The ideal base to do business in South America and the Caribbean, the only English-speaking country on the continent has also emerged as a pioneer in green economic policymaking
Americans know little about this South American country with a Caribbean soul, but that is about to change. Guyana, the only English-speaking country in South America, has emerged as one of the region’s fastest developing countries. Growth in the Guyanese economy accelerated significantly in recent years, doubling its performance in the early 2000s. It not only weathered the effects of the global financial crisis very well compared to other Latin American and Caribbean countries, but it has continued to build momentum. Even as the United States and other economies in the region faced prolonged difficulties, Guyana recorded an average growth of 4% annually and continues to move forward, with economic expansion projected to approach 5% this year. Its economy has experienced eight consecutive years of robust growth, buoyed by high commodity prices, foreign direct investment and expansion of private sector credit, according to the International Monetary Fund.
“We are now experiencing economic diversification,” says President Donald Ramotar. “Gold mining is a major input and the information technology sector is growing. Call centers are beginning to be operated out of here and manufacturing is at a strong performance level. We are looking at broadening agriculturally, with new crops coming into play as well.”
Because of its geographical location and traditional ties to the United States, the United Kingdom and Canada, Guyana is a natural gateway to South America. This, coupled with its favorable international business climate and attractive investment incentives, positions Guyana as an emerging business and trade hub in the region as well as a burgeoning eco-tourism destination.
The Guyanese diaspora in the U.S. is the largest in the world, with over 400,000 residing in the New York metropolitan area alone.
A leader in regional cooperation, Guyana has played an important role in the development of multilateral groups like the Union of South American Nations (UNASUR), the common South American market (Mercasur), and the Caribbean Community and Common Market (Caricom). Guyana has also led the region in the signing of free trade agreements, which is one of the main reasons it is emerging as a trading hub in the region.
Although it has succeeded in attracting significant amounts of foreign capital, Samuel Hinds, Guyana’s Prime Minister, says that he would like to work with more American firms.
“People who are investing now are people from Asia: China, India, and Malaysia,” he says. “They are the larger investors in terms of quantities, or monies. However, whosoever comes will be welcomed. Everyone is eligible for the same treatment – there are standard incentives for any company to come to Guyana to work. We have an American telephone company that bought the government monopoly telephone operator in the 1990s, one of the smaller telephone companies of the U.S. – Atlantic Tele-Network (ATN). It was bought on privatization about 1989 and it has done extremely well for its investors.”
“Guyana is not well known and we have a very small economy,” adds Dr. Jennifer Westford, Minister of Public Services. “We are sitting strategically in South America, bordering Venezuela, Brazil, and Suriname, but are deemed as part of the Caribbean, simply because we are the only English-speaking country in Latin America. I would like Americans to see us as the ‘hidden jewel in the crown’ that is yet to be found.”
Green and peaceful
Its proximity to markets in North America, South America, the Caribbean, and even western Africa make Guyana a natural crossroads of commerce and diplomacy. It has also taken the lead on important global issues like climate change, and is a pioneer in green economy creation through its Low Carbon Development Strategy (LCDS) agreement with the government of Norway.
“As a foreign minister for the past six years, one of the things I like about our country is that we stand on principal on many international issues, whether it has to do with Palestine or climate change, we do not change or negotiate on it,” says Minister of Foreign Affairs Carolyn Rodrigues-Birkett. “We also believe that we should, and have as many friends and allies as possible. We are a small country and we do not believe in conflicts. There is a large focus of peace and we have been discussing it in the region. That is why it is very important especially at this time when we see so many conflicts in the world.”
These attributes have helped it to secure foreign direct investment in agriculture, forestry, mining, and petroleum, among other sectors, as Guyana boasts an enviable array of natural resources including gold, diamonds, timber and bauxite.
“Guyana is also very well situated,” President Remoter explains. “It acts like a bridge between the Caribbean and South America. We see we have the possibility of helping the Caribbean to link up with South America too and broaden their relations. The financial and economic crisis hit the region very hard. If we could develop more of a relationship with the south, we think global impacts could be made a little less.
