Combating poverty amid attempts at making the country ungovernable
By PREM MISIR
Guyana Chronicle
December 8, 2002

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IN A difficult climate where some people are trying to make the country ungovernable, Guyana continues to positively move forward. But in order to fully evaluate these strides, we need to understand some aspects of the abysmal economic and social baseline inherited by the Peopleís Progressive Party/Civic (PPP/C) in 1992.

The baseline is a strategic and a necessary tool for evaluation, contrary to the opposition forcesí feeling that the past is irrelevant. No appropriate assessment and evaluation can be administered without a baseline. Amid the Economic Recovery Program (ERP) in the Hoyte era, Gross Domestic Product (GDP) dropped sharply by 5 per cent annually from 1989 through 1991, and inflation was in excess of 100 per cent in 1991. The inflation rates for 1989 and 1990, were 89.7 per cent and 63.6 per cent, respectively. Interest rates for 1989 and 1990, were 36 per cent and 31 per cent, respectively. Per capita income was below US$400 in the ERP years. Unemployment and underemployment were placed in excess of 30 per cent in 1992.

We need to really understand how a poor country services a foreign debt in excess of US$2.1B in 1992 and the consequences of coping with a large debt over the last 10 years. This external debt was equal to 560 per cent of Guyanaís GDP. The PPP/C inherited this debt in 1992. Servicing this debt required 105 per cent of the Governmentís current revenue in 1992; this servicing was reduced to 90 per cent of current revenue in 1993. And these are only a few indicators from the Hoyte era.!!

Guyana moving ahead
Real GDP increased by almost 3 per cent in the first half of 2002. The balance of paymentsí deficit, taken as a whole, was reduced from US$19.3M to US$10.6M, due to a significant decrease in the current account deficit. The Guyana dollar marginally depreciated against the US dollar. This currency stability was due to lower demand influence that may be explained through increased flows from the export market. Interest rate payments on the domestic debt were reduced because of lower interest costs on maturing treasury bills. The interest rate showed a downward trend. The central governmentís cash performance continues to show great strength, as revenue collections outmatched expenditure incurrence.

These data are sourced from the Bank of Guyana Half Year Report and Statistical Bulletin 2002. The World Bank Group today places the per capita GDP at about US$900. Over the last year, a tidy sum of US$126.6M was injected into the economy via business ventures. These investments created more than 3,000 jobs through 96 projects.

In a United Nations Survey 2000, Guyana ranked 19th globally to have had direct investment yields. From 1988 through 1990, Guyana was placed at 72nd during the ERP period. Preliminary estimates in 2002 place the total foreign debt at US$1.2 billion, reduced from US$2.1B. Due to adequate management of the debt burden, today, more funds are available for social services. Today, education constitutes 17.2 per cent of the Budget and health 8 per cent of the Budget. These are significant developments compared to the entire social services consuming a mere 8 per cent in 1992. Combating poverty, given the abysmal economic and social baseline from whence we came and given the regular efforts some people exert to make the country ungovernable, itís very telling to see the advances made in reducing the poverty level in Guyana.

Who are the poor in Guyana?

These are first, the Amerindians residing largely in hinterland areas, second, the East Indians living mainly in the coastal region, followed by Africans primarily found in the urban centers. The coming of the new political administration in 1992 brought in its wake high expectations among its people, especially after they were witnesses to nearly three decades of dictatorial rule. At that time, it was reasonable to suppose that many such expectations would have remained unfulfilled at the end of the PPP/Cís first term in office.

Clearly, even then, it was reasonable to assume that some expectations that were more personal to the individual's well being would soon start to evolve as an emerging reality. One personal expectation has to do with the reduction of poverty. Even with the 1994 Budget Proposal declaring war on poverty, the hidden faces of poverty continue to provide some artistry to human misery. But since then, considerable poverty reduction has taken place. A SIMAP Report indicated that in 1992, about 86 per cent of Guyanese lived below the poverty line; that figure was approximately 35 per cent in 2000. In the U.S., the poverty rate dropped, with some fluctuations, from 22 per cent in 1959 to 13.8 per cent in 1995. The poor numbered about 38 million in the U.S. in 1995.

Given the continuing difficulties of considerably reducing poverty in the U.S. which has enormous resources, we may do well to appreciate the significant poverty reductions achieved in Guyana in a mere eight (8) years!!

Some years ago, the PPP/C Government waged war on poverty. And this war has been sustained. A year ago, the Government launched its public consultations on the Interim-Poverty Reduction Strategy Paper (I-PRSP). The public consultations guaranteed that the poor will not be excluded from inputting subsequent poverty reduction policies, programs, and projects. The I-PRSP represented an attempt to transform the existing social and economic arrangements of Guyana to produce poverty reduction.

Numerous recommendations from the public consultations have been included in the PRSP. The PRSP also suggests that Government recognizes the connection between inequality and poverty. Through a national poverty strategy incorporated in the PRSP, the Government will sustain an improved macroeconomic, trade and investment environment; enhance the business sector; improve the social services, as health, education, water and sanitation, housing, and safety nets; maintain and diversify economic infrastructures; and execute special programs in areas where there is a high incidence of poverty.

