Many of those who accepted a smaller, less intrusive government after Desmond Hoyte accepted the “conditionalities” of the 1989 International Monetary Fund (IMF) Structural Adjustment Programme (SAP) have now failed to acknowledge the flip-side of the argument. To wit, the Private Sector was supposed to fill the vacuum in investment occasioned by the withdrawal of the State from the “commanding heights of the economy” in the ensuing privatisations. But even more incongruously, even though the Government has been flagellated for not achieving higher Gross Domestic Product (GDP) growth rates to impact more quickly and more positively on our standard of living, it still continues to flounder as it “muddles through”, bereft of an overarching vision for development.
Government, in the neo-liberal model unleashed by Hoyte, was supposed to be a “facilitator” of business by creating an environment that did not place too many constraints on economic activities. Over the last three decades, almost all of the reforms demanded, under the rubric of liberalisation, stabilisation, and privatisation were completed by the People’s Progressive Party/Civic (PPP/C) Administration. Additionally, President Bharrat Jagdeo removed the US$2.1 billion debt albatross bequeathed by the People’s National Congress (PNC).
Under the Hoyte Administration of 1989-1992, as the controls were lifted, the economy recovered and expanded rapidly towards the production-possibility frontier (PPF) that had been stifled through the corrupt PNC bureaucratic labyrinth. But while there were marked improvements in investment rates from what had prevailed previously, once the PPF had been reached, the PPP Government’s consistent average of five per cent growth was not sufficient to catapult us into the trajectory that transformed countries like China. There were several reasons for the investment gap, not least being the politically-instigated violence between 1999 and 2008 that created a vicious circle of a crime-ridden societal image.
But it has now been three years with the PNC-led A Partnership for National Unity/Alliance For Change (APNU/AFC) Government at the helm, and the growth rate has now reportedly dropped to half of that of the PPP/C years – 2.4%. The Government cannot escape the logic that more investment is needed. But even if the Exxon oil strike has lowered our investment risks, the suggested infrastructural development as hinted in the Islamic Development Bank (IsDB) loan facility, and satisfying our minuscule domestic market, will not justify significant investment in production just to satisfy our needs. A repeat of the 1970’s PNC’s “import substitution strategy” is not the way to go. We have to invest in exportable products and from the foreign currency earned, import other goods to satisfy a higher standard of living. Our investment, then, must be export oriented. To support this, we will have to broaden our export base by both product and market diversification.
But none of this is new. The million-dollar question is how do we achieve this investment and diversification in the face of our underdeveloped and anaemic business climate in Guyana? We return to the proposals floated in this space: public-private partnerships. We remind those now in government, countries such as Malaysia, Singapore and South Korea forged ahead of us even though we were on par back in the sixties, because none of them had governments that were mere bystanders. Their successes were built on the concrete support that their governments provided to targeted export-oriented businesses.
In this way, a virtuous cycle is created. Business risks are lessened, investment encouraged, exports increased, quality improved because of world competition, employment created, the Government collects more taxes, and more companies can be supported. The speciality hospital identified by the PPP/C, for instance, was a good example of diversifying exports: medical tourism brings in substantial foreign exchange. But public hospitals have rarely provided the service demanded for success in this field: a public-private partnership would be best. Agro-processing in support of the Government’s “Grow More Food” campaign is another fertile area for the concept. The latter programme will never grow to its potential unless the perennial gluts at harvest time are processed.
Before this approach is unleashed, however, the Government would have to demonstrate much more confidence in the business sector by making them partners and being much more open and transparent with its plans.
