Dear Editor,

We at Pro Guyana note recent public disclosures of information about GuySuCo, and the continued evidence of profound mismanagement of a significant industry for our nation and a large proportion of Guyanese citizens. The sugar industry is essential to Guyana’s future, even at this juncture in Guyana’s history, to be used as a divisive political device and vehicle for corruption.

The statistics regarding the company’s productivity are alarming in light of the fact that GuySuCo is the primary income earner for some 30,000 Guyanese families. As such, the consequences of GuySuCo’s failure are too frightening to even contemplate.

We call for a lucid, transparent, apolitical examination of reforms for sugar production in Guyana, involving all stakeholders, limited in time that are intended to be economically constructive and culturally positive. Too many livelihoods depend on the production of sugar, in a global environment that demands that Guyanese production be made more efficient and lucrative for hard working cane cutters and those who depend on them to put a meal on the table.

The problems facing the industry are structural and merely tinkering with the accounting will not help. To this end, we are disappointed that GAWU has been shut out of the new GuySuCo plan. The corporation has a duty to make profits for its shareholders, a duty to workers and a duty to the Guyanese society. Therefore, excluding GAWU is very troubling, to say the least as the union represents the interests of the majority of workers.

We call upon the government to form a national, non-partisan committee to examine several structural issues that could improve the fortunes of the industry, its workers and the country: (i) the agricultural science behind sugar, (ii) the best desired product mix and diversification, (iii) the potential for partial privatisation and (iv) the level of assets owned by the corporation.

Yours faithfully,

Errol Chapman

Mark Dacosta

Tarron Khemraj

Privatization was seen as one of the “reform” measures for an economy transitioning from socialism to a marked-based capitalist economy. Today many still hold privatization as an important component of reform. From Russia to Guyana the assets of the state were sold off at significant discounts to a single investor or family. Take for example the sale of Hand-in-Hand shares to the brother of the head of the government holding company, NICIL, Mr Winston Brassington (see SN report March 27, 2012). This sale was done to a connected family member. We did not see reports indicating that efforts were made to sell the shares to a diversified group of investors. Instead this was a sale to a family member connected to an influential bureaucrat of the government of the day.

Single-ownership private investors and family businesses are not obligated to produce regular accounting reports for market analysts to scrutinize. On the other hand, companies traded on a stock exchange must release information to the market on a regular basis. Analysts working in the stock market mustobtain information from traded companies so that they can make correct valuations. Cash flow, debt level, balance sheet structure, and profit statements are all crucial documents that a publicly traded company must release on a regular basis.

There are numerous examples around the world of situations where the government has sold off shares of public companies to a diversified group of investors. Chinese government-owned companies, for example, are traded in New York, London, Hong Kong and other important centres of global finance. The state-owned Brazilian energy giant Petrobras has shares traded on various stock markets. This is certainly an interesting model of state capitalism. In these instances the government maintains majority ownership; however, there is partial privatization by selling shares to many investors.  Of course, some investors are able to buy more shares than some.

There are several advantages associated with this model of privatization in the Guyanese context. First, if the National Industrial and Commercial Investments Ltd. (NICIL) decides to adopt this privatization method as a form of public-private partnership, then the Guyanese public by virtue of the work of the stock market analysts will know more about the investment rationale and choices of the government. In other words, there will be significant improvements in government transparency, which can go a long way towards easing suspicions in an ethnically divided society such as Guyana. In addition, no analyst will be required to pay $50,000 for the release of documents that must be made public by law. The Berbice Bridge Company Inc. (BCCI) recently asked Mr Christopher Ram to pay $50,000 for documents that would have been public if BCCI had shares traded on the Guyana Stock Exchange.

A market can only function if it is thoroughly regulated by laws that make sure that no participant can have an unfair advantage over another. The stock market will not function when the CEO or the government refuses to provide information. In general, all markets break down and lose credibility when those with inside information take advantage by buying up assets that belong to the people.  Moreover, markets will perform poorly when some people have more information than others. Those with the information will erect barriers to entry so that outsiders cannot compete. They will establish an oligarchic system of exploitation as we see in Guyana today. An oligarchic system of capitalism only benefits a few families. Privatization through the market will benefit a wider cross section of Guyanese.