“Guyana is a free, open, transparent democratic society where there are very warm and welcoming people. It is a place where Americans can do business or can come to relax and see nature at its best. I think that our country is very welcoming. Guyana is a multiethnic, multiracial and multicultural country, and in this we are forging a unique Guyanese culture, while at the same time building on and adding to the famous cultures that help make up our society. So the Guyanese may be from different origins, like European, Indian, Native Indian, African, but this culture includes all of them.”
Guyana’s leaders say that the country’s economic vitality rests on sound government policies. “The medium-term economic prospect is positive and is anchored by the government’s commitment to sound policies and reforms which emphasize shared prosperity and poverty reduction,” according to a research brief provided by the World Bank. “We brought down the debt from almost 700% of GDP in 1992 to just over 60% of GDP today,” says Mr. Ramotar, illustrating this commitment. “We decreased our payment rate from about 96% of revenue to 4%.”
“The government has embarked on ensuring that we have maximum use of our natural resources and that we put mechanisms in place to ensure that the business environment is customer friendly,” says Dr. Westford.
“For there to be investments, certain infrastructure must be in place,” she adds. “The government invested heavily in a road network, as well as in information technology. The government has also invested heavily in its human resources development, as this is acknowledged to be a key factor for foreign entities entering Guyana.”
“When you look at our social spending, you will notice that we spend quite a lot of money in the social sector,” says Foreign Affairs Minister Mrs. Rodrigues-Birkett. “Prosperity is about people. We believe this is paying off. The prudent macroeconomic management of our country is what played a major role in seeing the successive growth we have had in the last eight years. It is actually the longest period of positive growth since we became independent in 1966. We have had exponential growth for example in the construction sector, as far as personal housing is concerned. Because we believe that if people own something, they feel better about themselves – it does something to your self-esteem. In a country with 215,000 square kilometers of land and with just under 750,000 people, we should be able to ensure that everyone has a home. We are also one of only three countries in the entire hemisphere that has a universal pension system for seniors.”
Like many democracies, Guyana’s two main political parties have reached near-parity, creating a damaging stalemate in the country’s legislature. In January 2015, in order to break this logjam, the President has used his constitutional authority to authorize a prorogation of the Parliament, a move that has been carried out many times in Canada and elsewhere. Mr. Ramotar has since called for free and fair elections to be held on May 11, 2015.
Focus on education
Another important part of the country’s success story is education. “When we came into office, just over 20% of children leaving primary school went on to secondary school,” the President continues. “We have achieved universal primary education and we are very close to having universal secondary education. Everyone has a stake in seeing that this society actually moves forward; everyone is involved in the development of the economy itself.”
“The government has invested heavily in the development of education, in ensuring that all education, from nursery to secondary, is free,” says Dr. Westford, the Public Services Minister. “There is a token fee for higher education. We have also partnered with several foreign countries in sending people to study in higher sciences such as electrical and mechanical engineering, ICT, human medicine, veterinary medicine, and agricultural sciences. From 1993 to 2013, the government sent over 2,400 people to be educated abroad who have returned to Guyana. Between 2003 to 2006, we sent 300 people per year.”
“We recognize that we need to make this investment now; you will spend far much more on crime later on if you do not educate the population,” adds Mrs. Rodrigues-Birkett. “We are trying to make our people feel that they are special, that we have a place for them to play in the development of the country.”
Powerful hydro potential
With a population of just 747,884 (according to the 2012 census) sharing a territory slightly larger than Kansas, Guyana tantalizes with its potential. It is rich in natural resources, biodiversity, and boasts pristine rainforests that cover more than eight-tenths of the country. Yet despite its many powerful rivers, Guyana is one of the only countries in South America not to develop hydroelectric power. The government is therefore aggressively pushing forward an US$840 million project at Amaila Falls, deep in the country’s jungle interior. As planned, the new renewable electricity generation would supply more power than Guyana’s presently needs.
“One of our largest imports is fuel to generate electricity,” says Mr. Ramotar. “We spend a substantial and daunting amount of money to subsidize electricity so that consumers do not have to pay more for it. We spend about 9 billion Guyanese dollars (US$42 million) a year on subsidies for electricity.”
“Anybody blessed with cheap energy would not refuse it,” adds Prime Minister Hinds. “We have the potential of hydropower.”
