Minister of Business:
I’d like to structure this presentation along the lines of where we currently are and where we’d like to be and how we’re going to get there. I will also touch on the challenges we face and how we intend to overcome them.
Guyana is categorized as a lower-middle income economy. What this means is that our gross national income per capita lies between US$1,000 and US$12,500 per annum. For 2013, the last year for which World Bank figures are available Guyana’s GNI per capita stood at US$3,940.
Globally Guyana is ranked 124th out of 188 countries on the Human Development Index in the UNDP 2015 Human Development Report.
This ranking is based on four criteria, Life expectancy at birth, mean years of schooling, expected years of schooling and gross national income per capita.
The same report also indicates 1.2% percent of our population in severe multidimensional poverty. Multidimensional poverty factors in deprivations in areas such as health care, education and standard of living in addition to simply looking at income levels.
On the World Bank’s Doing Business 2016 Index which measures the ease of doing business in 189 countries, based on eleven main indicators, Guyana is ranked 137th.
Not much changes in the Global Competitiveness Report 2015 – 2016, published by the World Economic Forum, which lists Guyana as 121st out of 144 countries ranked on the twelve pillars that form the framework for what we know as the Global Competitiveness Index.
In 2015 Guyana’s economy grew at a rate of 3%, down from 3.8% in the previous year and 5.2% in 2013.
Our GDP for 2015 was approximately US$3.2B. Our total public debt stood at US$1.5B at the end of 2015 and this year’s budget deficit was G$40.9B.
These are just some of the numbers that are used to assess various aspects of Guyana’s economy by persons or companies who have to make decisions about doing business in, or with, Guyana.
We should not underestimate the impact of economic data and other information published about Guyana on the decisions that need to be made.
Before they can provide financing or insurance or enter into contracts with companies that are doing business or contemplating business ventures in Guyana, most foreign companies will, at the very least, examine the available data on our country, and so it is important that this data is accurate, up-to-date and, above all, that it indicates a healthy and attractive investment environment.
It would not have escaped your attention that I haven’t yet mentioned what is probably the most important indicator of the state of any economy, the rate of unemployment.
This is generally defined as the percentage of the total labour force that is unemployed and is seeking work or willing to work.
For some reason we have not traditionally compiled and published this data on a regular basis, but every successful economy in the world pays very close attention to unemployment data because one of the main benchmarks used to assess the performance of governments around the world is the level of unemployment.
And this is why, in any successful economy, the number one priority of the government of the day is to find ways to keep its population meaningfully employed.
But how can a government craft a targeted strategy to address unemployment if there is no data to indicate the extent and location of the problem?
How can a government (or anyone else) assess the effectiveness of measures that it has put in place to reduce unemployment if there is no data to assess?
According to the latest tables I could find on the website of the Bureau of Statistics our rate of unemployment in Guyana was 10.7%. This was for the year 2006.
Countries like Iceland with a per capita gross national income of US$46,000 and an unemployment rate of 3.1%, South Korea with a per capita gross national income of US$27,000 and an unemployment rate of 3.5% and the USA with a per capita gross national income of US$55,000 and an unemployment rate of 5% all publish regular statistics on employment – from month to month.
And I should tell you that the 2006 figure of 10.7% is based on a labour force participation rate of 57% meaning that 57% of our working-age population were willing to work or seeking employment back in 2006.
In 2015 bauxite, sugar, rice, gold and timber made up 83% of Guyana’s exports. These sectors provide the largest source of direct employment across the country.
So that is where Guyana currently is. You may think that I am carefully avoiding some of the specific problems currently facing local businesses, particularly manufacturers but a lot of those problems are captured in the broad areas that I have just outlined especially when the competiveness and doing business indices are disaggregated into their respective components. And this will become more apparent when we look how we’re going to get to where we’d like to be.
So where would we like to be as a country? Over the last few decades I’ve listened to thousands of Guyanese saying pretty much the same things in different ways, different tones and with different levels of specificity about the future of Guyana.
So deep down inside I believe we are all not very far apart when it comes to where we’d like our country to be in another fifteen or twenty years.