Second, this form of privatization can widen the ownership base and help to build the Guyanese middle class. Instead of selling to a single buyer, more Guyanese will be able to share in the ownership of state assets. In a sense, this system socializes the ownership of state assets. We often say a state-owned business belongs to the people. However, this ownership only exists in the abstract. People only become literal owners when they own shares in the state enterprise.

Third, a market-based system of privatization will require a large number of economic, financial and industry-specific analysts. These are typically highly motivated, qualified and educated individuals. It requires the University of Guyana to get its act together and train suitable talents. These individuals will have the ability to price financial and physical assets given the information provided by the CEO and the government. The favourable spill over to other sections of the economy can be enormous. This could lead to the re-awakening of the critical thinking class of individuals.

Fourth, privatization through the market will discipline state-owned enterprises. Businesses started by the government will have to be transparent and believable. The concocted Marriott hotel would not have been possible under this model. Skilled analysts would report on TV that the assumptions that went into the Marriott are unrealistic and to a large extent crazy. Private investors will therefore stay away from this project and the government will find it hard to raise capital for unrealistic projects.

Fifth, the infused market discipline can force the

government to establish better private-public partnerships. This provides an opportunity for partially privatizing GuySuCo and raising capital for the sugar industry. However, government bureaucrats will have to come up with a credible business plan that involves better agricultural methods, better factory management and a diversified list of products. One question they will need to answer is whether the sugar cane farms can be better run by cooperatives and the factories by publicly traded companies. They will need to get rid of uneducated political types that have occupied the board of state corporations.  Otherwise, the market will severely punish the firm.

Sixth, as noted earlier this type of privatization can result in a wider ownership of shares in partially privatized state-owned companies. Eventually the government can assume a minority stake in companies once the private sector can buy them out completely or assume majority ownership. This wider ownership can lead to a deeper and more liquid stock market in Guyana. The market can attract inflows of capital from Caribbean long-term investors such as pension funds. However, those responsible for macroeconomic stabilization will have to guard against speculative inflows of hot money. That is why I emphasize inflows from investors who want to hold shares for the long run.

The stock market is a major plank of the capital market. Once the stock market is developed, the other plank, the bond market, can emerge so that publicly traded companies can sell debt that can become liquid as the debt security changes hands. Eventually the stock exchange can provide a channel for initial public offerings (IPOs), a situation where new financial capital is raised.

Developing the stock market, therefore, can result in financial sector modernization and help to provide an alternative channel of financing other than commercial bank financing. It would also result in the creation of high quality jobs and professions. Imagine the Tiger Bay area can become the financial centre of Guyana and the Caribbean. Think about the favourable spill overs this can engender by transforming the water front of Georgetown.

Comments: tkhemraj@ncf.edu

Dear Editor,

We at Pro-Guyana hear that some students at the University of Guyana are proclaiming that they “will take Guyana by ballot or bullet”. If these reports are true, we urge these young people to be thinkers instead of idle and dangerous talkers. We also condemn any notion of seizing power through force. Only a few years ago we saw the death and mayhem this can create when two convicted drug dealers (one offering testimony in New York courts) tried to destabilize the PPP government so as to make Guyana a full blown narco-state. We urge the students to remember how the legal and legitimate marches of President Hoyte were destabilized by hooligans paid to attack individuals to make it appear to be an ethnic issue.

Young men and women at UG ought to be debating and persuading their counterparts, regardless of their race, with reason and evidence. If we want government to be changed, we should support the political party or candidate of our choice by using political methods. For instance, we can help with voter registration and turnout in areas or social circles we consider sympathetic to our political preferences. We can call on the party we support to behave in more persuasive ways, for instance, appealing for MPs to be more active and visible in their constituencies. We can tell MPs that the privilege of honest civil service is not about perks, it is about service to the people who pay them: taxpayers.

