Building an economy

Stabroek News
January 11, 2000

Our experience with state ownership of major sectors of the economy was not good. In the sugar industry after nationalisation production fell to a fraction of what it had been. It has recovered since l980 under private management. The story is similar in the bauxite industry, after nationalisation there was a slump in production and the state owned industry has been surviving on large government subsidies for some time. The imposition of bureaucratic controls on the rice industry nearly strangled it. These were later removed. Attempts by the state to control trading through the External Trade Bureau were equally disastrous leading to shortages, smuggling and blackmarketing.

All in all our flirtation with state control of the economy was disastrous and is substantially responsible for the present low income levels both in the public service and in the private sector. Our income levels are well below, for example, those in Barbados and Trinidad.

We should have learnt our lesson as so many other countries have including those that had a long experiment with various types of socialism and state control. It does not lead to economic prosperity. Mr Desmond Hoyte in l988 and l989 accepted that the old system had failed. He pushed an Economic Recovery Programme based on major changes and went all out to encourage new investment. He was able to attract Omai (Cambior and Golden Star), Barama and ATN (GT&T) and Reynolds opened a new bauxite mine. He allowed free trading in foreign currency, the cambio system, and removed licensing and other controls. As a result the economy experienced several years of substantial growth. Critics said some of the deals were not ideal. They were not, but they may have been the best available in the circumstances. More than that, they provided hope and an impetus for change. After years of stagnation and economic collapse there was progress and everyone benefited from this.

Yet it is easy to forget how bad our situation had become and how much it improved as this progress was quickly taken for granted and led to what has been called in other countries a revolution of rising expectations. After years of falling wages in a mismanaged economy with a brain drain there was suddenly the feeling that we would make massive progress overnight and regain what we had lost and move on to prosperity. But of course it is not that easy. Skilled and experienced businessmen, professionals and workers had emigrated. The educational system was a shadow of its former self. The entrepreneurial class had been miniaturised and recreating momentum was hard.

Both the main parties now proclaim that the private sector is the engine of growth, a private sector they helped to chase into exile. Those businessmen who remained have faced major institutional problems in trying to rebuild and re-equip, in particular a devalued currency which makes the cost of new machinery astronomical and high interest rates which makes borrowing hard to afford. Yet despite our past experience and the formal position of support from the PPP and the PNC there remains substantial opposition to new investment, some of it knee jerk, some of it dogmatic and some of it politically opportunistic.

It is much easier to destroy than to build. We have destroyed some of what we had. Building, especially in Guyana today, is painful, it takes long years, energy and deep fortitude. There are so many problems, ranging from the lack of managerial and technical skills to bureaucratic delays. Yet though both the PPP and the PNC officially support private investment and the latter campaigned, explicitly and courageously, on that platform in l997 there is still hardly a welcoming public atmosphere for private investment, especially from abroad. Old attitudes linger.

Most of our problems are due in the final analysis to poverty. When people can't earn a living wage they forget everything else and look for scapegoats for their anger. The only enduring remedy for our poverty is economic development. The government has not got the money to invest and create jobs so the private sector must do this. The government must be a facilitator. The political parties must not be equivocal on this or make investment politically divisive. We need dozens of new companies and new businesses. In one of his letters Mr Hamley Case had outlined how we could go about getting this. There is room for criticism and new projects must surely be subject to public scrutiny, as the Beal deal has been. But for us to make progress and enjoy a better life surely we must concentrate the bulk of our energies on building, securing investment, creating new jobs and improving our skills at all levels. We must learn from past failures and move to a new plateau. The challenges are enormous but we must face them.

A © page from:
Guyana: Land of Six Peoples