Under the mattress
Which brings us to our first investment which is none at all. In other words sticking it in a biscuit tin or under the mattress. Definitely not a good idea in a high inflation period although the main increase in prices happened in 1991 when the CPI almost doubled from 30 points to 56.9. The currency would still be worth $10,000 face value but would have lost over a quarter of its purchasing power.

The Yankee Dollar
Maybe you could have changed it into US dollars and then reconverted them in 2001. That would have seen the $10,000 increasing to $41,000 as previously mentioned but actually having slightly less purchasing power since inflation had outstripped the rate of depreciation against the US dollar.

Gold
Buying a piece of gold jewellery was also an option given that it has traditionally been a hedge against inflation. Unfortunately the equity loving nineties were not too kind on gold although in the last year with worldwide political uncertainty gold prices have strengthened. The investment has the advantage that you can also get some enjoyment from your investment much like buying a house. In 1990 gold per oz stood at US$362 but by 2001 it was down to US$271.25. The only benefit is that the value is calculated in US dollars. That $10,000 would have bought you 0.61 oz worth of gold (US$222 divided by $362) which in 2001 would have been worth US$166.19 or $31,493. Less than holding on to US dollars and less than the rate of inflation.

In the Bank
The trusted bank is for many the safest option. But with interest earnings comes withholding taxes of 15%. The $10,000 in 1990 would be worth $31,899 by the end of 2001 not enough to counteract the effects of inflation.

T-bills
A better option would have been to invest in T-bills (Treasury Bills) reinvesting any earnings along the way. This would have realised an ultimate value of $43,101 after tax and would have kept your savings roughly in line with inflation.

Unit Trust
The other option open to the investor would have been to buy 1000 units at $1 a piece from the Guyana Unit Trust. A unit trust is an organisation which invests funds subscribed by the public in securities and in return issues units which it is obliged to purchase at any time. The units represent an equal share in the trust’s investment portfolio. They produce income and fluctuate in value according to the interest and dividends paid.

Guyana Unit Trust has spread its investments in the Caribbean and in developed equity markets as well as having funds (60.88%) sunk into the major Guyanese public companies and 7.8% in Treasury bills.

This would now be worth $120,000 an impressive capital appreciation and one that has also yielded handsome annual dividends.

Shares
If in 1992 you had bought 1250 shares in Banks DIH at $8 this would have resulted - after bonus issues of an extra seven for each one held - to a holding of 10,000 shares not forgetting dividends earned over the same period. So the value of your portfolio would be worth $80,000.

DDL was much the same with shares valued at $8 resulting in an additional 7 shares for each one held increasing the amount to $80,000 over the same period plus dividends.

Dow Jones as a measure
Just to get an idea the US Dow Jones Industrial Average in 1990 was around 3,000 by the end of 2001 it stood around 10,000.

That would make your $10,000 - then US$222 - worth US$739 or at last year’s exchange rate about $135,000.

In conclusion it would seem the smart money in the 1990’s flowed into equities either locally or abroad. However that is not to say the next ten years will be as bright. Local businesses generally have had difficulties in maintaining dividend payments of late. However good options for investors remain few with savings and T-bill rates around 4% and barely keeping up with inflation. Gold is probably at the high end of its price range in the short term. Perhaps taking that $10,000 and going out for dinner might be the best option after all.

Micro-enterprise
Learn to earn with GVC

The Guyana Volunteer Consultancy has been offering vouchers to micro-entrepreneurs for various training courses and many are benefiting.

The Guyana Volunteer Consultancy (GVC), a non-profit organisation which had its genesis in 1995, has been playing a significant role in the sphere of small business in Guyana.

Popularly known as the ‘voucher programme’, the Micro-Enterprise Training Market Development Programme has been extremely helpful for many persons with small businesses.

Funded by the Inter-American Development Bank (IDB), the Canadian International Development Agency (CIDA) and the United States Agency for International Development (USAID), GVC was set up primarily to address the training needs of the micro-enterprise sector in Guyana. For this purpose, some training institutions have become affiliates to the programme and were encouraged to tailor courses beneficial to this sector. Funds in US dollars allocated for the programme are as follows: USAID $200,000, IDB $900,000, CIDA $200,000 and GVC $30,000.