Calling for violence is clearly dangerous, and is also politically and pragmatically naïve and unproductive. From a political perspective, those suggesting violence will likely be playing into the hands of opponents who characterise them as nothing more than thugs who should be prevented from having access to power for exactly that reason. From a pragmatic perspective, it is possible, and sometimes even likely, that their opponents are far better armed and equipped than one may suppose. It is alternately possible, of course, that these “ballot or bullet” threats are part of a deliberate ploy to further a negative stereotype. If this behaviour is indeed a deliberately sustained racist tactic, we condemn it in the strongest terms.

Yours faithfully,
Errol Chapman
Mark Dacosta
Tarron Khemraj

Dear Editor,

We at Pro Guyana read the letter entitled `How credible is Dr. Rose now as a messenger’ (SN, October 26, 2013) as cause to reiterate principles that should be vital not only in the competitive democracy we and others would like to see Guyana become, but in academia.  Regarding academic principles, we and others celebrate Dr. Rose, also a co-founder of Pro Guyana, as a serious academic personality.  In that regard, he is obliged not only to seek information constantly, but also to respond to new data.  Sometimes, that data will reinforce previous decisions, but at other times it will and should cause conclusions to be reviewed and revised.  Is Mr. Hergash seriously proposing that the only thoughtful response to new information should be stubborn refusal to reconsider previous decisions? Dr. Rose did exactly what a scholar is expected to do.

Concerning competitive democracy, we stand with Dr. Rose in his brave willingness to change his publicly announced political opinions.  Certainly, given Dr. Rose’s prominence he would have anticipated responses including those expressed in Mr. Hergash’s letter.  The important principle, though, is that voters should feel free to shatter the imprisonment of the “my party” or “my candidate” models, when those affiliations do not respond to the voters’ desires and preferences.

This pattern also exists in other countries, but perhaps we are among those who can least afford it.  Guyana might be in a very different national situation if political parties were far less able to take their supporters for granted.

This presumptuousness is visible in the mentality that compels voters to support one party primarily because they dislike another, or despite blatantly disappointing conduct, instead of because of affirmative qualities of the party they support.  It is also visible in the way that, by implication, voters support the parliamentary list system when its removal would actually empower local voters and voting instead of political appointees who are poorly motivated to serve local constituents.

Dr. Rose’s decision to support Brigadier Granger was thoughtfully based on facts he has set forth publicly, including Brig. Granger’s desire for national unity and human development in Guyana.

Therefore, we believe we could be forgiven for being surprised that a commentator and published author of Mr. Hergash’s stature would even imply criticism of a powerful cornerstone of functioning democracy: free and informed choice.

Yours faithfully,

Errol Chapman

Mark Dacosta

Tarron Khemraj

Dear Editor,

I prefer to discuss policies, theories and ideas rather than fall for personality politics. However, please allow me to respond to three points raised by Mr Harry Hergash (`Mr. Granger will have to do far more than being `very passionate’ about the theme of unity and human development’ SN Oct 29, 2013). First, Mr Hergash projects the old racist subliminal message. It goes as follows: since Brigadier Granger brings up the Sun Chapman incident of 1964 it means he is anti-East Indian. To be pro-East Indian, according to Hergash, the opposition leader should have proposed a monument remembering the Lusignan massacre (Of course, the non-East Indian victims of the Bartica, Lindo Creek or Agricola massacres are forgotten). Yes, Editor, a monument. That is what Mr Hergash believes those innocent victims deserve. The PPP destroyed the livelihood of East Indians in Berbice by destroying the sugar industry and levying a burdensome tax to cross the Berbice bridge yet not a single “Indian rights” activist wrote a word. The state, fundamental for the well-being of East Indians and all Guyanese, has been criminalized, yet not a single word from the Indian rights activists.

Brigadier Granger has gone further than calling for monument. He is on record calling for a presidential commission of inquiry into the crimes that took place on the East Coast. This fact was reported in the newspapers. The families of the deceased deserve this inquiry which will add closure. Even Guyana Times, the pro-PPP newspaper, reported this call by the opposition leader. The PPP, supposedly the party of East Indians, refuses to institute such a commission. Why? Brigadier Granger went even further by calling for a pro-Guyana, pro-East Indian, pro-Afro Guyanese, pro-Indigenous Guyanese reform of the Burnham constitution. During an interview with Mr Yesu Persaud, the opposition leader called for a return to the early post-independence constitution which reduces the powers of the President and places the Prime Minister as the head of government. I think if these changes are made it can set the stage for democratic turnover instead of shared governance, which will become a system of elite accommodation and privileged entrenchment.