In building on the PRSP, the Guyana Government in its 2002 Budget allocated about $2 billion for poverty reduction programs to include SIMAP, Basic Needs Trust Fund, Linden Economic Advancement Project, the Poverty Fund, and the Poor Rural Communities Project. In the 2001-2002 period, about US$103M would have been invested in 67 projects in new growth areas, creating 3,449 new jobs. Clearly, these budgetary allocations are a strong testimony to the Governmentís firm commitment to reducing poverty. Job training programs for youth, in reinforcing the PRSP, are available.

At Mid-2002, a sum of $18.4B, provided by the Education, Health, Housing and Water, and Culture, Youth and Sport Ministries, was allocated for youth development in the Presidentís Youth Choice Initiative program. The Ministry of Culture, Youth and Sport, on its own, currently utilises $.5B for youth training. Some youth programs aimed at providing job skills and administered under the Ministry of Culture, Youth and Sport and the Office of the President are: Youth Entrepreneurial Skills Program, The Opportunity Corp., The Angoy Drop-In Center, The Presidentís Youth Choice Initiative, The Presidentís Youth Award Republic of Guyana Program, and The Commonwealth youth Program. Further, the Private Sector projected that in 2002, about $103M as investment in 67 projects, will generate 3,500 new jobs.

Poverty and inequality intertwined
Two competing explanations generally are given for explaining causes of poverty. The first is the individual explanation which purports that some people are trapped in poverty because of inadequacies, as laziness and lack of education. This perspective blames the poor for their poverty. Over time, people develop a culture of poverty which traps the poor, encouraging resignation to poverty as having to do with a personís destiny. Here, a lower-class subculture evolves where personal ambition and achievement take a back seat, and Ďliving for the momentí is advocated.

The other school of thought is that society is the producer of poverty. Here, the focus is on the structural aspects of society, such as, employment opportunities. Society is blamed for poverty because it is the society and not the people themselves who distribute resources. Generally, it is accepted that poverty is a consequence rather than a cause of a personís position in society. In many ways, poverty is produced from economic and inequality processes in the society.

Traditionally, however, inequality and poverty were perceived as separate issues, but they really are inextricably linked. Any decisive poverty reduction may require policies that incorporate the connection between inequality and poverty itself. The non-linking of inequality with poverty in poverty reduction programs has its genesis in excluding the poor from inputting such programs. In many parts of the world, government policies on poverty reflect the beliefs, values, and interpretations about the poor by those people who formulate policies. These beliefs, values, and interpretations mirror the policy makersí vested interests and not the interests of the poor, according to Edelman (1977).

This approach, espousing different perspectives on the causes of poverty and depictions of the poor by some policy makers, should not be surprising, as these policy makers hold different positions in the system of social inequality. Poverty elimination/reduction will be a reality only if poverty policies, programs, and projects transform the social and economic conditions of the society in question, rather than sustain the existing economic format. Some have even suggested that the solution to reducing poverty is economic growth and full employment. But as Hurst (1998) points out, this can only mean higher self-sufficiency for all. But this level of self-sufficiency is achievable only at the cost of reducing total economic inequality.

Capitalism as an economic system of production, historically, has not measured up to the task of combating economic inequality. In fact, it creates greater economic inequality. That being the case, therefore, capitalism as manifested through the private economy, does not have the full capacity to drive poverty-reduction programs. What else do we have for eliminating poverty?

A recent book `Sustainable livelihoods: building on the wealth of the poorí (2001) by Kristin Helmore and Naresh Singh, advocates the use of the sustainable livelihoods (SL) approach to eradicating poverty. Sustainability is used to mean the management and use of natural resources to make certain that these resources remain in one piece for future generations. Livelihoods are how poor people eke out a living. The livelihoods of the poor and the adaptive strategies they use to sustain these livelihoods against serious social, economic, and environmental hardships, are really the wealth of the poor, and constitute the building blocks of any development initiative.

The SL perspective then starts not with the traditional needs assessment, but with an analysis of the wealth of the poor. The SL approach begins more specifically with adaptive strategies which are changes and adjustments poor people make in their livelihood systems to cope with hardships and to respond to an emergency. These strategies will reveal the wealth of the poor that refers to peopleís activities, assets, and entitlements.

False hopes to people
There are some opposition forces that naively think that solely providing employment is a panacea for poverty. They really need to do some serious homework on the dynamics of poverty in their pursuit of attempting to eliminate this scourge and to make meaningful inputs to the discourse on poverty. In the absence of this type of homework on poverty, the opposition forces really are merely giving false hopes to people.

Although many attempts at poverty reduction have tackled the issues of adequacy, employment, and work incentives, there has been limited success with achieving stable, long-term, full employment in the private economy or where capitalism is the economic system of production. The entrenched stratification system in any society ensures that employment and investment are necessary but not sufficient conditions for eliminating poverty.

The opposition forces are wrong. Indeed, their efforts to make the country ungovernable have failed to stop the country from moving forward.

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