Persons who are already operating a small business are given the opportunity, through the voucher, to enrol in courses, with a view to using their increased knowledge as a basis for expansion. Each voucher is worth $3,000 and a person can get up to six vouchers per year. Courses generally offered by the GVC seldom cost more than $4,000.

Most of the courses are held after regular business hours, which is ideal for persons running a business. Classes are small in size and encompass 20 to 40 of training.

Monitoring of those who have completed training is done by unannounced visits by GVC officers to the business premises of voucher recipients.

GVC has advised that although there are a few dropouts from the courses, most of the persons complete their training and make positive changes to their mode of operation. The programme aims to distribute 28,000 vouchers over a period of three years.

The programme has its headquarters in Georgetown and offices in Linden, on the Essequibo Coast and in Berbice. According to the Information and Advisory Officer Sheneiza Lookman of GVC, Berbice has had the best response since the programme began, with almost 600 vouchers distributed for the month of September alone. Mostly women respond to the courses and constitute more than three-quarters of all the applicants to the programme. Lookman said technical courses, which may attract more men, are to be started soon. Courses presently offered range from computers, administrative management, floral arrangements, and bridal décor among others.

Stabroek News has spoken to some of the recipients of vouchers, none of whom wanted their names published. One woman said, “I benefited well from the programme and learnt a lot. It helped with my self-esteem. I am doing dry florals, craft, cake decoration and sewing.” Another said that she used to sell chicken and did courses in floral and garments. She said that she hopes to sew for herself and other people. Another woman from Linden said that she heard of it from a friend and that she was grateful for the programme. She did Microsoft Word and is now doing publishing. She said that if it weren’t for the voucher she wouldn’t have done any course because she doesn’t have the finances.

Some of the institutions affiliated with the Guyana Volunteer Consultancy are:

a. Adult Education Association - Management, Computer Programmes, Child Care etc. (Georgetown)

b. The Business School - Small Business Management, Marketing, Computer Courses. (Georgetown)

c. Shomath School of Home Management and Mathematics - Curtain Making, Advanced Cake Decoration, Fabric Design etc. (Georgetown)

d. GB’s Unisex Salon and Skills Training Centre - Permanent Waving Technique, Nail Artistry and Designing, Hair Colouring etc. (Georgetown)

e. Language Services Centre - Spanish course for Business. (Georgetown)

f. St Mark’s Library and Skills Training Centre - Food and Nutrition, Care for the Elderly, English and Maths for Small Business, etc. (Berbice)

g. Windex Internet and Education Centre - Elementary and Advanced Information Technology. (Linden)

h. Shereen’s Commercial School - Basic Typewriting 1&2, Business Communication 1&2, Fashion Designing and Dressmaking, Cake Decoration. (Essequibo)

Profile: Mike Brassington
End of the road for GRL?

After almost five decades in banking and manufacturing, Mike Brassington won’t give up on the dream of bringing Guyana Refrigerators Ltd out from under debts of $113M.

Mike Brassington was born in 1936, the youngest of four brothers and four sisters. His father Charles Edward Brassington was among other things a secretary/director of D’Aguiar Bros Ltd. The family lived in Hadfield St and Mike’s childhood was solidly middle class as he tagged around with his elder brothers who used to call him ‘Small change’. Many of his memories of that time are to do with World War II and he recalls that air raid wardens would walk around making sure no lights were showing behind window blinds although why the Germans would want to bomb Georgetown is a bit of a mystery. He also remembers huddling around the radio and listening to the BBC World Service reporting on the war’s progress in the various theatres of action. None of the family saw action although his two elder brothers - Mike followed suit some years later - did enrol in the volunteer force a forerunner to the Guyana Defence Force. After some carefree years at Main St R.C School, Mike went on to St Stanislaus. He concedes that he was a lousy student but reasonably good in Maths.

After school he went straight into Barclays Bank or as it was called then Barclays Dominion Colonial and Overseas. But his life might have turned out quite differently for on the very day he got the letter to go into the bank he was preparing to go up to Mackenzie on the R.H Carr for an interview with Demerara Bauxite. He quickly weighed up the options and decided that Georgetown was a better place to be. It was to be the start of a 21-year career with Barclays which he says taught him valuable disciplines of punctuality, efficient work practices and the paramount importance of customer service.

