The inexorable two-edged sword

Dec 20, 2013 Editorial

After several decades, the phenomenon of the “barrel”, stuffed with the necessities and shipped in by overseas relatives and friends, is now an established fact. And so the question arises: “What has been its effect 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.
After the opening up of the economy in the late eighties and early nineties, 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 over the years adapted to this process by instituting special procedures in the customs department to clear any possible backlogs at this time.
The flow of the remittances by the overseas Guyanese seems to be continuing unabated and, by some reckoning, has not as yet been significantly affected by the country’s being recently blacklisted.
It may be of some note that estimates by internationally recognised entities have indicated that one third of global remittances are conducted through informal transfer channels, but countries with weak financial sectors and systems tend to have the highest flows.
Remittances reportedly make the most significant regional contributions in the Middle East (72%), North Africa (54%), the Caribbean (51%) and South Asia (51%). At the national level, some countries rely more on remittances than on official development assistance.
By whatever measure applied and/or accepted, the sum flowing into Guyana has always been very substantial.
For example, there are few new houses constructed today in Guyana that are not substantially funded from abroad. 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 youths, 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 are not inclined to accept less than US$8-10 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 efforts to apply cost-cutting measures in the sugar industry where it has pumped in huge investments, it will be facing severe labour problems, especially in Berbice – 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 well over a decade have not materialised.
Experts have opined that at the macro-level, the benefits of remittances are generally seen as positive, though significant flows of remittances can mask problems and delay needed economic or regulatory reforms. Conversely, however, some researchers argue that, at the micro-level, remittances may exacerbate income inequalities in communities.
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.

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