Oil wealth must be immediately used to tackle poverty and social inequality

Dec 29, 2019 Features / Columnists, Hinds' Sight with Dr. David Hinds

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So, Guyana has started to produce oil. Understandably, the government celebrated the announcement of First Oil. The President declared a National Petroleum Day. The Opposition was lukewarm about the official announcement. The critics of the government’s handling of the contracts and the general preparations have continued their criticisms. In the meantime, Guyanese wait to see how oil would change their lives for the better.
I have long decided that I will not make much of the mistakes made thus far. The bigger test for me is how the revenues coming to Guyana would be spent.
There has been no shortage of advice to the government on what to spend the money on. APNU+AFC has given us an idea of how it intends to proceed. To date, I don’t see or hear any bold idea coming from the coalition. There is nothing revolutionary about the Sovereign Wealth Fund—it is about saving today’s wealth for an unknown future . There is everything correct about a rainy-day fund. But there is also everything correct about using today’s money to solve today’s chronic problems.
And Guyana has some very chronic problems which have blighted this country for all its life, before and after independence. It is why I favour a sensible balance between saving for tomorrow and aggressively using the wealth to deal with the institutional problems of today. I am not convinced that the Coalition has struck that balance. There is too much emphasis on the Sovereign Wealth Fund and too little on tackling poverty and socio-economic equality. That message needs to be articulated very clearly to people as pointed policy items.
This is Guyana—a Caribbean country that shares a lot with the rest of the world, but has its own peculiar history. We are a post-plantation society. We have never had the kind of resources needed to successfully tackle the problems that accompany post-plantationhood. Now that we are in the presence of such resources, the primary concern should be erasing the scourge of post plantationhood.
The institutional nature of our condition means that we need a multipronged approach—a wide gaze and a wide swipe. I am afraid that what I hear is too narrow for my liking. This business of spending on education, or infrastructure, or agriculture as stand-alone areas is nonsensical. Any country with the kind of problems we have demands that we spend on developing all those sectors simultaneously.
There is a reason why Guyana has for some time been among the poorest countries of the hemisphere. During that time, we have had periods of positive growth rates. But these have never translated into sustained human development. The majority of our people continued to be poor and the gap between the minority rich and the majority poor widened by the year. One of the biggest challenges, then, is to translate the expected colossal rise in the GDP into human development. I am afraid that to do that we must from day one begin to intentionally invest in people in the short and long term.
One of the fortunate things is that Guyana could learn from the mistakes of other new oil-producing countries with a similar history to ours. The instances of corruption are many. But so too are the instances where governments acted as if the money is theirs and only they know how to spend it. Government programs are a must—there is no escaping them. Tax breaks for citizens are always a useful tool of putting money into people’s hands. But we know that tax breaks often benefit the rich.
For poor people who live their entire lives without enough income to fulfill basic dreams, Cash Transfers have proven to be a very effective policy intervention. Cash Transfers, in conjunction with a quality education and full employment, is a very potent recipe for poverty alleviation. Yet for some strange unexplained reason, the Coalition is hesitant to embrace. To its credit, the PPP has already announced that it would enact a limited Cash Transfer program. The Coalition is yet to announce a similar policy.
There is a lot of talk about Local Content. But it’s local content for the business class. What about local content for the working people? Businesses are important for job creation and the provision of goods and services, so local entrepreneurship must be encouraged and protected. However, the working people should not be at the mercy of a trickle-down approach. Invest in local businesses, but invest more in the Guyanese people.
I will be listening out to hear what the parties, especially the two large formations are putting before the people at the upcoming elections. I have no problem with promises—that is what elections are about. I want to hear the promises to the people. Enough Guyanese are saying that they will not vote if they don’t hear how this coming oil wealth would concretely benefit them at the personal and family levels, both in the short and long terms. I am warning the big contestants that they ignore that threat to their peril.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper)
More of Dr. Hinds’ writings and commentaries can be found on his YouTube Channel Hinds’ Sight: Dr. David Hinds’ Guyana-Caribbean Politics and on his website www.guyanacaribbeanpolitics.news. Send comments to [email protected]

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