Case studies of entrepreneurial success include those of three Guyanese giants of the private sector who built the largest firms in manufacturing, construction, and currency trading from the ground up
A concerted effort to enhance public-private partnerships has led to Guyanese firms striking up agreements with the United States and the Caribbean Community and Common Market (Caricom), of which Guyana is a founding member.
In 2014, the U.S. accounted for 17% of exports and 21% of imports, according to figures from Trading Economics. However, Guyana’s trade deficit stems from a relative lack of exports of the country’s abundant natural resources and a net import of fuel and manufacturing products. Foreign direct investment (FDI) rose from around US$25 million in 2004 to over US$250 million in 2012, the World Investment Report notes, and last year FDI inflow stood at US$240.3 million. Over the past five years, Guyana has recorded the largest score improvement of any South and Central American country on the Index of Economic Freedom, with the 2015 report noting an increase in government spending and investment freedom. One of the top five fastest-growing economies in Latin America, Guyana posted GDP growth of 4.8% last year.
Through its investment arm, the Guyana Office for Investment (Go-Invest), the government has been promoting opportunities in agriculture, manufacturing, information and communication technology, fishing and timber.
The country faces challenges, not least from adverse weather conditions such as the 2013 rains that stunted many areas of the economy, but local companies are meeting these with governmental and foreign support to improve transport and infrastructure.
“There is huge demand for construction companies due to the amount of infrastructural development that is taking place,” says Komal Singh, CEO of Gaico Construction and General Services Inc., which picked up its first government contract in 2003 and is in the process of achieving ISO certification. “At the moment we do not have enough contractors to execute work on a timely basis. Since inclement weather can have an adverse impact on the construction industry, it is critical to have more contractors in the system if we are going to achieve the country’s infrastructural developmental plan.”
Also key to Guyana’s economy are its trade links with neighboring Brazil and Venezuela. The bulk of the country’s bauxite is exported along the Demerara River and Berbice River, with Chinese companies often the end delivery point following a round of significant investment from the Asean giant in Guyana’s huge mining sector, of which gold and bauxite are the star performers. Alongside exports of sugar, shrimp, timber, and rice, these make up almost 60% of GDP. Keeping these aquatic thoroughfares up to the standard required to meet demand is one area where Gaico and the government have invested.
In 2012 Gaico purchased an IMS 5012 LP Versi-Dredge to dredge small canals and carry out land reclamation work, among whose beneficiaries was the Guyana Oil Company. “Our recent acquisition of a trailing suction hopper dredge will now open a whole new line of opportunities within the region,” adds Mr. Singh. “At the moment dredging is a very costly exercise in the Caribbean since most of it is being done by companies from the Netherlands.”
Projects signed off between the Inter-American Development Bank (IDB) and Guyana over the past year include initiatives to improve environmental management, water, electricity supply, sanitation, and citizen security.
Since 2007, the IDB has extended Fund for Special Operations (FSO) financing to the country to increase competitiveness the country’s export market by enhancing infrastructure programs in the energy and transport sectors.
In addition, between 2007 and 2012 the IDB approved loans exceeding US$100 million for infrastructure development.
The EU has also made firm commitments to supporting renewable energy programs in Guyana and the wider region. In January 2015, Guyana was a signatory to the Caribbean Energy Security Summit Joint Statement, which was the result of a symposium attended by the Caricom Secretariat, Caribbean Development Bank, European Union, Inter-American Development Bank Group, International Renewable Energy Agency, Organisation of American States, and the World Bank Group, with the U.S. and U.K. also represented in Washington DC.
This, according to Nazar Mohamed, CEO of Mohamed Enterprises, is all part of a carefully structured strategy to place Guyana at the forefront of regional investment potential while making the most of its vast natural resource base domestically.
“The government of Guyana over the past 20 years has really created an environment and good platform for businesses,” he notes. “It has facilitated business, which in turn has created employment. It has given foreign companies tax breaks, and local companies – particularly in the mining area – have benefited from tax breaks and subsidies in fuel and equipment for the bigger miners, as well as duty-free concessions.”
Mohamed’s Enterprise is a family-run business built up from its eponymous CEO’s early experiences of dealing in foreign exchange on the streets of Georgetown, which led to the creation of a jewelry store and a business importing watches from the U.S. His commercial dealings eventually led to a chance encounter in New York with a friendly teller who pointed Mr. Mohamed in the direction of a far better exchange rate deal. “So when I went where she mentioned and saw the rate, the spread was so wide in comparison to taking the U.S. dollar. It immediately dawned on me that I could open a foreign currency business here. I decided I would take British pounds and Canadian dollars and change them into U.S. dollars and bring them back to Guyana and sell them back to the local market. It was fantastic,” Mr. Mohamed explains.
“I am still doing business with the same company because we have a personal relationship,” he comments. “We are doing it on a larger scale now – everyone who brings foreign currency to Guyana, regardless of who it is, will come and buy and sell to us.”
Mr. Mohamed’s company recently branched out into the fertile gold mining sector. “It is a medium-scale investment at the moment. And the government, because of the contribution we are making to the economy, has given us some very nice prime gold mining lands. We have about 50,000 acres. So that is our main focus for 2015,” he adds.
Gold makes up around 50% of Guyana’s total exports and its position as a key commodity export on the international markets has been instrumental in a 31% rise in per capita GDP in Guyana between 2008 and 2013, the IDB stated in its 2014 Private Sector Assessment of Guyana.
Furthermore, other than heavy machinery, the bulk of which is imported, the same overseer notes that there are significant cooperative links between mining and agriculture and other areas of the economy.
Sattaur Gafoor, Executive Chairman of Gafsons Industries Ltd., also backs the idea that Guyana’s economic future lies as much underfoot as over-ground, although building upwards has been the cornerstone of his business. “I still believe that gold will have a big impact on Guyana’s economy. If you position yourself to provide the services required in the gold industry that is a good spot to be in,” he says.
A construction and manufacturing interest created in 1971, Gafsons has supplied the means for many of the country’s most ambitious projects, including the fundamental premise of putting roofs over heads.
Working on government contracts, the firm furnished most of the building materials for various housing projects, including townhouse developments catering to Guyana’s growing middle class. It recently completed a GY$1.5 billion (US$7 million) luxury complex at Cummings Lodge, which houses Guyana’s diplomatic community.
“When in 1970 the late President Forbes Burnham invited Guyanese to venture into manufacturing, we took that challenge and started the manufacture of louver glass, nails, and reinforced concrete mesh,” says Mr. Gafoor. “This opened a new horizon in that many of the items then manufactured were exported to Caricom countries. Unfortunately, Guyana experienced severe foreign exchange shortages as from 1976 as a result of the world’s increased prices for oil, resulting in us not being able to import any raw materials nor spare parts to continue manufacturing.”
Today, Gafsons’ operation runs to a 700,000 square foot manufacturing and warehousing complex designed to meet the growing demands of a booming domestic sector. “Our top priority is to ensure we continue to understand our customers’ needs and to meet them. As the economy develops, we always look at ways and means to grow in conjunction with it,” says Mr. Gafoor.
Gafsons places a lot of stock in community development and has funded schools, medical centers, and initiatives in education and sport. However, he recognizes the greater contribution to the nation that harnessing its considerable hydro potential would bring.
“Guyana cannot continue to generate power using imported oil. The quicker we get involved in the generation of hydropower, the greater the country’s development will be. Corporate companies can never lose sight of their responsibilities to the wider community,” he says.