With all the hype being created about oil and gas, and how the proceeds derived from the sector could transform this country overnight, there is currently a high level of optimism in regard to the future of our country. Due to this level of excitement, persons from many different countries are already here, hoping to explore the opportunities that are likely to come once commercial production of oil commences in 2020. It is also highly believed that many Guyanese who are residing abroad will return home in anticipation of taking advantage of the opportunities that will become available.
Just this past week, a representative of the United Nations’ International Organisation for Migration (IOM) pointed to the fact that Guyana must be prepared to deal with a huge influx of migrants and re-migrants. It is also highly believed that, in the coming years, Guyana will more than likely become a destination country for foreigners, as many of them will come here to explore investment opportunities or search for employment due to a booming oil sector.
The Private Sector Commission (PSC) has made it clear that its members are very aware of the developments, and are getting ready to capitalize on the many opportunities. The Government has called on local entrepreneurs to be prepared for a level of investment and hive of business activity that is unprecedented. It has urged businesses to upgrade their skills and knowledge, improve the standards of business, form alliances and partnerships, and get ready to compete with the best.
Citizens, also, have certain expectations of the Government. They expect those tasked with managing the sector to be fully transparent and accountable. It could be recalled that it was only after several questions were raised from various stakeholders that the Government disclosed it had indeed collected the US$18 million signing bonus from ExxonMobil and had placed it in a special account. Similarly, it was only after heightened public pressure that the Government released the oil contract it had signed with ExxonMobil, which eventually led stakeholders to understand how the Government had settled for an extremely bad deal.
Every nation wants to strike oil. Unfortunately for many of them that are successful, not long after, they are worse off due to the high levels of corruption and mismanagement of oil proceeds at every stage of the process. Managing wealth derived from natural resources is not an easy task. In fact, it is fraught with difficulties; and if not done well, can adversely impact macroeconomic performance in the short and long terms.
Research has shown that quite a few of these oil rich countries are home to some of the world’s poorest people. Africa, in particular, is a perfect example of how corruption and mismanagement of natural resources could stifle development. For example, millions of people in oil-rich Nigeria still live in poverty. Although oil is said to account for 75% of the Nigerian economy, no one knows how much the country actually produces or refines, because hundreds of thousands of barrels of oil are stolen every day at every level of the supply chain. A similar situation exists in Angola, Chad, Libya, Equatorial Guinea etc, where, in spite of the massive oil wealth, the actual benefits are not trickled down to those in need.
That said, there are many examples of Governments that have succeeded in ensuring that their citizens are better off by ensuring the wealth from natural resources are channelled towards key development initiatives and distributed more evenly. For example, due to sensible resource management, Norway has lifted its prospects far and above what it was prior to any major oil or gas discovery. Alaska is another example; the state is bound by law to put at least a quarter of its revenues from oil into the Alaska Permanent Fund which was established in 1976. The money is invested, and each year, citizens get a share of the dividends. These payments stimulate the economy and reduce income disparities.
This country is indeed at an important juncture in its history. The decisions we make now as to how we exploit our natural resources would determine our future. Guyana must not simply be known as an oil-producing nation, but rather as a country that has been able to effectively use its natural resources to provide a better quality of life for its citizens, and become a competitive and modern country on the international scene.
