By Utamu Belle and Dr. Terrence Blackman – OilNOW
The eighth installment of the GBJ and CPC’s webinar series, “Transforming Guyana,” focused on “Investment Attraction and Retention, and the importance of Protection, Regulations and the Business Environment.“ These webinars bring together experts and prominent voices from Guyana, the diaspora, and the Caribbean, to discuss the impacts of Guyana’s Oil and Gas development. The participants in this Episode discussed the issue of how Guyana could create a safe and welcoming business environment that would draw in and retain foreign investments and expertise.
Komal Samaroo, Executive Chairman of Demerara Distillers Limited (DDL), provided an economic overview of Guyana’s journey since becoming independent in 1966 when discussing the present investment situation. He outlined that the initial ten years following independence saw the nation coming to terms with the reality that many of the key industries were owned by foreign companies, leading to a nationalisation process completed in 1976. The subsequent decade was devoted to managing state-owned enterprises that failed to deliver the desired economic progress. The third decade was devoted to making changes to the state-run economic model and initiating an economic revival plan with the International Monetary Fund (IMF), outsourcing the management of the sugar industry, and liberalising trading and currency. Samaroo highlighted the effects of global trade liberalisation in the fourth decade and how it decreased the demand for goods such as rice and rum in Europe and Guyana’s financial struggles. He further noted that when the financial crisis occurred in 2007, gold prices had risen by the end of the fifth decade. The discovery of oil in 2015, which occurred in the sixth decade after independence, must be considered in the context of the economic history of Guyana, according to the DDL Executive Director.
This economic history, according to Samaroo, has created four imperatives that set the stage for investment in Guyana today. The first investment imperative is an absolute necessity to have competitive energy and infrastructure, as the country has not had the means to construct efficient infrastructure during the last five decades of independence. Samaroo observed that this critical need still exists. “I know that the government has put forward policies to rebuild infrastructure and invest in a Gas-to-Energy project to reduce the cost of electricity by 50%. So, that’s the first thing that is happening. In a sense, we are catching up in time due to the revenues generated from oil”, he explained.
The second investment imperative is the utmost importance, which is to bolster the service sector to support Guyana’s Oil and Gas industry, a new sector for the country. To this end, the government has enacted the Local Content Legislation, which ensures local businesses can collaborate with international firms to assist the sector.
The third investment imperative is regional food security, and he noted that the government has set a goal of reducing food imports by 25% by 2025.
The fourth investment imperative is moving from outsourcing to near sourcing and the new investment opportunities it presents for Guyana. Samaroo observed, “I believe with the situation where power cost is going to come down, where infrastructure is being put in place and where there’s more availability of capital, I think companies are looking to invest in areas that result in products, which previously were imported, being made available locally. I also believe that as we build those agencies, we will meet not only the Guyana requirement, but I believe under the regime of regional food security, there will be Caricom market opportunities.”
Patricia Francis, the leader of the Trade Facilitation Task Force (Jamaica), highlighted the significance of regional integration for Guyana in her presentation. She pointed out that, due to the small population, Guyana would only be able to create industries that can compete on a global scale if it becomes more involved in a larger regional setup. She noted, “And by that, I not only mean Caricom, I also mean South America; as things begin to transform and move, this will be needed for industries since global industries cannot thrive in markets of just 800,000 people. Setting the economy off a footing where it is not thinking globally from the start, I think it may be another short-lived strategy.”
Francis observed that the government has recognised this and is putting systems in place for foreign direct investment, and this should not be discriminated against. Francis further noted that the infrastructure to support rising industries and the ecosystem they’re built upon is also critical. “Once you start talking about producing for a global market, you’ve got to think about how we will move these goods-by sea or by air?”
At present, Guyana’s air and maritime infrastructures need to be in the condition necessary to guarantee a successful agro-industrial enterprise in the global market. Francis emphasizes that a reliable supply chain will require the cooperation of the public and private sectors.
Scott MacDonald highlighted the nation’s achievements in his speech, citing a headline stating, “According to the 2023 World Bank report, Guyana is the only country in the area to show double-digit growth.” MacDonald pointed out that this stands in contrast to other developing countries and some developed economies. He commented, “Although many other nations are having a hard time, Guyana is heading in the right direction. Transformation is never easy, yet if we look at the foreign investments coming into Guyana, it is quite striking – US$2.06 billion dollars in 2020 and US$4.55 billion in 2021; it looks like the trend will continue this year. Even though much of this money goes towards the oil industry, a good portion is also being invested in other sectors.”
He further highlighted the importance of advancing human capital and local investment. He suggested that Guyana adapt Jamaica’s approach of reaching out to the Guyanese diaspora. Additionally, he advocated for low-carbon efforts, and improved government transparency and disclosure in conjunction with Transparency International. He went on to comment that Guyana is progressing, and its citizens must strive to maintain this momentum. He concluded that the money is available, but the key is to use it correctly by focusing on developing infrastructure and human capital.
Andrew Schnitzer da Silva remarked that his experience suggests that while there is a willingness to innovate and draw in investors, there is still ground-level confusion concerning the full implications of this discovery. He continued to say that the bureaucracy associated with foreign investment is a major impediment and that the nation must learn to embrace and collaborate with such investors. Schnitzer da Silva believes that if the country can grasp the potential of working with experienced companies and foreign investors, it would be a major boost to its development.
Samaroo argued that both foreign and local investors struggle with bureaucracy in Guyana. He mentioned that the government has taken steps to digitalise documents so as to reduce reliance on government officials and their discretion in dealing with applicants. Additionally, he mentioned that the Caribbean Court of Appeal and certain regulations focus on intellectual property and trademarks. He explained that the country has been changing for the past several years to replace systems in place for the past half-century and that this process requires time and patience. He concluded by expressing his belief that the government is willing to take the necessary steps to make these changes happen.
To end the discussion, MacDonald highlighted the need to create an agreement across all ethnic groups in Guyana and cultivate its citizens’ skills and infrastructure. He explained that the country’s stock market needs to be fully utilised. He emphasized, “Guyana does not require a bailout, but it requires investments, and its stock market is just sitting there to be further developed.” Samaroo agreed with this, adding that the structure must be in place for Guyanese to take advantage of the opportunity before them optimally.
The 9th Episode of Transforming Guyana will premiere on Wednesday, February 8, 2023. Panelists will examine the intersection of Guyana’s Agricultural Sector and the emerging Oil & Gas economy. The previous episodes can be viewed on the Guyana Business Journal’s YouTube channel. The program airs at 10:30 am EST on the second Wednesday of each month.
About the Authors
Utamu Belle is an award-winning Guyanese journalist with a career spanning over a decade. Her experience includes writing for print, television, and online media. She has worked as a Radio and Television host. She is the Founder of A-to-Z Media (Guyana), a News and Digital Editor with Upscale Magazine, and a Digital Coordinator/News Editor with The Guyana Business Journal and Magazine.
Dr. Terrence Richard Blackman is a member of the Guyanese diaspora. He is an associate professor of mathematics and a founding member of the Undergraduate Program in Mathematics at Medgar Evers College. He is a former Dr. Martin Luther King Jr. Visiting Professor at MIT and a member of The School of Mathematics at The Institute for Advanced Study. He previously served as Chair of the Mathematics Department and Dean of the School of Science Health and Technology at Medgar Evers College, where he has worked for more than twenty-five years. He graduated from Queen’s College, Guyana, Brooklyn College, CUNY, and the City University of New York Graduate School.