Second, Mr Hergash agrees Guyana needs swing voters to allow for democratic change in government. I use the example of Trinidad and Tobago. He believes using that country is akin to comparing apples and oranges. I don’t think do. It is indeed hard to find the perfect control group in the social sciences (except psychology of course); nevertheless Trinidad and Tobago is a bi-communal society similar to Guyana, but most likely with a larger percentage of swing voters. Therefore, time will tell as his letter notes.

Third, Mr Hergash questions my ability to help in achieving the objectives of unity and human development (UHD) because I “live in a foreign land”. However, I wrote a PhD dissertation on excess liquidity in the Guyanese and Caribbean banking systems, published ten peer-reviewed papers on various economic issues in Guyana, and have access to numerous data sets and information sources that I can get abroad but not in Guyana. I am actively involved in Caribbean economic issues, including that of Guyana, since I’m a research associate at the Caribbean Centre for Money and Finance, a UWI-based central banking think tank. I am confident I have a very good understanding of Guyana’s political economy. I have helped several PPP supporters, who work for the government, gain acceptance in foreign universities. I do this because I believe it is important to build state capacity even though I have nothing in common with the PPP.

Yours faithfully,

Tarron Khemraj

Introduction

The Stabroek News reported on October 24 that the Private Sector Commission (PSC) is deeply troubled about APNU’s statements regarding the Marriott project. The report stated that the Chairman of the PSC, Mr Ronald Webster, wrote to APNU expressing the PSC’s concern that statements made by the opposition party regarding the Marriott are increasing political risk for businesses in Guyana.

In spite of being an ethnically divided society, Guyana’s tax payers come from all ethnicities. Therefore, to reduce political risks, spending of tax funds must be done in the most transparent manner and must be based on credible investment projects. The taxpaying public has to believe that the government is being as fair and as economically efficient as possible. The Marriott is neither transparent nor economically sensible in any honest sense, thus adding a significant dimension to political risk. It is this dimension that the PSC seems unable to recognize. This column proposes the essential point: if the government is concerned about political risk it has to be credible when it spends the tax money of the people. Moreover, the PSC and the government must consider all dimensions of political risk, instead of invoking political risks in ways that are convenient to some special group.

Political risks

Risk implies that we can assign a probability outcome to some future event (Economists utilize various probability and volatility models to measure risk, a concept completely different from fundamental uncertainty which cannot be measured. Probabilities can be based on an educated subjective guess or could be estimated from historical data). These risks can come from many sources, and some risks can be diversified away as in the case of a portfolio of stocks. However, political risks are not easy to measure and they do require assigning subjective probabilities. Risk is important because when it increases, the investor, specifically private investor, would require a higher expected profit before he/she invests. Otherwise, the investor holds on to low risk cash or liquid assets such as Treasury bills.

Overall, if the government’s policies are not credible and can be seen as unfair, it will increase political risk, particularly in an ethnically divided society like ours. For example, political risk can also emerge from the failure of President Ramotar to assent to Bills passed unanimously in Parliament, the people’s Parliament. The President cannot provide a credible justification for not signing the four local government bills. These are crucial aspects of post-2011 democracy that can deflate national tensions, allow independents to participate in the democratic process and enable the main political parties to participate in local democracy. This is an excellent mechanism for easing tensions and reducing political risk. Why has the Chairman of the PSC not assigned a subjective probability to this event also? Why has the chairman not called on President Ramotar to sign the bills that can ease opposition resentments and diminish political risks?

