Professor Emeritus of Economics, The University of the West Indies and former President, Caribbean Development Bank
When oil and gas production fields in Guyana are fully operational, the fossil energy sector is likely to be the predominant source of national economic activity through its direct contribution to foreign exchange earnings, government fiscal revenues, employment and labour incomes, and local purchases of goods and services.
Nonetheless, national economic policy should seek to ensure that other industries and sectors are expanded and developed to make significant sustainable economic contributions. This policy perspective is elaborated with reference to a few selected industries and sectors.
Local purchases of goods and services by the oil and gas industry are likely to be modest initially. However, the experience of other countries with major petroleum industries has shown that over time a variety of local enterprises can become substantial suppliers of goods and services to the oil and gas companies thereby expanding and widening the production base of the economy and generating higher levels of employment and incomes. Provision of the requisite support to emerging enterprises in this context should be one important component of short-term and medium-term public policy.
Agriculture and the fishing industry should be priorities for major developmental assistance. The agricultural sector includes the sugar industry, the rice industry, and livestock and commodity farming. Both agriculture and the fishing industry are high employment sectors integral to livelihoods in large segments of the resident population. The largest proportion (17%) of all employees in 2018 worked in agriculture, the fishing industry and forestry.
The sugar industry after a period of partial closure, asset depletion and financial neglect can be resuscitated and revitalized by economically rational restructuring complemented by investments for improving farm and factory productivity. The supply of molasses to the rum industry in Guyana and the Caribbean could be optimized and realistic strategies for marketing sugar both regionally and internationally could be developed.
The rice industry might be in less urgent need of policy attention but could benefit from government assistance with international marketing, identification of new markets, and international payments arrangements.
The fishing, livestock and domestic food crop industries if expanded and strengthened can profit from projected substantial growth in demand for food in households, hotels and restaurants resulting from higher incomes and purchasing power in the boom economy. They can also become significant components of Guyana’s commodity exports to CARICOM markets where several governments wish to reduce regional dependence on food imports.
The specific policy interventions and assistance required by these industries would have to be based on current situational analyses and may include budgetary allocations, facilitation of private capital investment, and effective and efficient regulatory frameworks. In the case of livestock and crop production, improvements in flood control are warranted. Likewise, marketing and distribution of hinterland produce would benefit from improvements in commodity storage and transportation facilities. Fiscal incentives to enterprises engaged in commodity storage and supply chain distribution should also boost agriculture and fishing.
Guyana is not known as a tourism destination despite steady growth in the number of international visitors in recent years. Holiday visitors while accounting for 61 per cent of total visitors are primarily from the Guyanese diaspora who are accommodated mainly in private homes and to a much lesser extent in hotels and guesthouses. Nonetheless, tourism can be developed into a substantial industry attracting many visitors worldwide in addition to the Guyanese diaspora.
The uniqueness and abundance of Amazonian wildlife, rivers and waterfalls make the Guyanese hinterland a valuable scenic tourism resource currently underdeveloped and underutilised. The key attractions to potential hinterland tourists as evidenced from Africa are nature, wildlife and exotic foods. A UN WTO study estimates that in 2015 wildlife watching accounted for 80 per cent of annual sales of trips to Africa. The Guyana government can set itself a medium- term goal of promoting and developing hinterland tourism as a significant contributor to the economy.
It can invest in major improvements in the presently inadequate physical infrastructure for air and land transportation. It can facilitate private capital investments in visitor accommodation, in recreational services and facilities, and in food and beverage services in hinterland regions. It can provide fiscal incentives to local tour companies. No less important, it should promote conservation of the natural environment especially against risks of degradation through mining and timber logging activities. Through these means, government could increase direct and indirect employment opportunities in myriad tourism-related services for residents in remote communities.
The manufacturing sector could also benefit from official support. Pharmaceuticals already have a presence in Caribbean markets which could be enlarged by product innovation and aggressive marketing. There are other industries, for example manufacture of precious metal and gemstone jewellery, whose export potential merits close examination.
The bottom line is that Guyana needs to pursue an economic future not solely dependent on the fossil fuel export industry. Expansion and development of sectors and industries outside of oil and natural gas should be a central component of public economic policy now and in the immediate future.
