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Guyana must learn from other oil producers’ failures to avoid wastage — US Business Professors
Jerry Haar, Professor of International Business at the Florida International University
Kaieteur News – While betting on Guyana as a winning proposition—in light of its oil boom —its Government must learn from the past experiences and failures of other oil and gas producing countries, to avoid wastage of resources.
This, in order “to remain focused on a strategy to minimize grift and (to) encourage socially responsible practices that can lift a large portion of the population out of its dependence on remittances from the diaspora.”
The sentiments were among the most recent round of cautionary advice for the emerging oil and gas-producing nation, this time coming from United States based Finance Professor at the Florida International University (FIU), Deanne Butchey and Jerry Haar, a Professor of International Business at the tertiary institution.
Finance Professor, Deane Butchey
The duo in a recent paper on “Guyana, Beyond Oil,” noted that while many believe that oil is the magic bullet that will hit the bull’s-eye of prosperity for the country—dramatically increasing revenue, growth and economic development—“the near-exclusive focus on oil and gas exploration unfortunately diverts the attention of foreign investors and multinational enterprises from other promising sectors and industries that can strengthen the Guyanese economic ecosystem.”
It was pointed out in the paper published on Tuesday in the Oil and Gas Republic, that “recognizably, oil services, equipment, transportation, and technology tied to the petroleum sector offer abundant opportunities, as well, to companies and entrepreneurs keen on doing business in the energy sector,” and that “these supporting and spillover circumstances provide a multiplier effect and are extremely important to the development of the Guyanese economy.”
It was noted however, that, “be that as it may, an assessment of the structure of Guyana’s economy could lead one to conclude that a near-exclusive reliance on commodities—particularly gold, rice, bauxite and sugar—poses a huge limitation on the nation’s economic diversification and industrial development.”
The professors argue however that “actually, the truth is just the opposite” and qualified the position by noting that “despite the volatility of commodities, they are a dependable source of foreign exchange and enable a continued source of revenue to enable a nation to diversify its economy and spur industrialization.”
The professors noted that while doing business in Guyana can be challenging, “the nation has copious assets that entice foreign direct and indirect investment.”
These include being the only country in South America, where English is the official language, a stable economy, similar time zones as the U.S., geographic proximity, location outside hurricane zones, and government commitment to expand investment in infrastructure such as education, information and communication technology, and transportation.
“Other important assets are a young, educated workforce and labour productivity rates superior to Central American countries and Jamaica, to name a few.”
As such, it was pointed out too that government in light of its future development trajectory should be encouraged to institute a Diaspora Investment Fund.
This type of fund, it was emphasized, “must develop clear strategies to securitize international remittances and facilitate access to the appropriate skills and networks required to advance the economy.”
The professors cited a recent example of the efficacy is of this mechanism reflected in the receipts of an estimated US$3 Billion in remittances to Kenya in 2019 from North America and Europe into a licensed investment fund, representing the largest source of foreign exchange for the country.
The Fund administrators, the professors suggested, should create a structure to do among other things—like in Taiwan—create a database to track skilled migrants and match them with entrepreneurial ventures and job opportunities.
Guyana, the financial experts concluded, “is at an inflection point and all signs report to an upward growth and development trajectory for the remainder of 2021 and beyond.”
Accordingly, opportunities for domestic and foreign investors are abundant in select sectors of the economy, and the country’s talented human resource base will enable the country to expand its engagement in the knowledge economy, hence the final conclusion “betting on Guyana is a winning proposition.”
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