Rawle Lucas is a Guyanese-born Certified Public Accountant and Assistant Vice President of the Lending Services Division.
Mr. Lucas has agreed to serve as a columnist with the Stabroek Business and will be contributing articles on economic, financial and development matters.
By Rawle Lucas
Expatriate Guyanese
For a very long time Guyanese have known that most of the foreign currency coming into the country resulted from the export of a handful of commodities. The list of leading contributory commodities includes gold, sugar, rice, bauxite, shrimp, timber, rum and molasses. In any year, the four commodities of sugar, bauxite, rice and gold combined are responsible for bringing in the lion’s share, over 70 percent, of the foreign currency earned by Guyana. Gold and sugar have led the way for the last 10 years each accounting for about 24 percent of export earnings
While commodity trade continues to bring in more export earnings as a group, the single most important source of foreign exchange is now expatriate Guyanese.
With access to quick and convenient money transfer services like Chequepoint, Laparkan, Money Gram, Travelex Money Transfer and Western Union, Guyanese were able to send US$286 million or $57 billion home from all over the world last year. Many Guyanese speculate that the figure could be much higher given the widespread availability of informal channels through which money also could be sent home.
Sweeter than sugar
At current levels, remittances glitter more than gold and are sweeter than sugar to the many Guyanese beneficiaries who rely on them for economic survival and various other purposes. For the five years covering 2000 to 2004, remittances made up about nine percent of the foreign inflows into Guyana compared to 20 percent for sugar and 22 percent for gold.
Over the last three years however, the money sent home by Guyanese living abroad grew at the phenomenal annual rate of 57 percent and replaced gold and sugar as the leading sources of foreign inflows. The reason for this sudden rise in remittances is unclear but could be the result of the increase in the number of Guyanese working overseas and sending money back home. It could also signal the substitution of money transfers for the shipment of barrels and boxes by expatriate Guyanese. Whatever the reason, remittances account for 24 percent of foreign inflows and now bring in nearly twice as much as gold or sugar. Even though current gold prices have improved the prospects for gold, remittances are still on pace in 2008 to bring in more foreign currency than either sugar or gold exports.
In essence, the money from overseas has become the dominant source of foreign currency for the Guyana economy, and by itself makes the people of Guyana, and not the goods that they produce, the most important export of Guyana.
Unappreciated and undervalued
This development is as much about care and compassion as it is about ambition and economic struggle.
Guyanese see opportunity abroad where there is none at home and pursue it with resolve, sometimes challenging themselves and the immigration laws of the country of destination. Hidden in the increasing flow of money from overseas is the reality that not enough opportunity exists at home for persons willing and able to work. For those who found work in Guyana and left, they felt that their skills and labor were unappreciated and undervalued, and there was no clear path to a comfortable and satisfactory future for themselves or their children. Time was passing them by while lucrative opportunities went a begging elsewhere. Others felt at risk for the political opinions that they espoused while some felt that their dignity and constitutional rights were being trampled upon.
Whatever the reason, most Guyanese who left Guyana were determined to make a difference for themselves and the family that they may have left behind, despite not knowing for sure what they would find in the land of destination.
Care and compassion
To me, remittances reflect the courage and determination of the many Guyanese who left home looking for a better quality of life than was otherwise possible. Remittances also symbolize the wisdom and success of those decisions. That appearance of success may be serving to sustain the rate of emigration from Guyana, thereby imposing enormous pressure on the dwindling human resource base of the country. Remittances also reflect the anxiety and commitment of many who dwell in the shadows of the law of foreign countries awaiting the chance to regularize their status and be joined eventually by hopeful family members.
Not all expatriate Guyanese are well placed to share the fruits of their labor but by sending money home, Guyanese demonstrate the care and compassion of a people known over the years for their kindness, hospitality and generosity. Coupled with necessity, remittances reveal the human side of Guyanese that can easily be forgotten or dismissed by the lawlessness reflected in the prevailing chaos and diminished security at home.
Stability and reliability
As remittances have grown, so has its impact and importance to the Guyana economy. It is not just exports that remittances now dominate. For example, remittances represented about one-fifth of the revenue of the private sector in 2007. The money sent home by Guyanese in 2007 was enough to buy all the companies listed on the Guyana Stock Exchange and was nearly enough to pay off everyone’s debt to all the commercial banks.
The money that comes from overseas plays a pivotal role in the lives of many at home, but very few realize its value beyond the grateful recipients. Administration officials do not publicly express appreciation for this revenue source but they cannot deny its value to the Guyana economy. Like in other developing countries around the world, remittances have become the most stable and significant source of foreign currency inflows into Guyana. As another example of their importance, remittances have exceeded foreign investment by an average of 107 percent over the last five years. The stability and reliability of remittances prompted the Bank of Guyana to acknowledge in its 2007 Annual Report the positive effects of remittances on the current account deficit.
In addition to being a valuable source of foreign currency, remittances have given the administration, through the value-added tax, another way to benefit from expatriate Guyanese. Whether used for consumption or investment, remittances contributed about one-fifth of the indirect or value-added taxes collected by the administration in 2007. To underscore their economic usefulness, the inflows last year exceeded investment spending by the administration by 30 percent and were over five times more in value than the contracts awarded by the administration through its procurement process.
Double-edge sword
As valuable as they are, remittances can act as a double-edge sword just by their size and nature.
Remittances helped to boost the Guyana economy by 30 percent in 2007. Since remittances represent money not earned in Guyana, they are like welfare payments and have the potential to distort wages and prices. Where remittances exceed what workers earn, they act as a disincentive to work and workers may opt to stay home instead of harassing themselves for no “good” reason. Many actually remain idle at home awaiting their chance to leave and send money back to prove that they too can be just as successful as those Guyanese who preceded them.
Profits motivate entrepreneurs to stay in business and to take the chance to increase investments. Like in the case of the government, remittances exceeded private sector investment by 30 percent and net profits by nearly 100 percent. Looked at from this angle, remittances reflect a risk-free form of return without the recipient having to make an investment. The logical consequence of idle labor and idle capital is a decline in production that could lead to lower output and lower real incomes all round.
The seismic shift that the growth in remittances represents for Guyana is extraordinary and has the potential to reorder the dynamics among people, production and the various sectors of the country. The administration and the private sector ought to take note and start taking aggressive steps to attract and retain qualified personnel in Guyana in order to assert the dominance of the productive sector. Moving in that direction is crucial especially if the national competitiveness undertaking launched earlier this month is to yield the desired results.
