The old business methods need revamping

Jun 26, 2016 Features / Columnists, My Column

I live in a country where people do two things very well; they complain a lot and they point fingers at everyone who just happens to be the source of some disappointment. This past month I have been hearing complaints about the state of the economy. Many in the business community say that business is down.
What that means is that the businesses are not getting enough of the people’s money. They say that the people are just not buying because they do not have money. This set me thinking about the people who support these businesses.
Over time I have been hearing about the influx of Chinese businesses and the cheap products that they have on offer. It goes without saying that people try to get the best for their money.
It matters not that many complain about the products they buy from the Chinese. And suffice it to say that many people actually enjoy the products they buy.
The local businesses operate as though they have a monopoly on people’s money, as though they are the only merchants operating on the local landscape.
I hasten to add that the volume of money has diminished somewhat. People attribute a variety of reasons. Some say that the flow of drug money has slowed remarkably so there is less money to enter the system.
Deputy Chief of Mission in the United States embassy, Bryan Hunt, admitted that the presence of the Drug Enforcement Agency has placed a dent on the movement of drugs both at the local level and at the other end. We know of some of the arrests, but not all of them make the news. The very big busts do, but it stands to reason that the small ones all add up.
There are other factors that affect the flow of money. For one, the price of gold has declined markedly. This too has had an impact on the flow of money.
Guyana just celebrated the 50th anniversary of its independence and none can deny that tons of money flowed. I am sure that the businessmen made a killing, so for them to complain that their revenue has declined is to actually hide the truth.
But be that as it may, it is not that the people are earning less. I go into the commercial banks and each day I see scores of people lining up to make withdrawals or deposits. These people must be doing something with their money.
One indicator of the level of business is the sale of newspapers. People buy newspapers with their disposable income-money that they have to do things other than buy food and clothing and pay for transportation. Newspaper circulation has not gone down. In fact it has risen.
The markets are also good indicators. No doubt there has been an increase in the number of vendors, so certainly some will experience reduced sales.
Yet it comes down to the number of foreign businesses reaching for the people’s purses. It would be interesting to hear them talk about their take at the end of a certain period. It is not clear whether the Guyana Revenue Authority would actually be collecting its due from these foreign businesses, so the books might not reflect the true situation.
Car sales are not any lower. Each day about thirty new cars hit the streets. Where is this money coming from? Surely things cannot be as bad as some would want to make out.
Government spending, in the past, has done a lot to fuel the economy but according to head of the Central Bank, Dr Gobind Ganga, there are certain things that a government must do to avoid the pitfalls. It has to limit its spending and it has to control the wages bill, else it would fuel inflation.
The good news is that inflation has been curtailed, forcing the Central Bank head to describe it as deflation. And there is likely to be a public service pay hike following negotiations between the Guyana Public Service Union and the government. Certainly, those businessmen who are complaining would begin to smile, although I am certain that the Chinese businesses would grab the bulk of the money.
There is another thing about the business climate. Local businesses place a hefty markup on their goods. It would be nice if some of them lower their prices to capture the market. Already many enterprising Guyanese are buying on-line. They buy their products from overseas and they all say that they get their goods cheaper.
Such competition should force the local businesses to review their policies. They may find that they could actually increase their profit.
And there is something else. I look at companies like Nike, Adidas, Puma and the like. They keep making money although they give away a lot by way of sponsorship. They put back into the society that actually fuels their profits. In Guyana not many businesses affix their names to local events. If they do, I am sure that they would become household names and thus attract business. Instead of lamenting, now may be the time for them to revolutionise their business. Surely, they are discovering that the old and established methods need revamping.

1 thoughts on “The old business methods need revamping”

Roy Persaud June 28, 2016 at 3:17 pm

One of the important factors for the downward trend of consumer spending you may have missed is CORRUPTION! The previous government was spending the proceeds from corruption in the local economy, thus boosting businesses. This could be consider as a benefit from government corruption.
However, now that the new government have reduced the outflows of funds from corruption, then there are more money to spend by the new government. The question is, where will they now allocate this extra funds?
The measures you used for assessing the level of consumer spending in Guyana’s economy are straight from the text-book. I am no economist, but should we not use a more realistic or “localized” measure that will give us more reliable information.
I do agree with the “drug money” theory. However, the newspaper and “line-up at the bank” (withdrawals) theory may not be ideal measures of consumer spending in Guyana’s economy.
The advice by the Central Bank to reduce government spending seems to be a bit ridiculous! Why, when developed countries have a downturn or negative growth, they encourage “government spending”. Why can this strategy works for smaller economy?
Is the Central Bank really reducing government spending to curtail inflation or are these tactics imposed by lenders to ensure that debt repayments are secured. We made this mistake in the past, satisfying lender’s requirements and ignoring the economy. Are we going to do this again? I am not saying not to pay our lenders, but lets negotiate better deals for the people.
Your core message to proof that businesses are complaining of “bad business” when your measures says otherwise might be wrong. It’s the fact, businesses in Guyana has indeed slowed down and as you know, a small percentage drop can have a huge impact on people’s livelihood. However, for us to be able to increase the reliability of information, to make relevant decisions, we have to use proper measures and create benchmarks that can be used as guidance.
Please take my comments as constructive criticism, I am not an expert in this field.
Great article! Thank you!

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