He started off at the Water St Branch which he notes has changed little as the present GBTI building with the dome and balcony. His starting salary of $132 a month was a handsome amount for a young man at that time.

But in 1957 he was tempted by an offer to be a salesman for the local distributor of NCR machines at twice his salary. His father talked him out of it suggesting his long-term future was more secure with the bank and Barclays helped make up his mind by offering him a posting to St Vincent. So he settled in to a comfortable bachelor life consisting of work of course but also Sunday afternoon beach parties fortified by cheap stocks of rum flown in by seaplane from Barbados. After a year Mike was transferred to St Kitts spending over two years including a stint as cashier since he had skipped that position at his other postings. This led to a memorable day when the three other cashiers called in sick coinciding with the payment of the island’s public servants. He recalls that the line went out the door and round the town’s square. By the time the bank shut its doors - about two hours after normal closing time - he had served 484 customers. He then took a posting in Trinidad in San Fernando where although being only 23 he was put in charge of the bank’s foreign exchange desk which at the time was doing huge business on account of the energy companies’ investments. He was eventually appointed as the accountant for the Point Fortin Branch where he spent two years before receiving an urgent telegram to return to Guyana. It read roughly “Come home... a new branch is opening in Mackenzie and you are wanted as the first Guyanese manager.” He packed and was on the next plane only to find the branch had another two weeks for completion and that they only wanted him there to be introduced for the donation of a wing to the University of Guyana. This was in 1966 and Forbes Burnham was insisting that companies should have less expat workers. After successful stints at Mackenzie and at the High St branch Mike was appointed acting deputy manager for Guyana in 1969 which led to a memorable encounter with Burnham who had vowed to see Barclays out of the country while at the same time wanting to borrow US$15M for the bauxite industry. Burnham reminded the young man that he owed his position to him because he had limited the issuing of work permits to expats. After much wrangling with senior officials from the bank Burnham got the loan and even though it was publicly stated that Barclays was eventually sold to the government for $1, quietly they were allowed to repatriate their profits over a number of years.

Meanwhile Mike began a new chapter of his life which all started in the London kitchen of his brother who wanted to buy a new fridge. Mike asked how much that would cost and he said about 28 pounds. A quick calculation and Mike realised he could sell that fridge in Guyana for a handsome profit. He called the company, LEC Refrigeration Ltd. in the seaside town of Bognor Regis and the chairman Charles Purley invited him to lunch where he quickly told him that instead of importing fridges he should be producing them with his help.

So when he returned home Mike gathered his friends and asked if they wanted in and how much could they contribute to the $500,000 needed to get the factory up and running. He says his friends could not lie because since he still worked at the bank he knew how much they had in their accounts. Eventually he got twenty of them to put up $380,000 only to find that the cost was now $750,000. So he approached local companies such as Auto Supplies and Fogarty’s and to his surprise all of them said yes. Guyana Refrigerators Ltd took root at a plot of land on the East Bank where Colgate Palmolive would eventually build and later abandon its factory.

Mike and a staff of 35 started production of a 7.6 cu. ft. single door model but soon ran out of cash. So most board meetings involved passing around a hat for more donations. Business eventually picked up and more models were added until there were eventually nine types of freezers and fridges. Mike who was still at the bank sent a sales rep to Trinidad only to have him return saying stores wanted a different size. Undeterred, Mike flew over and sold 1,000 refrigerators and freezers in a few days. And that was the start of an export drive which would see charter boats laden with units leave Guyana every month and in one year 13,000 units were sold to Trinidad, 6,000 to Jamaica and exports making up between 75%-85% of total sales. Production hit a high in 1985 with 28,000 units.

Mike says the company was immensely profitable with 14 out of 20 years in the black. In the context of its present predicament Mike says the 20 initial investors made back their money seven fold and when bonus shares were issued eight times that amount. In 1986 GRL had profits of $2.85M and in 1987 $4.448M. It had US$8M in revenues for overseas sales.

In 1980 the company started IDEAL a unit to make stoves using a US$2M loan from the International Development Finance and Lloyds Bank.

In 1983-4 the company had a public share offering of $50M raising $26M with the remainder issued as a rights issue two years later.

