Prioritizing poverty reduction national imperative
May 20, 2001
BUSINESS PAGE is dedicated to providing objective information an opinion on issued of interests to the business community and the public at large. The articles in Business page are prepared and contributed by CHRISTOPHER RAM. Christopher Ram is the Managing Partner of Ram & McRae, Chartered Accountants, Professional Services Firm.
The Living Conditions Survey carried out in 1999 to measure the impact of economic and social programmes on poverty reported progress in improving the lot of the poor in Guyana. It revealed that since 1992, there has been a reduction in the number of Guyanese living below the poverty line as well as those living in extreme poverty, that poverty levels among all ethnic groups were reduced and that poverty has fallen most in urban and coastal areas with Georgetown showing the most favourable change. We all know that the word "statistics" is often placed next to "lies and damned lies" and the Survey was careful to point out that the results contained relatively large margins of error at the regional level.
Yet, even the more reasoned discussions which have taken place on the post-elections activities in Georgetown and the lower East Coast Demerara emphasise the serious shortage of jobs facing the country particularly among youths and single mothers who seem to have little role in the economy or hope in the future. They no longer consider themselves stakeholders, and not a few seem willing to engage in unsocial and, increasingly frequently, in unlawful activities. Not that unemployment is a Georgetown or East Coast phenomenon. It is a national problem. There is not enough room in low-return self-employment for all the unemployed, as is so often seen to be the solution. If a large segment of the population have no jobs and therefore no income, there will not be sufficient demand for goods and services and too many sellers but too few buyers. The challenge of creating jobs for the tens of thousands of Guyanese who are now either woefully underemployed or unemployed is a challenge facing not only the government but the main opposition party as well.
Part of the economic programme, which seems to be a permanent feature of our economy, is a Poverty Reduction Strategy Programme (PRSP) aimed at reducing poverty in the context of accelerated economic growth and improved social conditions. The very objective assumes accelerated economic growth but after quite impressive performance between 1991 and 1997, the economy has performed sluggishly since then. According to the Interim Poverty Reduction Strategy Paper published last year, GDP had increased cumulatively by 37% over the past seven years while extreme poverty declined by about 10% implying that for every 1% reduction in poverty we need a 3.7% rise in growth. The reverse may not be the same however since the poor are often the first to be affected when the economy declines. As a result, the recent decline in real GDP will probably have exacerbated the poverty situation.
We shall return to the economy and the PRSP shortly but it may be useful to consider at this stage whether and how the question of poverty reduction has been addressed in the discussions between President Jagdeo and Mr. Hoyte. Business Page fully supports the dialogue and the calls to give it a chance, but notes that poverty reduction is not the main focus of any of the committees set up by the two leaders. The next best is a committee to deal with depressed community needs, which has as one of its terms of reference the preparation of a list of projects for priority action in the public sector infrastructure programme.
The two co-chairs are engineer Philip Allsopp and Mrs. Philomena Sahoye-Shury, politician. While the execution of projects in roads, dams, water supply, drainage and irrigation, social services, health, environmental and educational facilities and youth and women projects will all create job opportunities, they do not address the more fundamental question of training and sustainable job creation. We badly need more entrepreneurial activities offering jobs for residents in the areas. Many of the villages of the East Coast Demerara-West Coast Berbice corridor had their genesis in co-operatives and there seems to be no reason why we ought not to have policies designed to encourage their formation in these communities. These co-ops could be favoured with public sector works in the area such as maintenance of public property and construction works. A special financial facility established by the government to provide low-cost financing and the availability of technical assistance and advice could fuel the entrepreneurial spirit, provide employment and restore confidence and self-respect to the communities. It is a pity that this committee's mandate does not include examining options for job-creation and profit-centred economic activities which can contribute substantially to a better society.
Poverty in Guyana
Considerable work has already been done in identifying the incidence of poverty in Guyana. It has been established for example, that most of the poor live in the rural areas; the highest incidence is in the rural interior; poverty follows ethnic lines (the poorest are the Amerindians followed by Indo-Guyanese and Afro-Guyanese) and education is a factor in the equation. All this is vital information but the question is how to address the problem and find the resources required to do so. There are many who argue that some of the post-elections activities have a large political dimension. In any case, what they have done is to draw attention to some areas and to seek to bring short-term solutions to serious structural problems in a number of communities which have developed over several years due in part to misguided policies and inadequate governance.
