In a recent statement, the Georgetown Chamber of Commerce and Industry (GCCI) expressed serious concerns regarding the burgeoning issue of sham partnerships within the private sector, a trend alarmingly labelled as ‘fronting’ or ‘rent-a-citizen’. Such faux partnerships, according to the GCCI, directly undermine the core intent and spirit of the Local Content Legislation (LCL).
One of the principal goals of the LCL is to ensure ‘in country value retention’. This means that the country’s wealth and resources remain within its borders, benefiting its citizens and economy. However, ‘fronting’ has the potential to gravely diminish this value retention. Such practices pave the way for the extraction of rent, leading to a host of problems including hindering the country’s capability to realize its full growth potential.
Some Guyanese complaining about denied opportunities, despite local content law – Official
But what exactly is ‘fronting’? As defined in previous discussions, ‘rent-a-citizen’ or ‘fronting’ refers to foreign companies employing Guyanese businesses merely as a loophole to bypass the stringent provisions of the Local Content Act. The legislation outlines 40 sectors and sub-sectors earmarked for Guyanese companies, making it mandatory for foreign investors wishing to operate in these domains to form genuine partnerships with local businesses. Moreover, these local entities must have a beneficial ownership of 51% or more in their collaboration.
Deodat Indar, Guyana’s Infrastructure Minister, and former President of the GCCI, has been vocal in this conversation. In a passionate plea to the local private sector at a recent event, Indar emphasized the detriment of ‘rent-a-citizen’ practices, highlighting its counterproductive nature to the government’s rigorous efforts to bolster local content growth, particularly in the oil and gas sector.
The GCCI’s commitment to tackling this issue is unequivocal. They stress the need for authenticity and genuine local participation. To combat the menace of ‘fronting’, the Chamber is lending its unyielding support to the Local Content Secretariat in their rigorous vetting process of companies seeking Local Content Certificates. They further advocate for placing the “burden of proof” regarding beneficial ownership on the applicant company itself, ensuring transparency and accountability.
The GCCI’s clarion call serves as a reminder of the collective responsibility to ensure genuine and sustainable growth, devoid of any ‘parasitic’ practices that could stifle Guyana’s potential.
