A preliminary report of a study on foreign direct investment and the impacts of it in the extractive sectors of the Guyanese economy has made the point that significant amounts of the money are spent outside of the country.
The consultants, Consultants Masuma Farooki and Sohinee Mazumdar who are working on the study highlighted several issues and noted that within the large-scale mining sector, about 1000 jobs would be created over the next five years. In contrast, it is estimated that for small and medium scale mining, 15 000 jobs have been created. However, according to the consultants, 1000 trained people are a greater resource for the economy than 13 000 people who are doing part time mining.
The consultants also pointed out that while the figures being invested are often highlighted, a significant portion of the money is not actually spent in the country. They cited expenditure like fuel and repairs for specialized equipment, among others. It was stated that procurement is not the same as manufacturing and to capitalize on the projects, a strong manufacturing and services sector is needed. There is money coming in but how that is managed is also a crucial question, they said. FDI can steer the development direction of the country “in terms of overreliance on mining revenues rather than diversification into other activities,” it was also noted while it was emphasized that good governance is crucial.
In his address, Minister of Natural Resources and the Environment Robert Persaud in noting government’s search for good investors, said that investors have complained that the process of investing is too slow, there are too many agencies involved, and the permitting process is too elaborate. He acknowledged that they have to do a better job in some instances of facilitating and allowing these investments to take place.
Earlier, he had urged others to see the full picture. “We live in a political age in Guyana…of suspicion and sometimes of unwillingness to fully comprehend and to understand what it is we are seeking to do,” the minister said. He stated that while one can appreciate the politics, in the interest of national development, those not involved in the political game should step away and look at the whole scenario as to what is being done in the interest of the people of Guyana.
He said that the study would serve as a guide but is also an opportunity to engage local and international stakeholders. Persaud added that he hopes that the report will be a catalyst for investor confidence, and would also ensure that local investors would have a better appreciation while other stakeholders would understand and also be able to contribute to effective governance. “If all of this is gonna work and work for the benefit of the people and we’re gonna derive the maximum impact, good governance is important,” he said acknowledging the recommendation in the consultant’s report.
He said that good governance cannot only be done by the regulatory agency, but also requires support from civil society and other stakeholders. He said that he would hope that the report would serve as a catalyst where there is a greater buy-in and greater understanding, rather than “us from time to time seeing uninformed or ill-informed or deliberately mis-represented realities as it relates to foreign investment in our country” and that there would be greater understanding of impacts as well as the safeguards there are. He acknowledged that the mining policy is outdated and said that it is being worked on.
Big number
Meanwhile, Guyana Gold and Diamond Miners Association (GGDMA) representative William Woolford said that FDI is a big number inserted over a narrow timeframe and very little is expended in country. “Therefore the life of the mine becomes important and the economic framework in which the mine operates is vital because for small countries like Guyana, we don’t have great industrial manufacturing so we will not be selling big equipment to the miners but we will be looking to get a lot of jobs, a lot of employment for our people,” he said.
He said that the GGDMA is looking to see the numbers with respect to FDI. He said that they know that the numbers for gold exported is quite high and government revenues from mining is also fairly high. He noted the increase that large-scale mines would bring. He said though that employment and wages is a small number at the moment. “I would be interested to see what projection for employment and wages, what percentage of the impact it would have and how the gold and diamond miners and the rest of the country could position themselves to benefit from the FDI that comes through large-scale mining,” he said.
“We are fully supportive of large scale mining and what (we are) looking for, is parity,” he added.
The forum also heard that Guyana needs to consider improving its mineral sector administration and to revising the mining code and policy. United Nations Development Programme (UNDP) Deputy Resident Representative Chisa Mikami said that the results of the current study show that Guyana’s mining sector, although important within the domestic economy is not expected to remain small. “Projections indicate that large-scale gold production will increase to a similar output level as that of small and medium scale miners,” she said.
Guyana Goldfields Inc, Troy Resources Guyana Inc and Sandspring Resources are expected to open large-scale gold mines within the coming years and the study highlighted the potential impacts of these projects. Investment in large-scale mining is expected to double the output of gold, Musa said while also speaking on the impact on employment and technology transfer, among others.
