BELOW THE SURFACE OF APPEARANCES

Nov 09, 2008 Features / Columnists, Peeping Tom

It is better for an economy to have catch-up growth than no growth at all. Over the past three years the Guyanese economy has been growing at a fair rate despite the fact that this growth was preceded by years when the economy stuttered and registered either zero, below zero or very marginal growth.

We know what has happened to the Guyanese economy since 1997. We know the reasons. It is no use over-diagnosing the problem. We also know what occurred in 2005 and how much the economy shrunk because of the floods of that year.

It would be an exaggeration to say that the Guyanese economy has rebounded since then even though we have had fair growth in 2006, 2007 and so far for this year.

However, as the figures also reveal, most of this growth remains in the traditional sectors of the economy which have so far failed to surpass the record levels of production set in the past.

This column has remarked on more than one occasion that sugar production ought to be approaching 400,000 tonnes per year.

This year it will struggle to achieve its target which is below 300,000 tonnes, a production figure which was surpassed in the seventies.

Rice prices are rising and this ought to have led to bumper crops. Production is going to be substantially higher this year than last year and this is to be expected given the world prices.

However, we shall not have record production since during the period when prices fell, it became uneconomical for many farmers to work the land and despite prices having risen over the past two years, raising capital to go back into production will take time.

High world prices have also led to increased gold mining but the question that needs to be asked is just who is benefiting from this boom, given the speculative nature of the industry and the high cost of inputs such as fuel which has eroded profits.

In the case of bauxite, the industry is now making a revival and we must therefore not read too much into the production figures.

I have no doubt also that timber production will also be boosted this year but, as we know, there are serious problems in the timber industry, none more so than the shameless decision of the government not to seriously restrict the exportation of logs.

Guyana’s productive base is not increasing and this should be a cause for worry despite the consistent growth rates over the past three years. Every year, the government is singing the same tune, a tune they have been singing for over ten years now.

We keep hearing about value-added production. In the case of bauxite, gold and timber, most of this is taking place outside of Guyana.

We hear about the new sectors such as tourism. We know about the many hotels that were built and which are now white elephants and presently on the auction block.

We are yet to learn whether the global financial crisis has affected that investment that was proposed for the Kingston area.

We hear about information technology and aqua culture. These are the same tunes that are sung every year but the results have been disappointing. Let us not beat around the bush, the government has failed to diversify this economy to the extent they have been preaching.

If our economy is to add value, if it is to create the sort of jobs that are needed to reduce unemployment and pull workers out of poverty, the sector that needs to be looked at is the manufacturing sector. Yet this sector is not doing well at all and best represents the failure of official policy.

For manufacturing to improve, greater value added must be imposed on the economy. This entails a ban on the exportation of logs. Let those who wish to have our resources come here and open their mills rather than ship our logs overseas and add the value there.

If manufacturing is to improve, the government has to stop allowing the use of industrial estates for commercial activities. If manufacturing is going to be boosted, the government has to ensure that energy is cheap.

In all of these areas, the government is intellectually bankrupt and has no solutions as to how to move the manufacturing sector forward.

They seem content with the reliance on the traditional sectors while each year reminding us about inland fishing, tourism, information technology and now non-traditional agriculture.

The Guyanese economy may look good on paper. But below the sub-surface there are serious problems which require vision, ingenuity and proper planning, all of which are in short supply within the government.