THE CASH ECONOMY
August 14, 2004
On Wednesday, a Mon Repos butcher and his driver were robbed of some $300,000 in cash after they had gone into the village of Melanie Damishana to purchase meat. According to reports in this newspaper, the men were relieved of the cash after they had loaded the meat into a vehicle.
This latest incident is a reminder that we still have not learnt an important lesson from the crime wave of the past three years. That lesson is that we should not be carrying around large amounts of cash on our person. This is an invitation to bandits to strike.
There are many companies in Guyana who operate on a cash basis. They send their vans and trucks into villages and receive cash in payment for goods and services supplied. There have been numerous cases where sales vehicles have been held up and the occupants relieved of large quantities of cash. Yet, the practice continues simply because many shop owners still insist on paying for their purchases with cash.
Businesses in Guyana are constantly complaining about the state of the economy and how far behind we are than other developing countries. Yet, many businessmen continue the archaic practices of a cash economy. Ever so often, you read in our newspapers about some large sum of money being busted from somewhere. Why is there so much cash trading in Guyana when the commercial banks have introduced means of paying, other than by cash?
One reason is that for many, the feel of the actual dollar in the hand is worth more than a credit or debit to their accounts. There is a physiological identification with actual money. In many cases, there are businessmen who can only relate to monies received and spent in a physical sense. It can never be, for them, the same with a book figure of sales and expenditure. They know they have made a profit from the amount of physical cash in their hands.
There are two extremes of this cash economy at work in Guyana. At one end are those who do not believe at all in credit. Having to borrow to them signifies that they are living above their means. At the other extreme are those who borrow and borrow until they have exhausted their financial viability. In the middle are others who understand the value of credit to an economy, as well as the ability to service one's indebtedness.
In any economy, there is going to be those who will continue to deal strictly on a cash basis. But those who continue to operate on this level can never be the catalysts for large- scale investments in any country. Cash economies never make it to the big league. You will never find a Donald Trump paying his bills in cash. And I do not know when was the last time Oprah felt a dollar bill in her hands.
We have got to move on in this country and particularly our businessmen must move towards more plastic (non- cash) means of payments. A start has been made but it is extremely slow in taking root. Today you can pay your utility bills over the telephone. You can pay for your supermarket purchases by debit cards. And some businesses accept managers and personal cheques. But the practice of paying by cash is still the dominant means on monetary transaction in Guyana.
One reason is because we do not have a developed credit market system in Guyana. Certainly there are limits to which the banks are going to grant credit facilities to customers because to recover outstanding debt in Guyana is not easy. But we need to make a start to reduce the amount of cash transactions in our economy.
Another reason why many businessmen are reluctant to use non-cash instruments is because of the reluctance to pay their fair share of taxes. By resorting to cash sales, many transactions can be kept off the books and thus out of the reach of the taxman.
I am disgusted every time a citizen is robbed of large sums of money and then complains about the lack of protection in Guyana. Those persons should not blame anybody other than themselves for having such large amounts of cash on their person or at home. Why does any citizen need to have more than ten thousand dollars on his or her person? Why do persons have to move around with hundreds of thousands of dollars in cash? Why cannot payments be made by cheque?
We blame the police and we blame the government each day for the robberies that are committed. But nobody blames the persons who move around with a lot of cash to pay for goods and services. If we want to help reduce crime in society, we need to become less cash-oriented an economy.
The next time I hear about a robbery in which someone loses a large amount of cash, I am not commiserating with that person because there is no reason why anyone should have to carry large amounts of cash around or hold large sums of money at home.