Remittances are a two-edged sword

Dec 04, 2012 Editorial

---

 

 

After some three decades, the phenomenon of the “barrel”, stuffed with the necessities and shipped in by overseas relatives and friends, is now an established fact. A barrel is no longer that which stores liquids such as rum.
The English textbook of our sixth-grade children asks them to “write a thank-you letter to a friend who has sent you a barrel of clothing and foodstuff from the USA”. Our educators obviously expect the barrels to keep flowing in, and are preparing the new generation to be suitably grateful. The question arises: “What has been the effect of the ‘barrel’ on the national economy, and perhaps more importantly the national psyche?”
If the truth be told, the actual “barrel” flow has diminished somewhat since its heyday in the eighties when the goods in those barrels literally kept body and soul together for so many families. It was in that era that Laparkan became a household name, and they were able to lay the financial foundation of their now multibillion merchandising and manufacturing conglomerate. Their shipping operation still goes on, but has essentially lost centre stage. After the opening up of the economy in the late eighties and early nineties by the Hoyte administration, overseas Guyanese gradually shifted to sending home cash since “you could buy the things right in Guyana”. Barrels are now the preferred mode of “helping out at home” during the Christmas holidays”, and the Government has adapted to this bulge by instituting special procedures in the customs department to clear any possible backlogs at this time. The Government does not want to be the Scrooge of the Guyanese Christmas, in which Santa rides in freighters.  The flow of the remittances by the overseas-based Guyanese however continues unabated and, by some reckoning, actually continues to grow. There is quite a substantial variance in the estimate of the remittances. The Government’s estimate is the most conservative – in the US$50-70 million range annually as opposed to several independent observers who put the figure at US$150-200 million. By whatever measure accepted, the sum flowing into the country is very substantial. Remittances must have a dramatic impact on the economy. One may ask: why is the Government’s estimate so low? One cynical answer is that it is not in the Government’s interest to promote the fact that much of the increased standard of living for the ordinary tax-payer since 1992 emanates from the help of their overseas friends and relatives. The Government boasts about a “building boom”, but there is nary a new house constructed today in Guyana that is not substantially funded from abroad. Aside from acknowledging what every Guyanese knows, however, the Government could enact regulations in the money-transfer business that would encourage the lowering of the fees that have to be paid to conduct the transactions. All observers agree that the fees are too high and may be a deterrent to even more funds being sent back.
While the remittances have undoubtedly helped to prevent what would have been a greater social and economic crisis in Guyana, the phenomenon has had some deleterious and insidious effects – especially on the Guyanese psyche. Today there are many Guyanese, especially young Guyanese, who depend totally on the cash from abroad to “make a living”. They have no incentive to look for jobs. This takes a big bite out of the prime group that should be motivated to put their shoulders to the wheel to develop Guyana by being gainfully employed. Those who are willing to work will not accept less than US$5-6 per day for even the most unskilled task – such as turning paddy on the roadsides during the rice harvesting period. It is for this reason that, as the Government continues its cost-cutting measures in the sugar industry where it has pumped in huge investments, it will continue to face severe labour problems, especially in Berbice – the site of their expansion, but also the site of the largest bloc of recipients of remittances.
Other entrepreneurs who want to open up businesses in Guyana also face this wage spike. When we compare the wage demands of the unskilled Guyanese, fuelled by remittances, against those of skilled workers such as computer programmers in India or the Philippines (they are in the same range), we would appreciate why the “hi-tech” jobs promised by the Government for over a decade have not materialised. Remittances then are a two-edged sword, especially if the valuable foreign currency received is ploughed only into immediate consumption. The Government has to find ways of encouraging Guyanese recipients of remittances to invest in their country – for increased consumption of all in the future.

---

---