By Macsood Hoosein
History does not have many cases in which a developing country found itself suddenly with an economic opportunity of the importance and magnitude that Guyana does today; these opportunities are rare and enviable windfalls.
Today’s near-term macroeconomic projections for most economies of the world are less-than-encouraging, yet Guyana’s is off the charts. Guyana’s recent substantial oil finds are without a doubt the biggest development in its history in economic terms, but it is also of global significance given its magnitude and timing. How the people and government of Guyana use this opportunity will decisively determine the degree to which the country makes good of this opportunity and what the long-term wellbeing of the country will be. Yes, many have pointed this out before and perhaps some are becoming inured to this message by now. Yet, it is hard not to point out, from the vantage point of someone looking from the outside, how rare, valuable, and heartening a global opportunity Guyana has been gifted with. If Guyana uses this opportunity to build economic and social strength and resilience it would transform the lives of its people and also earn the bonus of improving its standing, brand, and bargaining power in the wider world. The probability that Guyana will again have an opportunity of this importance and magnitude is not only uncertain, it is unlikely. And, to use an accounting term, the useful life of this opportunity is finite. In other words, the duration of this opportunity’s economic value is limited. Seen in investment terms, Guyana’s oil is not an infinite resource, the price of oil is likely to decline in the long term as the world moves to decarbonize to save itself from the existential threat of climate change, and the use of oil has external costs to Guyana and broader society that are not factored into its price. Given all of the above, the value of this opportunity can be multiplied and extended through astute planning and execution that uses it to generate additional sources of value. How? By strategically and judiciously investing the proceeds in areas that would pay the country the highest dividends over the longest term, including using them in ventures that create new and additional value
In corporate history, many companies remained viable and successful because they crafted and followed a strategic path of transforming or reinventing themselves. Think about IMB, which moved away from making computers to being a service company because it was able to see that computers were going to be a less viable way for it to stay in business and compete. Some countries have transformed themselves successfully using foresight and strategic planning. South Korea, for example, invested resources and doggedly followed a path to become a global manufacturing force. Other nations did not manage opportunities they had very well, such as post-Mandela South Africa, which already had infrastructure, industry and resources it could have leveraged to transform itself post-apartheid. Oil-rich Brunei, a country in which the country’s leader was once the wealthiest man on earth, is likely headed for challenges in the future if it does not diversify its economy from its heavy reliance on petroleum and train its young people in a variety of new skill areas.
Whereas energy will always be a key input for the economies of countries, petroleum as a resource, is not a guarantee of economic prosperity in the long run. The long-term future of the global energy economy involves less reliance on petroleum and more on renewable energy. And whilst Guyana has historically had few natural disasters, that will change with the risk that climate change brings to Guyana – sea level rise, increased rainfall, risk of drought, and the risk of forest and brush fires, all of which are not only economically disruptive, but carry human and social costs. Given that most of government, agriculture, infrastructure, and the population are situated on the below-sea-level coastal plain, the first two of those would pose substantial risks. It cannot be overemphasized how high the risk of climate change is to Guyana’s people and its economy.
So, what can Guyana do? All citizens need to unite around this opportunity, as should the country’s political leaders, to develop policies and plans that use the economic proceeds of the country’s petroleum extraction to address some of the present needs but, more importantly, create new and viable opportunities for economic benefit and secure the country and its people in the long term. A better future for the country using some of the proceeds from the petroleum industry could include a panoply of initiatives. The following are some of the more obvious ones that don’t require a formal cost benefit analysis to make the list.
Strategic planning: What are Guyana’s strengths, weaknesses, risks and opportunities? What are the country’s comparative advantages?
Holistic planning: Crafting integrated, cohesive, long-term planning for development. Use a participatory approach, informed and periodically reviewed based on lessons learned, and the best minds available, to craft long-term plans that would survive administrative change and be shielded from political interference.
Resist the temptation to spend money impulsively. Part of accountability is the fiduciary philosophy that involves making a well-developed plan, investing money responsibly, and being transparent about the inflow and outflow of publicly owned resources.
Use the oil proceeds to build renewable energy infrastructure that poses lower social cost and climate risk to the country. Offer incentives to homeowners and investors for things like solar energy, heat pumps, hydropower (in this regard, the policy to develop the Amaila Falls is a step in the right direction), and electric-vehicles and their power infrastructure, for example. These would require government help but will help the country adapt to and buffer some of the physical, economic and other risks of climate change and reduce the cost of energy.
Develop a plan to move people and build communities and infrastructure away from the coast; review building codes to encourage flood-proof designs of buildings and facilities.
Craft a transportation policy and plan that is based on a more orderly public transportation system that reduces congestion, emissions, and lost hours, and the phasing-in of electric vehicles. A good transportation system would be part of a larger effort to restore badly needed order in society (more of that in another article).
Leverage Guyana’s agricultural potential to promote viable and competitive agriculture to help move away from less-efficient, less-healthy, and more-climate-damaging options like beef, flooded rice, and sugar. Instead, invest in stemming the exodus of farming families from places like Black Bush Polder and incentivize them to return the agricultural settlement to it days of glory. Agriculture has suffered substantially, in part from emigration over the last few decades, so much so that some of the very fruits that commonly flooded the stalls are now hard to find or are only available in poor quality. Eggs should be a cheap, easy-to-use source of protein, yet it has become so expensive in Guyana, even before the avian flu of 2022. Encourage people to return to growing and eating more local, more plant-based for the benefit of their health, their pockets, the soil, and the environment.
Address critical areas, such as the police force, public education, and the public service. Develop creative ways to fund awards, incentives, scholarships, and low-interest loans to deserving students for university and technical trades training (as against free education across the board). These interventions would yield the twin benefits of helping to build human capacity and reverse the culture of corruption.
Promote involvement in a broad range of fitting sports and other creative activities to help people develop healthier lifestyles while generating sources of pride nationally. Too many young people are idle or doing things than harm themselves and society.
Do something to reverse the pervasive culture of loud music. Too many people play loud music too frequently. The irony in this is that their sense of hearing degrades progressively that they are unable to decipher this loss. More importantly, such loud music harms the mental and physiological health as well as productivity of others, and ultimately the economy.
The extent to which Guyana is in an unprecedented moment to take itself and its people securely into the future cannot be overstated. The complaint of lack of financial wherewithal that many developing countries have has been answered in the case of Guyana. The small size of the country creates the opportunity to amplify the benefits per citizen, make history, and offer a good example of hope and wellbeing, if its decision makers and its people can work together with purpose and astuteness during one of the best opportunities the country will ever have. Make it happen, Guyana! And, in doing so, secure a place in history for this small country!
Macsood Hoosein is a Guyanese-born professional working in sustainability and finance in New York. He has an MBA and a Graduate Certificate in Finance.
