Guyana does not have an enabling environment for Private Sector growth (Part 2)
This week, we shall progress the series on the private sector and its role in economic growth. This week, we shall progress the discussion on the three other pillars – providing access to finance, actively promoting investments, and aggressively promoting regional trade. This series shall be concluded next week.Providing access to financeThis is the most important factor in promoting investment and new jobs. I once heard this phrase from Lionel Peters, and he was spot on when he said, “Money is the mother’s milk of all new projects”. My research over the years has confirmed this pillar is one of the principal reasons for projects’ failures. In 2011, a group of us pushed hard the idea of the creation of a State Development Bank structured similar to the system that resembles the BNDES (National Bank for Economic and Social Development) in Brazil. In our plan, which was proposed to the AFC and included in that party’s 2011 Manifesto, we had suggested various measures to raise the funds for such a bank, namely long-term Government bonds, available cash from NICIL, diaspora bonds, portions of the idle cash in the banking system (up to 15% if necessary), special taxes levied on the insurance industry, utilisation of some of the pension fund capital (no more than 15%), and even the option of approaching the international agencies for soft loans. The outcome of that vision was massive state facilitated industrialisation in all 10 Regions. The rest is history; the Coalition Government has now abandoned this idea of a State Development Bank.It was clear to us then, and it is clear to me now, that the local banking sector does not have the investment models in place to accommodate a risk/return appetite to meet the needs to drive the industrialisation of Guyana. Unless and until Guyana moves up the value chain by way of an industrialisation process, it would be very difficult to enhance the private wealth of the people quickly. The vision then was to allow the Development Bank to partner with the local and regional banks, to move their risk/return profile to one that is more feasible, thus making more projects in Guyana bankable. This vision remains a dream deferred.Actively promoting investmentsFostering foreign and domestic investment is the cornerstone of economic growth. These new investments will come with their own rules, which will serve to increase productivity and force unproductive companies out. But there is no incentive to invest, because of the many state-sponsored roadblocks. What is missing are sustained executive actions at the highest levels that are geared to facilitating big deliverables. GO-Invest is there, but in name only, and is not up for this job. Where are the tangible investment deliverables on its success? The way it is structured today makes GO-Invest into a powerless poodle!Aggressively promoting regional tradeGuyana’s future is primarily in northern Brazil, but in the absence of a functional transportation link between Linden and Lethem, the nation’s only option for rapid expansion today is the CARICOM region. But even the CARICOM region and the CSME remain challenges. There are too few, no high-value, Guyanese-produced agricultural products dominating the supermarket shelves of the Caribbean. It has been three years now, and the Minister of Agriculture, Mr. Noel Holder, has failed with a big “F” grade to help the nation penetrate the Caribbean food market.In spite of the CSME, rather than Guyana increasing its exports, we are flooded with products from the Caribbean, such as “tinned pigeon peas”, which only contribute to the importation of great financial harm to the nation, as they serve to deplete our stock of foreign exchange at an increasing rate. This brings me to the question: Is the CARICOM Agreement working against Guyana?But, more importantly, where are the programmes that are training our producers to improve their efficiency and enhance their skills at producing competitively for the export market? One catfish exporter told me that for every shipment he exports, he is forced to bribe all sorts of officers, from customs to fisheries officers, in order to progress that shipment. This is another example of the artificial tax that exporters have to face on a daily basis. Such a situation only augments the exporter being priced out of the market.Mr. Granger promised us he would be the leader that would clean up the corruption; but, to date, corruption has gotten worse than under the PPP. There goes another broken Granger promise!Next week we shall conclude this series.