Dear Editor,
I wish to encourage the nation’s leaders to support the idea of sharing some of Guyana’s oil revenue directly with Guyanese citizens living in Guyana. I see this as conceptually comparable to my receipt of royalty checks I get each month for oil and gas produced from under my land here in Texas.
Guyanese receive more than four hundred million US dollars per year in remittances from family and friends living abroad. Why is it okay for us to trust our relatives and friends with money remitted from abroad but won’t trust them to use cash transfers from the Government’s oil revenue with equal prudence?
I ask those who argue that cash transfers do not work, to show me any place with an economic profile similar to Guyana’s where it was tried and failed.
Guyana has a per capita GDP of around $4,800 US dollars. Currently, that amount has the equivalent purchasing power of around $8,800 US dollars, mostly because food and housing are cheaper compared to other many other countries. But once the massive influx of oil revenue enters the Guyanese economy, that calculus will reverse. While the per capita GDP will double, then triple, and perhaps even quadruple within a few years, the purchasing power parity will decline because of inflation, primarily in the costs of food and housing. The poor will get poorer. Cash transfer, directly to the people, is in my opinion, the surest way to offset the spiraling inequities that will engulf the majority of the citizenry.
Oil does not spread its bounty evenly. The wealthy, or at least some of them, will become fabulously wealthier. Some who are well connected will join them, perhaps even outpace them. A few thousands, mostly the better educated, will benefit directly from the oil industry and its spin-offs employment, and indirectly, from infrastructure capital works. But for the majority, the benefits they will see will be impersonal, like infrastructure improvements and current expenditures on education, health care, personal safety and security. Direct cash transfer, at least for the first decade or so, is one mechanism to build the social capital to give everyone a piece of the pie, even if it just a small piece.
Editor, in my presentation, at Moray House earlier this year, I suggested that Guyana’s oil revenue be divided into four roughly equal baskets for: (1) infrastructure starting with technical education, roads and bridges, sea-walls, parallel roads ten miles inland from the coast interconnected with the coast by roads along both banks of the major rivers, a half mile wide transportation corridor from the Brazilian border to Vreed-en-Hoop terminating in a free port and trans-shipment zone, empoldering the alluvial coast for industrial scale agriculture, a completely green power grid generated by wind and sun; (2) savings, as envisioned in the Natural Resource Fund, for when the oil runs out or becomes obsolete; (3) current improvements in health care and personnel, free tertiary education, security, emergency services, personal safety, etc; and (4) wealth sharing as in cash transfer to all Guyanese citizens living in Guyana.
I mention these, to highlight, that despite the bright future, it will be several years before the bulk of the benefits will be seen by the average Guyanese. The time to do the greatest good for the greatest percentage of Guyanese is up front, starting as soon as possible.
ExxonMobil and its partners and other oil operators may have valid legal contracts, but they are far from enjoying a social licence that is equally desirable for them to have a mutually satisfying business relationship with the people of Guyana. I see cash transfer as a way of sharing the oil wealth, directly and immediately, with the people of Guyana. Oil operators, especially in a foreign land, should treasure societal goodwill as much as they measure profits.
I encourage all political parties to include some mechanism of sharing the oil wealth in their manifesto for the upcoming elections; and to deliver on it once the oil revenue comes in.
Yours faithfully,
Tulsi Dyal Singh, MD