Guyana does not have an enabling environment for private sector growth (Pt One)

This week, we shall commence a two-part series on the private sector and its role in economic growth. There is enough empirical evidence to clearly establish that the foundation of economic growth remains the private sector.  But despite this, a helping hand from the state sector can, and will, guarantee success.  If the economy is robust, then the people will become more resilient to economic shocks; but none of this will occur, unless the private sector is firing on all cylinders.
At the end of the May 2015 elections, the popularity rating of the new PNC outfit (called the APNU) was higher than 50%. All eyes were on President Granger, when he declared in his inauguration message by way of a national song: “LET US COOPERATE FOR GUYANA”, and the journey began.
But what a deceptive and pretentious journey it was, because since that rendition of President Granger’s, Guyana has been worse off when it comes to social cohesion of the nation, and this has impacted adversely on private sector development. The evidence shows that there is no strategy on the part of the Government to break the ethnic supremacy mentality that the PNC had become known for under Burnham.
Unfortunately, the 73-year-old David Granger fell into the old Burnham mode, and surrendered his government to the ethnic extremists in the PNC. Today, with the hardliners of the PNC totally in charge, the Public Service of Guyana has been reduced to a place where mainly friends and families of the PNC leaders can be employed as departmental heads, permanent secretaries, regional executive officers, or heads of joint service agencies.  The outcome is that 85 per cent of the heads of department are from a certain ethnic group that the PNC represents; 16 of the 17 permanent secretaries, and 9 out of the 10 regional executive officers also fit into that mould.  Let us not even mention the joint services’ leadership.
Can President Granger deliver on the promise to expand the economy, led by the private sector growth?  The evidence over the last three years confirms that this is now impossible, because one of the key building blocks for national development – national unity and social cohesion among the people — is on its knees today. The evidence proves that it is not within the DNA of Mr. Granger to allow such a progressive mindset to incubate, despite the sham of having a whole Ministry of Social Cohesion.
But, worse yet: on the economic front, unless the PNC is firmly in control of the cash flows, with the option of tapping that flow periodically, as we are seeing on the preferential contracts to the financiers of that party, the private sector will be stifled.
As Burnham did, the PNC under this Granger Government has shown that it must control the commanding heights of the economy.
But, in spite of this reality, I think it would be negligent on my part not to discuss a set of public policies that can expand the economy licitly.  So, here we go.
In Guyana, there are five pillars that must be firmly established to facilitate private sector-led economic expansion:
·  Creating an enabling environment
·  Providing access to finance
·  Actively promoting investment
·  Aggressively promoting regional trade; and
· Providing direct support to special industries.
I shall start with one of these pillars today, and complete the series next Friday.
Creating an enabling environment
Can we safely say Guyana is a place where private sector investment can thrive without interference from state actors, using their positions to make the system vulnerable to unnecessary manipulation?  One only has to look at the practice in the procurement of medical supplies, and the evidence is present. Not once, not twice, not thrice, but four times in three short years under this Granger Government were there major, questionable procurement practices being used to steer contracts to private entities sympathetic to the ruling regime, using public funds in a particular Ministry.
What does such public action do to the local manufacturing sector in a specialised industry such as pharmaceuticals? In addition to exposing them to an unreliable electricity system, these local medical supplies’ manufacturers have to operate in an environment wherein foreign entities that are friends of the regime are allowed to parachute into the marketplace to displace them.
So, in the final analysis, Guyana does not have an enabling environment to aid in the growth of the private sector.  To fix this would require a wholesale purging of corrupt personnel from within the public service.  But in the absence of national leadership on this front, and with a President who clearly appears not to have the aptitude, or attitude, or testicular fortitude to fight the corrupt forces, the investment environment will deteriorate.