The Minister of Finance, Mr Winston Jordan has confirmed this week’s information that both he and I knew since the end of February 2018, ie that the Guyanese economy is in trouble. A growth rate of 2.1% for 2017 was announced.
There is clearly a lesson this Granger regime refuses to learn from the rest of the world. But let us not even go to Asia, let us reflect on Africa. That continent failed in their lost decades between 1970 to 2000. However, today the World Bank projected that Africa will grow by some 3.6% in 2019, 3.3% in 2018, compared to 2.5% in 2017. Guyana, on the other hand, is projected to be moving in the opposite direction with a forecast growth rate of 1.1% in 2019, 1.8% in 2018 on the back of a 2.1% growth in 2017. Guyana looks set to expect zero growth by 2020 if this policy paralysis of Mr Jordan continues.
What can Mr Jordan learn from Africa?
1. Manage the economy better. With policy stars like President Paul Kagame in Rwanda in power, their positive policy influence is infecting the continent. Every African leader wants to be the next Paul Kagame who uses drones to deliver medical supplies and blood to remote hospitals in the mountains in hours, when in the past the same operation took days by land. In Rwanda, which is growing by almost 7%, their government has actively reduced their fiscal deficit as a percentage of GDP in 2017 and it is set to reduce further in 2018.
2. Investors need stability. An increasing number of African leaders are becoming global dealmakers who offer international investors fiscal stability. The change in leadership in South Africa happened to weed out the corrupt one only to replace him with a professional business magnate. Their billionaire President Cyril Ramaphosa is a private sector man who is on a mission to grow his nation’s private sector as a means of putting his people to work.
3. Competent debt management. Africa is extremely careful about how they are managing their debt. Even a basket case like Zimbabwe has signed on to this mission. President Mnangagwa was successful in getting China to write off all of its debt owed to that country in exchange for favoured access to some of the mineral wealth. What it did was positively change the cash flow dynamics with the stroke of a pen.
4. Africa is getting rid of loss-making non-exporting public enterprises. Ethiopia is a clear example of this success story where all loss-making non-exporting public enterprises were privatized. The immediate impact was that the economy took off to a growth rate of 8.1% in 2017.
5. Africa got on board with the telecoms revolution. In 2000, Africa had 11 million phone lines; today it has over 800 million mobile lines with a penetration rate of some 74%. Kenya was a global trendsetter with a technology called mobile money. When the Americans were waking up to the payment of bills on smartphones, that technology was already 10 years old in Kenya by way of a platform called M-PESA (meaning money in Swahili). In Kenya, there was an almost 80% penetration of the population by 2017 creating some half a billion dollars in “person-to-person” transactions.
6. Africa is making a serious attempt to invest more in education. But their focus is on the people first, then buildings. Their mission is to cultivate a cadre of teachers who are better remunerated who can own the system rather than leave it to the politicians.
7. Africa got serious at reducing conflicts. The African Union made it very clear that democracy must be respected which has resulted in some important democratic transitions happening across the continent.
So what is Guyana doing wrong?