Dear Editor,
With the advent of oil budgets, the explosion of government expenditure on infrastructure – and the means to fund it – have stirred much public debate. The plan by government to spend $204B in 2024 “to upgrade and expand our roads and bridges” aptly illustrates the deepening disconnect between big government outlays and the people’s dire objective and subjective wellbeing. A trillion-dollar budget – and no buzz or excited anticipation in the air. People have simply lost confidence in the PPP government. As its excuse, the PPP keeps shouting from the rooftop that spending big on infrastructure will, someday and somehow, alleviate poverty and lift living standards. It provides no timeline or credible mechanism for this transformation. But at least five flaws exist why the PPP’s version of infrastructure-led development will fail where it should matter most: helping to guarantee 800,000 Guyanese a higher quality of life. Let’s start our case by distinguishing between social infrastructure (schools, hospitals, sports grounds, etc.,) and economic infrastructure (roads, energy supply, D&I schemes, etc.,)
FLAW #1: The weakness of the PPP’s one-dimensional approach to social infrastructure has been extensively criticized and needs no elaboration: hospitals without the required nurses and doctors; schools without the required teachers and counsellors; stadiums without adequate sports policy, programs and activities. And so on. Expect to see no quality-of-life indicators from this government to assess the impact of its expenditure on social infrastructure.
FLAW #2: If we turn to economic infrastructure, competent governments try to achieve two goals: (i) expand the productive capacity of the economy, and (ii) reduce the cost of production (or increase productivity). Much of the PPP’s expenditure on public works has achieved and will achieve little in both regards outside of the Coalition-initiated projects, such as the Gas-to-Energy project, the solar farms, and the Linden-Mabura Road. Repairing and replacing existing infrastructure are necessary government actions, but much of it will not add new productive capacity. In addition, government’s expenditures on infrastructure to support agriculture production (such as the $1.4B spent on the Tacama corn and soya project in 2023) are yet or unlikely to reduce food prices.
FLAW #3: We know it. A lot of this expenditure is wasted and lost through corruption and mismanagement. As much as 40 to 50% of every dollar. Multiply that by the infrastructure budget and we end up with as much money as the government borrows. The PPP has shown no appetite to reverse this loss, dismissing it as the figment of the imagination of its critics.
FLAW #4: The large expenditure on public works is not trickling down to the ordinary people at a volume to raise living standards. Most of this money circulates among a narrow set of local contractors and suppliers, with a combined workforce in the hundreds, not in the thousands. The involvement of foreign contractors, suppliers and workers means significant sums of money also leave the country. Not surprisingly, there is no jump in consumer spending power or household incomes. Unemployment and underemployment remain high. There is only a limp multiplier effect. And, worst of all, we see no decline in poverty and economic insecurity.
FLAW #5. The fifth flaw I would highlight, among those remaining, is the sheer simplistic nature, haphazardness, and one-dimensionality of the PPP’s infrastructure planning. There is no integrated, holistic approach. The PPP does not grasp that increasing infrastructure stocks does not automatically mean improv-ed infrastructure services or economic performance. It does not grasp that a point is reached where diminishing returns on investment kick in. Let’s point to a few examples of this problem. With social infrastructure, we already mentioned above such as examples as building new hospitals without a plan to retain health care workers. In terms of economic infrastructure, a road such as the Linden-Mabura road should be accompanied by a regional development plan. Hinterland electrification should be synergized with efforts to build vibrant hinterland communities. Energy infrastructure should be guided by a policy for ensuring total energy security. And so on.
To wrap up, large expenditures on infrastructure, absent a vision and a theory of change, leave the people and the country merely marking time on the same general spot.
Sincerely,
Sherwood Lowe