Finance Minister Winston Jordan has indicated that the problems affecting growth in the economy can be attributed to the lack of risks being taken by local private sector players.
In responding to questions posed about the bleak economic situation in Guyana, during a diaspora meeting at the Guyana Embassy in Washington DC on Friday, Minister Jordan declared that the local private sector is not taking enough risks to stimulate the economy.
Jordan said: “I met the existing private sector and they are stuck in their ways. We need to have an expanded breed of private sector players. We need a private sector who shall take more chances.”
According to the Finance Minister, the private sector players are not making the necessary investments, internally and externally, that would help the economy to grow.
New breed
Contacted on Saturday to clarify the comments he had made in Washington on Friday evening, Minister Jordan explained that his “new breed” of private sector players are those who are willing and prepared to think outside of the box; be creative and innovative in using cutting edge technology to improve productivity, thereby increasing competitiveness.
“My new ‘breed’ of private sector players would be seizing the many opportunities that are available for expansion, especially with oil on the horizon. They will try to form partnerships and alliances with the private sector in the Caribbean and further afield to overcome some of the barriers they face, such as financing and human resources,” Minister Jordan explained.
He told this publication that the local private sector faces many limitations, but a significant number of players are “stuck in their ways” and are restricted in their growth because of a refusal to adjust to a changing and more challenging environment.
“In spite of all the local content legislation we may put in place, few private sector firms will benefit if they do not re-orient the way they do business,” the minister stated.
Jordan has, nevertheless, said he recognises the efforts of those private sector entities which have made strides in this regard.
Risks and rewards
Economist Sasenarine Singh, who attended the meeting in the USA, was perplexed about some of the minister’s statement. He contends that businesses will not pump money into an economy if the investment climate is not favourable.
Singh explained that it all comes back to the ‘risks and rewards’ balance, and if the risks outweigh the rewards, then businessmen will not be encouraged to invest.
“No businessman is going to invest if he is not going to make returns,” Singh contends. “Who is going to make investments in Guyana when the risks are so high and the returns are so low?” he questioned as he highlighted that there are other countries with greater risks involved, but businesses opt to make investments there because of the attractive rates of return.
Investors’ confidence
Time and again, the private sector umbrella bodies in Guyana have raised concerns over the robust tax regime and its impact on investors’ confidence in the economy.
Most recently, the Private Sector Commission (PSC) voiced to a visiting International Monetary Fund (IMF) mission its concerns about increased taxation, the declining value of the Guyana dollar, and uncertainty about the direction in which the economy is headed.
“There has been a decline in the economy. We don’t have a sustainable growth rate, and both the Government and the PSC must work to fix this. I would like to see the Government offer businesses incentives and work to create a stable environment where businesses can operate,” PSC Chairman Eddie Boyer told a news entity in March 2017.
The PSC, in a separate statement this year, also noted that growth and improvement in Guyana cannot continue if investors’ confidence continues to be eroded. The PSC has noted that the trajectory in which the country is heading at the moment does not inspire such confidence.