By 1985 the company which by now had 900 employees consolidated GRL and IDEAL into one operation at the IDEAL factory on the Soesdyke Highway cutting the workforce to 650. High interest rates of 38% and continued currency depreciations hit the group from both sides what with its local and overseas loans. Despite this Mike says Caribbean countries were still calling for orders. Through the nineties production slowly tapered off as debts mounted and cash flow problems set in. In 1995 the company made 6,000 units but by 1998 had suffered a massive loss - partly from a write-off for a subsidiary - of $200M. GRL went into receivership a year later with debts of $194M which would increase to $300M with interest.

What went wrong? Mike says the depreciations were the company’s primary undoing coupled with the directors’ insistence that dividends of up to 25% should be paid every year therefore leaving little money to reinvest.

Mike says IDEAL continues manufacturing a limited amount of appliances mostly special orders for the hotel and the restaurant trade. The company has also been assisted with a UNDP donation of $500,000 in equipment for new foaming machines and final assembly equipment to comply with CFC emissions guidelines.

This equipment now stands idle although completely tested.

Meanwhile GRL has gotten a series of concessions from the government which are available for any potential investor who wants to clear off the company’s debt now reduced to $113M. any investor would also need to inject US$1.4m in working capital. Mike says it is a tremendous opportunity given that the company has state-of-the art equipment, 114 acres of land among assets estimated at US$9M.

As for the suggestion that the imported fridges are more popular, Mike says even today people tell him how they have had a GRL fridge for 20 years and it is still going strong. He believes with the concessions the company has a distinct advantage in production costs over importers and that an economy fridge would be popular here and in the Caribbean.

He will continue low level operations for the group but by the end of the year suggests some decision on GRL’s future will have to be made and that may include selling off the assets.

Mike was also Chairman of GUYSUCO (1989 -1993) at the time of its revival and he oversaw a doubling of production to 254,000MT. He believes the Skeldon Project should be even larger as Guyana should be in a position to take advantage of less efficient Caribbean countries moving out of sugar and giving up their rights to European markets. However he feels at least two Demerara estates will have to close to get production costs down.

Married to Gloria for the last 33 years the couple has four children two boys and two girls. Michael is a pilot stationed in the US; Paul is now at university in Florida; Lucianna was up to recently a chemical engineer at GUYSUCO; and Marilu an accountant has just got married and is now living with her husband in France.

Mike is also a keen golf player (“I like the game but it doesn’t like me”) who started playing in Trinidad at Clifton Hill. His best handicap was 16 and he won a Taylor Woodrow Bowl at the Mackenzie golf club back in the sixties. He has also been President of the Lusignan Golf Club for the last twenty odd years.

He was chairman of the President’s Advisory Committee (1986 -1992) which would meet once a month with then President Desmond Hoyte. He recalls it being a genuine interaction between the private sector and the government and notes that Hoyte was memorable for his decisiveness.

Mike continues to commute everyday to the IDEAL compound. It was once the scene of much industry but now is mostly as quiet as the surrounding sand hills and it remains to be seen if GRL will ever rise again.

Trinidad must fulfil its CARICOM commitments while preparing for the wider world
Mr Ken Gordon, the Chairman of Caribbean Communications Network, a multi-media Trinidadian company spoke to Stabroek News on his recent visit to Guyana

Stabroek News: Do you believe Trinidad’s political instability is now behind it with the clear mandate the electorate has given the Manning government?

Ken Gordon: It is always difficult to determine whether political instability has been diminished but to the extent to which you can make a judgement I think the country is experiencing a breath of air after a conflict for some time for reasons which I think the entire world knows. We have had the problems with the elections. I think the government has settled down very well. How long this will remain will depend largely on the performance of the government and they have made a good start. They have done very well at catering to the needs of the people at the bottom. They have strong social programmes and I think this has gone down well in the country. The key is they must be able to assist people who need help while at the same time not resorting to a handout syndrome, which tended to happen in the early eighties. So a fine balance has to be established there.

SN: Do you think the continuing racial tensions in Trinidad could be remedied by an overhaul of the Westminster system of government and what system might you have in mind?

