If there continues to be any doubt that Government cannot run commercial businesses and that the socialist formula of nationalization is disastrous, one need only look at Guyana’s experience. The infamous glass factory, the clay brick factory, and the nonsensical bicycle assembly plant are prime examples of businesses conceived by Government bureaucrats, the investments made using taxpayers’ money, and the failure spectacular. Another formula was the nationalization of going concerns. Their subsequent deterioration and ultimate failure under management of Government bureaucrats was equally inevitable: Guyana Refrigerators Ltd, Guyana Telecommunications Corporation (GTC), Guyana Electricity Corporation, Guyana Bauxite Company all failed after being taken over by the State under PNC leadership, and were bankrupt by 1991.
One of the most politically volatile examples of the incompetence of the State in running a business is GuySuCo. This company was created as a government owned successor to the private sugar companies Booker Sugar Estates Ltd and Jessel Holdings Ltd, which Mr. Burnham nationalized in 1976. Perhaps sugar production figures can be used for present purposes as an indicator of the success of the industry with and without Government involvement. Production was 300,350 tonnes in 1975, while the industry was in private business hands. In 1976, Guyana’s sugar production peaked.
That was the year that the State nationalized the industry. And from 1976, the rot began for sugar. As one writer commented: “The PNC encouraged the growth of a parasitic-bureaucratic elite who grew rich by bleeding out the profits from the nationalised companies. What it did was to encourage its leading members to establish “cooperatives” which were then given lucrative contracts to supply goods and services to these companies. In many cases, these goods and services were sub-standard resulting in time wasting and lower production.” A phenomenon which continues to be familiar in Guyana.
By 1977 – just a year after nationalisation – GuySuCo ran up a loss of G$15.6 million. By 1989, after 13 years of Government control, production had declined to 187,000 tonnes – insufficient even to meet EU and US quotas to which Guyana had preferential access at the time. There could be no doubt about the management competence of the Government appointees.
In 1990, during Guyana’s brief renaissance under the presidency of Mr. Hoyte, Booker Tate was persuaded to return to Guyana to manage GuySuCo again. By 1996, sugar production was up to 280,000 tonnes under their private management. By 2002, it was at 331,067 tonnes, its highest figure since 1976, and nearly double the 1989 figures.
And so, the Government, this time the PPP, again decided it was competent to run the business, and again stepped in. Under the Jagdeo administration, the decision was taken in 2004 to build the now infamous mill at Skeldon. The PPP boasted that the plant would have a production capacity of 110,000 tonnes. Even more magically, it would produce electricity, providing generation potential of 40 MW, of which excess power could be sold to GPL! As every Guyanese knows, the USD million dollar investment (taxpayers’ money) has been a colossal failure.
In 2010, the PPP Government fired the Booker Tate management team and appointed a Government-controlled management team. By 2013, production under this PPP management was down to 186,754 tonnes. To add insult to injury, Booker Tate sued the PPP Government for breach of contract, and was awarded judgment in 2015 in the sum of 664,750. Pounds sterling. More taxpayers’ money.
Finally, the PPP made no effort to anticipate and accommodate the cessation of the preferential access to European markets which Guyana enjoyed since 1976 under the Lome Convention. When that preferential access ended in a phased process between 2009 and 2016, aid was provided to help small countries adjust. Barbados, Trinidad and many other Caribbean countries ceased sugar cultivation altogether and in a gradual and controlled process adjusted their economies. In Guyana, the PPP did nothing.
Between the disasters of Burnham economics and Jagdeo miracle factories, the only plausible conclusion must be that the two political parties have been destroying and are continuing to destroy Guyana. The tragedy which has now unfolded as the present administration unceremoniously severs thousands of sugar estate workers with no visible plan for the future requires its own discussion. Yet half of Guyanese vociferously attest to the attributes of the pot, while the other half sing the praises of the kettle.
Timothy M. Jonas