infrastructure and where it exists it is costly. Mention has been made recently of the cost on bandwidth which is a disincentive to investment in call centre services in which Guyana has distinct advantages. The potential for this industry has already been demonstrated with the investments which have been made so far and thousands more jobs can be created if adequate incentives are in place.
With the Caribbean having a US$6 billion import bill for food, Guyana’s potential in agriculture is limitless. Once again, energies which are directed to new initiatives soon dissipate and fall flat, mainly because of lack of sustainability due to the inability to attract investment. Agro industries and industrial development have to await the less expensive electricity which the Amaila Hydro Project will bring, a still uncertain project and in any event, like the Brazil project, many years away.
One would have thought that new initiatives might have been developed to grapple with these enormous issues. Go-Invest, which was supposed to be the driver and promoter of investment in Guyana, is now a confirmed failure. It was felt that the government might have been looking at new strategies to attract investment rather than having the job scattered over a number of agencies and ministries with no central directing force. A Ministry of Economic Development whose main job will be Cabinet level responsibility to promote investment could have been one of the initiatives under consideration by the government. Several ministries could easily be scrapped or merged to make way.
Economic growth and development will positively affect everything from social development, crime, corruption, TIPS, weak infrastructure and all the negatives facing Guyana. It is therefore a mystery why the government focuses on outing the fires of criticisms, objecting to “interference in internal affairs,” when the PPP invited such interference in the 1970s and 1980s, instead of taking reasonable steps to deal with problems. It is these denials and criticisms that capture the headlines rather than the creative ideas, if any.
An important factor is a stable political climate. If the government has not learnt by now that it did not win the majority of seats in the National Assembly at the last elections and it needs to engage with the opposition in a serious way to move the country forward, nothing will happen in the economy. The government holds the future and its own in its hands. It can therefore decide to move forward or continue to feel a sense of entitlement to opposition support, honing and deploying its firefighting skills, while the tentative developments in the economy remain tentative, until the next elections.