Expansion and development of the Guyana economy

By Dr. Compton Bourne

Emeritus Professor of Economics, University of the West Indies and past president, Caribbean Development Bank

When oil and gas production areas in Guyana are fully operational, the fossil energy sector is likely to be the main source of national economic activity through its direct contribution to foreign exchange earnings, government fiscal revenue, employment and labor income, and purchasing goods locally. and services.

Nevertheless, national economic policy should seek to ensure that other industries and sectors are expanded and developed to make significant sustainable economic contributions. This policy perspective is expanded upon with reference to a few selected industries and sectors.

Dr. Compton Bourne

Local purchases of goods and services by the oil and gas industry are likely to be modest at first. However, the experience of other countries with large petroleum industries has shown that, over time, a variety of local enterprises can become significant suppliers of goods and services to the oil and gas companies thereby expanding and expanding the economy’s production base and generating levels higher of employment and income. Providing the necessary support to emerging initiatives in this context should be one important element of short and medium-term public policy.

Agriculture and the fishing industry should be priorities for major development assistance. The agricultural sector includes the sugar industry, the rice industry, and livestock and commodity farming. Agriculture and the fishing industry are high employment sectors integral to livelihoods in large parts of the resident population. The largest proportion (17%) of all workers in 2018 worked in agriculture, the fishing industry and forestry.

The sugar industry can be resuscitated and revived after a period of partial closure, asset depletion and financial negligence through economically reasonable restructuring, together with investments to improve farm and factory productivity. The supply of molasses could be optimized for the rum industry in Guyana and the Caribbean and realistic strategies for sugar marketing could be developed regionally and internationally.

The rice industry may need less urgent policy attention but could benefit from government assistance with international marketing, identifying new markets, and international payment arrangements.

The fishing, livestock and domestic food crop industries if expanded and strengthened can benefit from the anticipated significant growth in demand for food in homes, hotels and restaurants resulting from higher incomes and purchasing power in the country. a booming economy. They can also become significant components of Guyana’s exports of goods to CARICOM markets where several governments wish to reduce regional dependence on food imports.

The specific policy interventions and support required by these industries would need to be based on current situational analyzes and could include budget allocations, facilitation of private capital investment, and effective and efficient regulatory frameworks. In the case of livestock and crop production, flood management needs to be improved. Equally, the marketing and distribution of hinterland products would benefit from improvements in storage and freight facilities. Financial incentives for enterprises involved in the storage of goods and supply chain distribution should also boost agriculture and fishing.

Guyana is not recognized as a tourist destination despite a steady growth in international visitor numbers in recent years. Holiday visitors, accounting for 61 percent of the total number of visitors, come mainly from the Guyanese diaspora which is mainly accommodated in private homes and to a much lesser extent in hotels and guest houses. Nevertheless, tourism can be developed into a significant industry attracting many visitors worldwide in addition to the Guyanese diaspora.

The uniqueness and abundance of Amazonian wildlife, rivers and waterfalls make the Guyanese hinterland a valuable scenic tourism resource that is currently underdeveloped and underutilized. The key attractions for potential hinterland tourists as seen from Africa are nature, wildlife and exotic foods. A UN WTO study estimates that wildlife viewing in 2015 accounts for 80 percent of annual sales of trips to Africa. The Guyana government can set itself a medium-term goal of promoting and developing hinterland tourism as a significant contributor to the economy.

It can invest in major improvements in the currently inadequate physical infrastructure for air and land transportation. It can facilitate private capital investments in visitor accommodation, leisure services and facilities, and in food and drink services in hinterland regions. It can provide financial incentives to local tour operators. No less important, it should promote the conservation of the natural environment especially against the risks of degradation through mining and logging activities. Through these means, government could increase direct and indirect employment opportunities in myriad tourism-related services for residents in remote communities.

The manufacturing sector could also benefit from official support. Pharmacies already have a presence in Caribbean markets that could be expanded through product innovation and aggressive marketing. There are other industries, for example the manufacture of precious metal and gemstone jewelery, whose export potential deserves close examination.

The truth is that Guyana needs to pursue an economic future that is not entirely dependent on the fossil fuel export industry. Expansion and development of sectors and industries outside of oil and natural gas should be a central part of public economic policy now and in the near future.