Of Matters Financial

Sep 06, 2015 News

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By Lance Hinds

Over the past few weeks I have watched the exchanges between the Government of Guyana and the Berbice Bridge Company Inc. with great interest. Let me say first of all that as the current head of the oldest private sector organization in Guyana, it is my hope that the two parties begin to engage constructively in a level of discussions resulting in a middle position acceptable to both sides.

I believe this is also a teachable moment which hopefully triggers a soul-searching review and analysis of the role of Government and the Private Sector in national development and also each one’s position in the national economic space. It is one thing to talk about the Private Sector being the engine of growth. How that engine is positioned however, within the context of the expectations of the electorate, most especially in this political environment, needs careful thought and deliberation.

Can the Private Sector consistently pursue, which some may argue is its right, a singular agenda on maximum returns on its investment? Or must there be a hybrid model where financial expectations are tempered in view of the socioeconomic circumstances and challenges faced by our citizens?

In a few weeks the Private Sector is going to host a National Economic Forum that will include inputs, recommendations and proposed solutions from Government, Academia, Civil Society and faith-based organizations. In my humble opinion, before anything else, we should paint a clear vision of all the respective roles in national development. We are steeped in almost 50 years of a socialist and now neo-liberal economic model that quite frankly has not brought about the sort of prosperity we deserve as a nation gifted with all these natural resources we are supposed to have.

I no longer care whose fault it is. The bottom line is that we live in a highly competitive international 21st century environment that because of technology is complete independent of time, space or distance. Nobody is waiting for us to wake up and realize this “potential” that has been incessantly drummed into our heads since independence. We had better find a way to address and improve our economic affairs.

Let us go back to the matter of the Berbice Bridge. Out of academic curiosity I would really love to see the feasibility study or prospectus that made a convincing case for the creation of this ‘public/private sector partnership’. Was it based on traffic alone? I thought the population in Berbice was declining as a result of migration. Isn’t the building of infrastructure of this nature undertaken in conjunction with a comprehensive economic plan for the beneficiary community?

In its release the BBCI says:

“Up to 2008, there was no Berbice River Bridge and the government used to provide a much subsidized ferry service that was a great inconvenience to the Berbice community and Guyanese consumers as a whole.”

Lovely, this looks so far like a clear case of social entrepreneurship where the investors intervened to provide a solution to a regional problem. But then further down:

“The investors and creditors were assuaged that the projected tolls would however be less costly than that the ferry on the average, and that the Berbice community was surveyed and was more than willing to pay the projected tolls.”

Assuaged? Really? By whom or by what? Who participated in the survey that indicated that the residents of the Ancient County are more than willing to pay the projected tolls? I could have sworn I heard the residents of the Ancient County fretting about the prices from day one since the bridge was built. Is this basis on which the investment was made? Did the investors per chance conduct a study of their own?

We are also advised that there is a formula that dictates that tolls should be increased periodically to cover and to meet annual inflation. What about the continued ability of the Berbicians to pay the tolls? Especially when one takes into consideration the well documented economic difficulties with sugar and the potential problems with rice.

I am not in any way attacking any part of this state of affairs, but I am hoping someone very bright can provide clear answers to the simple questions posed above, since I am not steeped in the complexities of high finance. I would also recommend that someone or some entity provide a comprehensive, balanced overview of this investment for public consumption, because we have now ended up in a situation where the government and the BBCI appear to be at loggerheads and the Berbice community unimpressed with the proposed toll reductions.

If as a taxpayer I am going to be asked to contribute more to this operation, surely I am deserving of this level of information. Investment in this bridge, especially the debt instruments, include pension fund and trust funds. There may be many questions regarding the thought processes behind the overall investment but more importantly, this matter needs to be resolved, and soon.

The difficulties surrounding the cost of operating the Berbice Bridge brings up another national economic issue. In 2015, a significant amount of our citizens are still unable to afford basic commodities and services. The light bills are too high; the water rates are too high. Every September school books and related items are a challenge. The reason why there is a thriving photocopying industry is because a significant number of parents cannot afford new school books.

If for example, I buy cups in the US for $5. I add shipping taxes markup, so let’s say I’m selling them in the Caribbean for about $8. Chances are this cup is going to be affordable in many parts of the Caribbean but the howl here is going to be that it is too expensive. Is it that these things are really that expensive and is it we can’t afford it? I argue that there is a clear distinction between the two.

We have to find new economic models which at their core must increase the earning and spending power of our citizens. We have crowed for years about the size of the economy and its growth, yet in 2015 we are looking at youth employment at 40 per cent. I don’t even want to think about the possible national employment rate.

The National Economic Forum, therefore, must be the starting point of the development of a comprehensive macroeconomic framework that will provide the positive direction for our economic growth and evolution. It is either that, or we continue to meander as a backwater paradise lamenting what we could have been.

Lance Hinds is the current President of the Georgetown Chamber of Commerce. He is also the Chief Executive Officer of the BrainStreet Group, an ICT consulting and information services company.

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