Somehow a vision has to emerge that we can take collective ownership of and use as a national blueprint to guide our efforts and keep us focused on what we want to achieve in the long-term.
All of the indicators that I have mentioned in this presentation point to the fact that Guyana is not in crisis.
Venezuela’s economy is in crisis, Brazil’s is in trouble with negative growth for the second consecutive year and no clear end in sight.
Trinidad and Tobago is projecting negative growth of 2% yet again. Barbados is unlikely to grow by more than one half of a percentage point this year, following a 0.3% growth in 2014 and 0.8% in 2015.
And Suriname’s economy grew by 1.8% in 2014 and 0.2% in 2015.
As mentioned earlier Guyana’s economy grew by 3% last year. This year our economy is projected to grow by around 4%. I repeat, we are not the ones with an economic crisis on our hands.
This is important because a crisis calls for short-term decisions often at the expense of the long-term planning. We have an opportunity to work towards a long-term vision for Guyana and we should not squander that opportunity by becoming distracted with the notion of an economic crisis.
Worse yet, the donors recognize this so we are unlikely to be considered for any huge aid packages.
I alluded to the need for a vision to emerge that we can collectively own. Elements of that vision have already been infused into a common awareness of how our future will unfold.
A green economy, powered with affordable and renewable energy, driven by foreign earnings derived from exports of a range of value-added goods and services is well within our means to achieve.
So too is the sustainable growth of this economy and the sustainable exploitation of our natural resources so that generations of Guyanese to come can enjoy our rich patrimony which we ourselves were fortunate to inherit when we were born.
This is not something you’re hearing for the first time. Other commitments have been made on various occasions which should help to crystallize the bigger picture.
You will have heard that Guyana is now a signatory to the 2030 Agenda for Sustainable Development, which includes a set of 17 Sustainable Development Goals to end poverty, fight inequality and injustice, and tackle climate change by 2030.
Each of these goals is further broken down into a set of very specific, targeted and time-bound objectives. We are committed to these targets.
In addition, you will have heard that our Government intends to prioritize the development and improvement of infrastructure in order to make our economy more attractive and more competitive.
This includes our national transportation infrastructure such as roads, aerodromes, bridges and ports; our energy infrastructure; our information and communications technology infrastructure; and our sea defense infrastructure.
This is therefore the platform on which Guyana will become a model for sustainable economic development. And this is the model that our government is asking you to believe in and to invest in because the private sector is an important stakeholder in Guyana’s economy without which there can be no development.
But as a government we cannot expect you to invest in a vision, even if it is a shared vision, unless you are confident that we know what we are doing and we have solutions to offer to the problems that you face.
I have already made the point that our economy is not in any sort of crisis, however, the indicators do reveal several areas in which a lot of work will need to be done if we want to encourage investments in our economy.
I’d like to touch on the areas of competitiveness and the ease of doing business, specifically the two annual reports alluded to earlier. I said that many of the problems you, as businesses, face are captured in those two reports.
For instance the Paying Taxes indicator of the Doing Business Report covers the number of payments, the time this takes and the total tax rate that a company will pay in order to comply with all of our tax regulations.
This encompasses a lot of the complaints that are being made by businesses in Guyana and points to the need for reforms.
Another indicator in the Doing Business Report is Trading Across Borders which examines the time and cost associated with the logistical process of importing and exporting goods. Again, this is area where there have been numerous complaints.
The Getting Electricity indicator examines the procedures, time and cost to get connected, the reliability of the supply as well as the cost of consumption. I don’t need to tell you what the problem is here.
What I do need to tell you is that the Ministry of Business is currently working on a programme to tackle individually the indicators on the Doing Business Report.
We are working with a team from the World Bank that is providing technical assistance in several areas.
We’ve just had a legal and ICT consultants engaged to identify respectively the legislative requirements and amendments under which we can better regulate and protect our businesses, and the ICT deficiencies that need to be corrected in order for government to provide better services for businesses.
