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Guyana will need more than updated laws, proper oversight for oil to be springboard for development – Expert
Kaieteur News – While it is commendable that Guyanese authorities are making strides in updating their laws, improving planning systems and strengthening oversight, these mechanisms are not enough to make oil an automatic springboard for development.
Dr. Zainab Usman, PhD, Senior Fellow/Director,Africa Programme at the Carnegie Endowment for International Peace
This is according to Dr. Zainab Usman, a Senior Fellow and Director of the Africa Programme at the Carnegie Endowment for International Peace in Washington, D.C. In her recent analysis that examines principles for an oil-led development strategy in the 21st century, the expert warned that there are numerous variables Guyana must juggle to be successful with its hydrocarbon bounty.
Dr. Usman was keen to note that Guyana must, among other things, put systems in place to maximise earnings, manage revenues transparently and create buffers against the volatility of global oil prices. She said this will entail legislation, policies and regulations being implemented across the oil and gas value chain.
Dr. Usman said too that it is critical for Guyana to accelerate efforts on capacity building to monitor oil and gas operations, hire the requisite technical personnel, promote governance and transparency, and undertake financial and economic planning.
The Senior Fellow noted, however, that these commendable strides are “insufficient to position the O/G (oil and gas) sector as a springboard for national development; to achieving economic diversification, structural transformation and high-levels of human development in the long term.”
The industry expert said that Guyana needs to pay attention to the lessons several countries offer on the pitfalls of oil. She said, too, that Guyana needs to guard against certain misconceptions about the petroleum industry.
Expounding on this front, Dr. Usman said, “Oil wealth does not guarantee high incomes. Angola, Indonesia and Nigeria are all among the world’s top 20 oil producers but they remain lower-middle-income due in large part to their low-rents per capita. Secondly, attaining high-income status from natural resources wealth does not always translate into improved human development outcomes.”
The industry expert added that while oil-rich monarchies such as Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates have successfully achieved very high levels of human development and standards of living, it is not the case for other high-income oil producers such Equatorial Guinea and Gabon.
“Clearly, the ability to invest this resource wealth to build physical and human capital is a determining factor,” expressed the industry expert.
Taking the foregoing examples into consideration, Dr. Usman noted that achieving structural economic transformation is, therefore, a very difficult process and even more so for resource-rich countries.
Be that as it may, she opined that envisioning successful oil-led development in Guyana is not an insurmountable aspiration. In fact, Dr. Usman said today’s advanced industrialised countries like Australia, Canada, the Netherlands, Norway, USA, the UK, which are still major oil producers offer critical lessons for Guyana to learn from.
The expert concluded, “There is no need to reinvent the wheel because there are important lessons to draw from the successes and failures around the world. In drawing on these lessons, Guyana can forge its own path and should not be straitjacketed into blindly copying from elsewhere as the global environment is radically different today in the 2020s than it was in the 20th century.”
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