KG: I don’t think the racial problems of Trinidad are going to be significantly affected by any change in the Constitution. One thing which needs to be addressed is to ensure you don’t end up with an even number of seats on each side in the Parliament. That’s necessary, but in terms of the day-to-day problems, anyone would find it difficult to pinpoint any one instance of discrimination based on race in our country. It just does not exist. What has happened is that the traditional pattern of racial voting which has been very much a factor in our history has been exacerbated in more recent times. Mr Panday who is a very effective speaker has been able to inject a level of passion into this issue which previously did not exist. It is true that you had a historical problem which was more one of omission than commission. But that is long behind us and you have to deal to a large extent with perception and I think a lot depends on political appointments that seem to be even and balanced. And a start has been made in that regard by the present Prime Minister who in fact has gone to the point where most of the appointments at the senior level have gone to the East Indian population. Having said all that I am not suggesting that a change in the constitution would not be desirable but not for racial reasons. After so many years you need to look at it again in light of the realities facing the country.

SN: How would you compare Guyana’s racial problems with those of Trinidad?

KG: One gets the feeling that the problems here go much deeper and wider and the mindless incidents make you wonder. But it is not a comparison I feel equipped to make...Of course there are similarities because you have two parties which are clearly identified with different races. I think the fact that the economy of Trinidad is so much better is a powerful factor since people have so much more to lose. Trinidad is more fortunate in having a very large middle class and its population is also probably enjoying a higher degree of literacy and education than Guyana.

SN: The economy in Trinidad is buoyant, with large investments in the natural gas sector. But what direction do you see the rest of the economy taking - IT, financial services or manufacturing and how will the country address the forces of globalisation?

KG: We have already recognised that our sights have to be lifted to the world outside while being very committed to CARICOM. The whole process of globalisation is irreversible and if you want to be a player you have to join the world economy on its terms. In order to do that you have to decide how best you can cope yourselves. A critical part is accelerating the education opportunities. 7% of the population of Trinidad has some form of tertiary education and I think we have a target to move it up to 20% in the next five to ten years. The reality is if you are going to join the world out there where Information Technology is so important you have to improve the educational base. As far as other concerns go we have made a good start in manufacturing and we have exporters selling all over the world and that too has to be accelerated. As for the energy sector huge investments have been made and a few others are coming on stream. So the overall picture looks good and it’s really a matter of how we manage it and how we order our priorities.

SN: It has been suggested that Trinidad wants to become the gateway to South America, despite Guyana’s geographical advantage. You have signed a Partial Scope Agreement with Brazil. How important will Brazil be both as a threat and an opportunity?

KG: I don’t think Brazil presents the same amount of importance to the average Trinidadian as to the average Guyanese, simply because you share the same continent. If Trinidad has been put forward as an entrance to South America this is more a strategy issue. It has more to do with the fact that we have an airline and it is a logical jumping off point. But I don’t know that any serious debate has ever taken place in Trinidad about the country being the partner to Brazil. There are things that are of interest to us but perhaps not so critical as to Guyana with the shared border.

SN: How do you see CARICOM’s role in the FTAA?

KG: The reality is that the FTAA has been moving ahead at a measured pace and small countries like those that make up CARICOM not only are not prepared to keep pace with those developments but in some ways many of the countries are simply trying to win themselves some time. Dismantling barriers is one thing, but doing it overnight with all the social upheaval is another matter. I don’t think we have ever been prepared to deal strategically with the bigger partners in the proposed FTAA. One area where Trinidad was totally outplayed was the question of intellectual property rights. We signed an agreement some years ago which has now put us into a strait jacket and that was the only real bargaining chip we had when we come to the final crunch and sit down with the U.S. That demonstrated a complete lack of understanding of the reality that once the US got that settled you had nothing else that you could take to the table.

SN: How threatened would Trinidad be by a true Free Trade area?

KG: Trinidad is prepared for it. We have accepted that this cannot be stopped, and the country is more fortunate than other Caribbean countries in that it has a stronger manufacturing base along with energy resources to position itself as a significant exporter. We have recently done something which could be seen as shooting ourselves in the foot by removing the export allowance - one of the conditions for the agreement. Some people think we have done it too early but it is part of the preparation.

SN: There has been the belief among other CARICOM members that Trinidad feels it is a ‘tiger’ in the Caribbean and maybe is being held back. Trinidad has signed a number of bilateral agreements outside of CARICOM much to the organisation’s concern. What do you think Trinidad’s role is in CARICOM and how does it square with its hemispheric ambitions?