The Amaila Falls project reveals Guyana’s important relationship with international investors as well as its willingness to engage with multilateral institutions. This includes the Inter-American Development Bank, the China Development Bank, and even individual private American investors.
“We have worked for five to 10 years to put things together. We had to find financing that is concessionary to keep the rates low. We have worked with Sithe Global, an American company, a subsidiary of the Blackstone Group, and we have a commitment of about 50% of financing from the Chinese Development Bank. It would greatly transform the economy to have a large hydropower plant.”
Solving this issue would represent a major step forward. “Cheap electricity is very, very important for us, and we have the potential for cheap electricity,” the President continues. “It will even advantage those who do not get electricity from the grid because it will allow us to completely remove the current power subsidy. This would result in having more money to develop communities and face other challenges like infrastructure. We are working towards harnessing some of that potential to generate hydroelectricity. That would be vital for providing cheap energy.
“Meanwhile we are also looking at other alternative forms of energy. The people will also be able to save as electricity costs between 20-40% of their incomes, and with a cheaper source of power they will have more disposable income and purchasing power.”
Oil and gas
Even as Guyana moves forward aggressively to create clean, renewable sources of energy, the country is exploring a potentially large reserve of oil and gas within its territory and surrounding waters. The government has been careful to develop these resources in an efficient and effective manner.
“The economic benefits from oil and gas must be targeted directly at the people,” says Mr. Ramotar. “At this stage, oil and gas is still only regarded as a potential. The important thing in a democracy is that it is accountable and it is open and transparent. With oil wealth, Guyana can positively benefit the region as well. We would move from being a country still dependent on international assistance to becoming a donor country in our own right.”
The Foreign Affairs Minister believes oil wealth can be a blessing or a curse. “How you manage it is what is going to be important,” says Mrs. Rodrigues-Birkett. “You have to have cheap energy in order to develop. Part of my job is to ensure Guyana realizes this potential. I think we have to be prepared as a country that when that time comes, and I think it is inevitable, we are prepared to spend the revenue properly.”
As the country moves toward realizing its potential, its leaders welcome the special role played by Guyanese diaspora. “Some of them have done extremely well for themselves either in business or in professions,” explains the President.
“Some of them are on the cutting edge in medical professions or as engineers. We also have more people returning than ever before for business, to retire, or some who straddle both continents. It is not only a one-way flow. Gradually, although it is still more out than in, we have more people returning and the visitors are increasing incrementally. We hope that as our economy grows, as our facilities grow, we can attract more people into the country.”
“How can we have our people in the diaspora be involved in the country’s development in a way that would be of their choice?” asks Mrs. Rodrigues-Birkett. “We want to encourage (the Guyanese diaspora) that if they are thinking about investment, to think of their homeland as a place where they can invest. And this is what we have highlighted to the diaspora in the United States, that they are free to invest in Guyana.”
Prime Minister Hinds adds, “Guyana is a place to do business and a place to visit, but it is also a very close friend. Our people have been working in the United States for as long as we can remember and we have created that kind of ‘sisterhood’. We would like to see more American interest not only in investments but also in visiting our country. We do have close contacts with the U.S. and Canada, historically and in terms of people’s family members of Guyana who are in the United States. We are hoping we will see a boost in tourism particularly. The distance is not that large: maybe a four-hour flight from Miami, five hours direct from New York, and 6.5 hours from Toronto.”
Tourism – endless opportunities
Due to its unique history, its rich endowment of natural beauty and its warm and welcoming population, Guyana is becoming an increasingly popular destination for travelers looking for a truly authentic experience. “Guyana has very special attributes with lovely people and the fact that we speak English that you can understand,” says Mrs. Rodrigues-Birkett. “People will be asking you ‘Are you coming to Guyana?’ Not ‘Where is Guyana?’”
“Guyana is beginning to see the growth of the tourism sector and we do offer a fantastic tourist experience,” boasts the President. “I myself have been very fortunate to travel all over the country and to travel to other parts of the world. I can see that we have a very high quality product which is uniquely Guyanese. Guyana has been one of the world’s best kept secrets and I think now people are beginning to know something about our country and there is a little more recognition.”