Jagdeo and remittances

Dec 24, 2023 Features / Columnists, Peeping Tom

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Kaieteur News – Nothing better captures how much Jagdeo is divorced from local reality than his response to a Kaieteur News article about the growth of remittances. In that article, it was pointed out that since oil production began remittances to Guyana moved from US$380M in 2019 to US$429M in 2020 to US$548 in 2021 and 2022.

This finding was contained in the World Bank’s 2023 Migration and Development Brief entitled “Leveraging Diaspora Finances for Private Capital Mobilization”. The reported highlighted the massive growth in remittances to Guyana despite the high cost of doing so.

Jagdeo sought to attribute this growth to the flow of personal investment funds from abroad. He was implying that overseas-based Guyanese were sending remittances to invest in Guyana, including in property and commercial housing development.

But one should be careful also about the assumptions about remittances as a form of development funding – a line that Jagdeo seems to be adopting. In 2009, Professor Tarron Khemraj had argued that remittances cannot replace Foreign Direct Investment (FDI). He noted that some persons have argued that remittances, having surpassed FDI, should be seen as a critical source of development funds. However, he argued that although aggregate remittances were higher than FDIs, they enter the economy in small units that go directly to families and individuals to prop up private consumption and these micro quantities are not necessarily aggregated into a large high productivity investment project.

But being an economist, one would have expected Jagdeo to disaggregate the US$548M in remittances so that the public could be enlightened as how much of this was for investment purposes and how much was for altruistic purposes. He did not and therefore what is saying is mere speculation.

Had his feet been firmly planted in local reality and had he understood what is happening in Guyana, he would have recognized that despite the splurge in oil revenues, tens of thousands of Guyanese still depend on remittances from their families overseas to survive.

Remittances, of course, can be both monetary and non-monetary. The former relates to cash and other forms of financial inflows, while or non-monetary remittances include clothing the sending of items.

All Jagdeo needs to do is to extricate himself from his office for a few hours each day and take a stroll down to one of the money transfer agencies and witness the monthly pilgrimage of the poor and dependent to uplift remittances sent by their relatives. He could start by visiting the money transfer agency next to his friend’s business in downtown Georgetown.

Then he can make a trip to Berbice and witness first-hand the long lines each month of persons waiting to uplift the remittances sent by their relatives, and which have to be used for food, paying utilities and other expenses. No one doubts that persons are remitting sums for buying and renovating properties and for investment, but substantial remittances arrive in this country each month just to help families meet day-to- day expenses.

Many families depend on these remittances. If a loved one dies, a S.O.S goes out to the overseas based relatives to send money for the cost of the funeral. If there is a special event such a school graduation, monies are remitted to buy the graduation outfits. If there is a wedding, not only are overseas relatives invited but they are expected to contribute to offsetting the cost of the wedding. If there is a religious ceremony, the remittances will help defray the expenses. But, apart from these occasional remittances, each month, like clockwork, there are tens of thousands of families that depend on remittances for their survival.

No wonder there are so many money transfer agencies in Guyana. Two money transfer agencies alone have more than 60 outlets spread across Guyana. To this one must to add several institutions, including banks, offer money transfer services. Money transfer is big business in Guyana. The growth and distribution of these agencies represented an indictment of the Jagdeo administration from 1999 to 2011.

During Jagdeo’s presidency, there was a massive growth of remittances with these inflows reaching as high as 24% of GDP. This caused eyebrows to be raised and suspicions generated that much of this growth was related to the repatriation of drug proceeds from the United States. It is partly because of this that the US intensified its crackdown on drug lords in Guyana and demanded strengthened anti-money laundering legislation.

Several factors can explain the present rise of remittances. Nothing must be ruled out. The only way to know the truth is to disaggregate the value of total remittances. But this is an exercise which Jagdeo may not be too disposed towards as it could burst his bubble about much of remittances being investable funds.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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• Foreign Direct Investment (FDI), Migration and Development Brief, Peeping Tom, production, Remittances

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