The poverty reduction strategy of the Government includes the pursuit of a sound macro-economic, trade and investment framework, improving the business environment and maintaining and expanding economic infrastructure as the principal economic limbs. Since poverty is also measured by social indicators, the strategy has as one of its aims the improvement of social services. Significantly, it also aims to implement special intervention programmes in areas where poverty levels still remain high. The poor performance of the economy over the past few years and its dull prospects in the next few, make the challenge all the more formidable since smaller resources will be available to meet an expanding and worsening need.
These objectives contain some contradictions, certainly in the short-term. Improving the macroeconomic environment requires controlling public expenditure which can translate into job losses in the public sector. In the public service, sugar and the privatised enterprises, the number of employed persons has fallen significantly. If the private sector cannot absorb these persons then unemployment rises. Unemployment has negative social consequences which in the highly charged atmosphere in Guyana can degenerate into political and ethnic conflicts that cause loss of investor confidence, lower investment, fewer jobs, reduced government revenues and taxes etc.
Many of the country's leading commentators have pointed out that the form of government and the quality of governance impact on the economy and therefore the level of poverty in the society. A system where "winner takes all" and where the winner is determined not by policies but by strong ethnic voting patterns creates a sense of exclusion among the losers and their supporters. Weak bureaucratic procedures and sidelining of skilled persons because of their ethnicity only exacerbate the problem and make solutions that much more difficult.
The international community seems ready and willing to support the country's poverty reduction initiatives. However, the devil is always in the details and identification of specific programmes and activities has to be done as part of a very wide-ranging consultation process. The government claims that the formulation of the revised National Development Strategy was not only part of its PRSP but also that it was truly participatory. While poverty reduction is an integral part of any economic recovery programme, placing the PRSP on the national agenda has been rather slow and a number of deadlines have already been missed. Business Page understands that the Government is soon to establish some consultation process with a view to finalisation of the strategy. Hopefully this will include a sufficient number of professionals committed to delivering results and recognise the iterative nature of the exercise.
The region offers a number of excellent examples of the consultation process which can deliver results.
A workshop held in Colombia in March, 2001 indicates the kinds of problems of poverty which countries face and ways to deal with them. It is crucial that goals be realistic and that expectations are tempered having regard to the government machinery and the resources available. The participation of all sectors of society is a necessary ingredient, and consideration of local factors must be paramount to any international requirements and deadlines.
Local factors means not simply that it must be Guyanese in flavour but that solutions have to consider the regional and demographic circumstances. All political parties, civil society and the press have different but important roles to play even though the temptation to take political control by any party has to be resisted. Proper institutional arrangements should replace ad hoc approaches and the process itself must have sufficient resources to allow for proper planning and administration.
As the talks between President Jagdeo and Mr. Hoyte have demonstrated, short-term confidence building measures could enhance credibility and confidence in the process. These are not a substitute for more sustainable activities determined after very thorough consideration and analysis but they do help to keep the momentum to see the process through.
Women who make up over half the population and who as a group invariably bear the brunt of poverty, must be key players in any poverty reduction process. With or without a spouse or income they are expected to provide for the children and are themselves the worst victims of domestic violence which, though not unique to, is certainly common among the poor. In Guyana we cannot ignore the issue of ethnicity in poverty consideration not withstanding the complexity and inherently contentious nature of the issue.
The big question is who will bear overall responsibility for the execution of the poverty reduction strategy. Neither the Ministry of Finance nor Ministry of Human Services appears to have the institutional capacity to undertake this vital function. It is only in half jest that Business Page suggests that some of the ministries we now have be scrapped in favour of one to deal with poverty reduction. The other half is to ask the PNC/R to help provide some of the 100,000 jobs that it promised in its elections manifesto. We need a Ministry that takes unemployment seriously and that can call on the other Ministers to create policies and programmes that create and sustain jobs.