We’ve also had offers from at least two countries through their local diplomatic representatives for technical assistance to address some of the remaining Doing Business reforms.
We are also working on developing an electronic trade facilitation system that will completely change the way we process import and export licenses, permits and transactions so that these can be done online in a short space of time through what is called a single window where you provide information once and this information goes to all the relevant agencies involved in the process.
A lot of money will have to be spent and none of this will happen overnight. But we will see these reforms through because we know that this is the right approach if we want to achieve the long-term objectives that will transform our country.
The Global Competitiveness Report is similarly comprehensive but deals with the broader issues that combine to make an economy competitive.
It examines Institutions, Infrastructure, Macroeconomic environment and Health and primary education as basic requirements for economies at Guyana’s stage of development.
It also looks at areas such as Labour Market Efficiency, Financial Markets Development and Technological Readiness in the context of enhancing efficiencies of economies, and ultimately Business Sophistication and Innovation as key factors for economies that are driven by innovation.
The competitiveness of the Guyanese economy is an issue that will have to be addressed through an appropriate public-private dialogue body which can provide a mechanism for jointly identifying priorities, developing comprehensive solutions for recommendation to Cabinet and monitoring the implementation of those solutions for the achievement of their objectives.
A model for this public-private dialogue body is currently being developed and will be proposed shortly. It is my hope that it will be accepted by the private sector as a new, effective and long-term partnership for ensuring that the well-being of Guyana’s economy receives the attention it deserves.
In addition to dialogue there is also need for greater private sector participation in the development of long-term projects in the form of public-private partnerships.
I spoke of our government’s commitment to developing and improving infrastructure in a number of areas. Not all of this can be funded through the Public Sector Investment Programme or through loan or grant funding.
Many projects will have to be developed through partnerships between the public and the private sectors and I do not believe that Guyana has had many success stories in this regard.
This points to the need for a framework to be put in place for how we go about the whole business of public-private partnerships. This is something that is currently being addressed and if we get it right and we implement it properly we should be able to accelerate a programme of infrastructure development in Guyana.
And so in quickly summing up I believe that all that I have said here can be condensed into the following main points:
- Our economy is not in any sort of crisis;
- There is a long-term vision for Guyana that has evolved from all that we have learnt over the last 50 years into something that we can all proudly own and work towards achieving;
- Our Government will prioritize the long-term sustainable development of a green economy; and
- Our Government would like to do this in partnership with a strong and independent private sector.
In conclusion, I believe I should at least say something about the most exciting thing that has happened in Guyana since our Government has been in office.
And I’m not speaking about the Jubilee Celebrations -that was a different kind of excitement – I’m speaking about the discovery of significant offshore hydrocarbon deposits.
Since the announcement of the find by ExxonMobil last year Guyana has been receiving attention from various quarters. Companies and individuals from around the world are now giving us a second glance. When oil flows, money flows and everyone wants to be near the money.
We will not shun or discourage this attention. In fact we welcome it. Word gets around about the experiences of international companies in different countries and we must all bear that in mind because we need to refresh the image of Guyana and project something that is positive and attractive and will bring investments to Guyana.
Our local private sector needs to do its home work and make the necessary preparations so that it can participate in the increased economic activities that will likely occur once the decision is made for production to go ahead.
We may not have the expertise, experience or resources to provide many of the services needed to support an oil industry. We may not fully understand the range of opportunities that can arise from this development.
But the one thing we do know is that we cannot sit back and wait and expect to benefit from what might happen is this discovery pans out.
So I’m urging you to learn and learn fast about how the oil industry works and what the demands of an offshore oil industry are likely to be.
I don’t want to make this the focus of my presentation because there has not yet been a definitive pronouncement by the company about its plans regarding the discovery, so I will conclude with one final comment.
While the prospect of Guyana becoming an oil producing nation is certainly an enticing one, the benefits could be illusionary if we allow ourselves to be misled into believing that this will automatically transform our economy and provide the good life to all of us.
Let us not be distracted from pursuing our own vision for Guyana’s economic development because it is within that vision that we will be able to maximize the benefits of any future oil production.