By Jerry Haar and Deanne Butchey
Newsamericas -March 25, 2021
Many believe that oil is the magic bullet that will strike the bull boom for Guyana, dramatically increasing revenue, growth and economic development (no matter how and where that largesse is spent) .
However, the almost limited focus on oil and gas exploration is unfortunately diverting the attention of foreign investors and international enterprises from other promising sectors and industries that can strengthen the Guyanese economic ecosystem. The oil, plant, transport and technology services associated with the petroleum sector, recognizable, also offer extensive opportunities for companies and entrepreneurs looking to do business in the energy sector. These ancillary and overflowing conditions provide a multiplier effect and are extremely important to the development of the Guyanese economy.
Be that as it may, an assessment of the structure of Guyana’s economy could lead to the conclusion that almost exclusive reliance on commodities – especially gold, rice, bauxite and sugar – severely constrains the nation’s economic diversification and industrial development . Actually, the truth is the opposite. Despite commodity volatility, they are a reliable source of foreign exchange and enable a continuous source of revenue to enable a nation to diversify its economy and stimulate industrialization.
While doing business in Guyana can be challenging, this is true of almost any environment with huge potential. The nation has vast assets that attract foreign direct and indirect investment. These include being the only country in South America where English is the official language, stable economy, US-like time zones, geographic proximity, location outside hurricane zones, and government commitment to expansion investment in infrastructure such as education, information and communication. technology, and transportation. Other important assets are a young, educated workforce and better labor productivity rates than Central America and Jamaica, to name a few.
To encourage foreign and domestic investment, the government offers a package of incentives including exemption from various taxes, accelerated depreciation rates, and the return of capital, profits and dividends. GO-INVEST (Guyana Investment Office) encourages investment in light manufacturing, services, agribusiness and renewable energy. Among the most promising investment opportunities – and Guyana’s real strength in the services sector – is outsourcing business processes, for back office and front office functions. Call centers and telemarketing are two areas in this arena where Guyana has huge upside potential. There is still another excellent investment opportunity in ecotourism. Guyana was named # 1 ‘Best of Ecotourism’ in the world at the recent Berlin Top 100 Sustainable Destination Awards. Guyana was recognized for its holistic approach to sustainable destination management and development from its national policy for pursuing the Green State Development Strategy and implementing a strategy and action plan focused on sustainable tourism development.
In anticipation of expanded oil revenues, the Government of Guyana has sought to implement the Sovereign Wealth Fund, known in Guyana as the Natural Resources Fund, intended to capture royalties and other revenues from the oil and gas sector. The Fund includes, among its objectives, an intention to use the wealth of natural resources to fund national development priorities, including any initiative aimed at achieving an inclusive green economy. Eventually, it also plans to have revenue from other extractive industries in Guyana, deposited to it.
The fund intends to incorporate a mix of short / long term investments aimed at achieving economic progress. The government must learn from the past experiences of other oil / gas producing countries to avoid wasting resources and continue to focus on a strategy to reduce drift and encourage socially responsible practices that can lift a large proportion of the population from dependence on payments of payments. the diaspora.
The Government should also be encouraged to establish a Diaspora Investment Fund. This type of fund must develop clear strategies to guarantee international payments and facilitate access to the appropriate skills and networks required to promote the economy. A recent example of the effectiveness of this mechanism is the receipt of an estimated $ 3 billion in payments to Kenya in 2019 from North America and Europe to a licensed investment fund, which represents the largest foreign exchange source in the country.
The Guyanese diaspora, which includes migrants and their dependents, includes educated individuals who may have benefited from income redistribution during the pandemic including massive stimulus packages that passed their adoptive countries. Many also have executive-level jobs in innovative companies. They may be enticed to share their expertise and technical knowledge through partnership agreements. These should go beyond the commodity industries and provide avenues for economic diversification similar to the opportunities described above. Creating entrepreneurial jobs and enterprises in the oil / gas sector, artificial intelligence, machine learning, and biomedical fields have the potential to reverse brain drain for highly educated Guyanese residents as well as the diaspora.
As well as being altruistic and ready to develop the educational infrastructure of their homeland, diaspora members can also seek good investment opportunities but expect the transparency they have become accustomed to in their home countries.
Fund administrators should create a structure to:
a) Like Taiwan, create a database to track skilled migrants and match them to entrepreneurial ventures and job opportunities.
b) Use social media to create a network of like-minded individuals working for a common purpose. To be effective it must be populated with the right staff working towards clear performance metrics.
c) Work with senior executives to embed their companies’ global initiatives in promoting sustainability, diversity, fairness and inclusion. This has the added benefit of opening up the market to green opportunities and expanded goods and services.
Guyana is at point of influx and all signs point towards an upward trajectory of growth and development for the rest of 2021 and beyond. Opportunities for domestic and foreign investors are plentiful in selected sectors of the economy, and the country’s talented human resource base will enable the country to expand its engagement in the knowledge economy. And with so many successful Guyanese exiles in Canada, the UK, and the US, one would hope that, in an act of financial patriotism, they will step up to the plate and invest in a private sector Diaspora Investment Fund, complement the existing public Sovereign and Natural Resources Funds.
Betting on Guyana is a winning entry!
EDITOR’S NOTE: Jerry Haar is an international business professor at Florida International University and a global fellow of the Woodrow Wilson Center in Washington, DC while Deanne Butchey is professor of finance at Florida International University and Sam Walton Fellow of Enactus @ FIU.