KG: Trinidad continues to have CARICOM as its main and primary objective but it recognises that CARICOM has severe limitations in that it is a very small market. Trinidad has accepted that globalisation cannot be stopped and I don’t think it is reasonable for anyone in CARICOM to expect Trinidad to fail to prepare for what is certainly ahead because it needs to go at the pace of the slowest regional partner. What it has to do is to find a way to fulfil its CARICOM commitments while at the same time preparing for the wider world that is taking over. I am quite satisfied that every other country in CARICOM would if in the same position be doing exactly the same thing. A country has first and foremost to secure its national interests.

SN: The Manning Initiative had envisaged an alliance between Barbados, Trinidad and Guyana which would bring CARICOM’s economic ‘soul’ southward and away from Jamaica. Is this idea still valid?

KG: This was announced without debate and I think from his position it was a desire to move with partners who were more ready to move than others. But before there is a wider debate and the issues have been fully fleshed out then I don’t think there is a Trinidad position on this issue. It’s more a statement of intent by the government.

SN: A recent CARICOM meeting had discussed the formation of a regional airline and the BWIA Chairman has said it is an inevitability. What are your thoughts on such a consolidation?

KG: Let me answer by telling you what happened in the period when I was Chairman of BWIA. We had moved to take it out of the talk arena and into an action arena. We convened meetings with all the airlines of the Caribbean out of which we updated a report which had been done some years before detailing the tremendous savings that would result if the airlines were to act together. We decided that with Air Jamaica and BWIA having the most at stake then we should proceed with an MOU. This was signed by Butch Stewart, Chairman of Air Jamaica and myself. We began to implement the first phases of the MOU including three or four crews being exchanged. Some are still working with Air Jamaica. We were at the point of looking at the joint purchase of fuel that would have saved considerable revenue and we were looking at shared facilities at Miami and later in New York. That MOU still exists. I remain an unrepentant believer in the logic of a regional carrier. It has been shown elsewhere that when you get into difficulties, by coming together you can do so much better by having one operation rather than ten competing in a limited market.

SN: What is your perspective on the continuing political instability in Guyana and how do you think this can be resolved?

KG:I don’t know that anyone has a magic wand. What I do know is that if you have a problem you need to find the areas in which you agree and try to go forward based on taking the simplest possible steps. The avenue I think that should be pursued is where you have something like violence, crime or racism which everyone of goodwill must find common ground on, because no one wants to see Guyana destroyed. I gather you now have a group (Social Partners) although they seem to be working on a number of complicated areas. However if you simplify it and identify a common front and start it there where opposition and government are committed to freeing Guyana from violence and then mobilising the country to fight a war against it this might work. Once people work together and make progress they begin to understand each other better and it makes it possible to take the next step. The government and opposition need to work together, to close ranks, to make a call to defeat violence, trap it and from that the sides can continue to oppose, continue to govern but there is a basis on which to work together. An understanding that the other person is not necessarily a monster.

SN: The regulation of the media in Guyana is a controversial topic at the moment. What are your views on press freedom in the context of politically fragile and racially divided countries such as Guyana’s and do you believe self regulation is more effective than government regulation?

KG: I am absolutely, totally and unrepentantly opposed to any form of government regulation. Once that happens press freedom is dead. While this may be introduced for valid reasons because of some extreme situation, once it happens there you better believe it is going to keep encroaching. So the two things are completely incompatible. They cannot exist side by side. The answer has to be self regulation and the improvement of professional standards for journalists.

SN: But you must have heard of the issue of talk show hosts and the calls that they should be muzzled because what they say could be seen as inciting racial hatred.

KG: The media should convene a meeting among themselves - these talk show hosts do not own the stations - and impose some code of how the media should behave and all the houses should be guided by that. If it is as extreme as some say it should not be allowed to continue to damage the society. I think if the responsible media agree on that, one would expect responsible people who run companies (advertisers) to realise that there are people on the air who are damaging the country and they would not support them. You cannot operate without advertisers. The other way is through the issuing of licences and the terms of that licence could reflect the conditions under which the electronic media can operate and that is entirely legitimate in terms of if the licence says you shall not incite racial hatred and so on. If you suggest that a person should own a station and have no regulation at all then that is the Wild West. There are laws under which you should operate. I don’t regard this as the same as a government saying you can’t say this or that about them.