The Marriott investment, which uses the people’s money, is problematic at many levels. First, Guyanese are not employed in the construction phase and no commitment was made on the percentage of Guyanese who will work there once completed. Second, the feasibility study motivating the Marriott made highly unrealistic projections of revenue. The assumption was made that finding oil will bring in many foreign executives who will require a stay at the Marriott. The planner at NICIL failed to consider the possibility that Venezuela will not allow Guyana to exploit its natural resources in the Essequibo. The PPP government has worsened the situation by failing to have a credible foreign policy that can deter Venezuela. Furthermore, the government tied the economic fortunes of the country to a tenuous left-wing alliance with Venezuela which is also the source of fuel and a main market for Guyana’s rice. Any properly trained analyst will assign a high subjective political risk probability given the government’s foreign policy vis-à-vis Venezuela. This relationship could have a negative impact on the Guyana investment climate, specifically in non-rice producing sectors.

Third, Mr Robert Badal in a recent letter noted that given the low hotel occupancy rate in Guyana, the Marriott will just be able to cover its interest on the debt. Mr Badal’s conclusion is corroborated by the fact that the secret investor is given a large discount before buying into the project. The secret investor will spend US$8m for a 67% share in Marriott, while the government which spent US$20m of the people’s money will own only 33%. This discount, of course, stems from the fact that the project was not viable to begin with and the only way the government can motivate a private investor to participate is to provide a sweetheart deal. Fourth, the fact that the government refuses to name the private investor sends terrible signals to any observer interested in transparency, regardless of political preference. That could signal a dishonest transaction and engender political risk, which the PSC appears unwilling to consider.

National Unity

The project of achieving national unity is often compromised when the public cannot trust the investment choices of the government. When the public believes that the government’s investments are meant to enrich only a few while engendering risks and uncertainty for the many (example, the Skeldon sugar factory), there will be heightened tensions that will worsen the investment climate for our much needed private investors and capitalists.

The PSC can use its influence to push the government to establish a development planning system that will oversee NICIL, which sometimes seems like a one man planning unit. I also urge the PSC to be patient. The scholarly literature notes that indeed oligarchies may grow faster in the short-term but they eventually must come to a crash because the privileged will erect barriers to entry against those on the outside. The privileged will become divorced from domestic public service, preferring to go abroad for medical treatment, live in gated communities, and refuse to send their children to public schools. The latter is a recipe for uneven development and entrenchment of the privileged. Democratic societies tend to grow more slowly but the growth is more certain and less volatile.

The PSC can encourage the minority government to work with the Opposition in Parliament to establish systems that will foster national unity and minimize political risks. The objective of national unity can be better served if it is based on several obviously agreeable principles. Over the next few weeks this column will outline a few possible principles on which to build national unity. I will argue that these principles can anchor the agenda of national unity, thereby reducing the political risks with which the PSC is rightly concerned. In the next fortnightly essay, I will discuss how a developmental state can have the capacity to engender national unity, thus easing tensions in the society. Let me end by saying that political regimes will come and go, but a developmental state must remain resolute.

Comments: tkhemraj@ncf.edu

Dear Editor,

In response to my letter in Stabroek News on Oct 31, Mr Harry Hergash argues that a monument remembering the Lusignan massacre is more important than an official Commission of Inquiry into the East Coast crimes (SN Nov 2, 2013). Readers may recall that Mr Hergash chastised Brigadier David Granger for not calling for a monument. I responded pointing out that Mr Granger called for an Inquiry into the crimes committed on the East Coast; furthermore, I argued that an Inquiry is more important than a monument. Here are some reasons why. (i) The Inquiry adds closure for the families. It will not remove the pain, but it will provide mental closure knowing what went on and why. (ii) It will help us to understand the root causes of the crimes and violence. So far the Roger Khan trial in New York and Wikileaks have revealed the potential narco connection to the destabilization.

(iii) The East Coast violence is relatively recent so an Inquiry is better and could be more effective at this point. The monument can come after the official Inquiry. (iv) The Inquiry will lead to factual historical accounts so that 25 years from now politicians will face reasoned rebuttals should they exploit the crimes and murders for political gains. Future generations must know the official documentation of these crimes, something which my generation was denied. All my generation gets is loaded propaganda and tales of one-sided victimhood of the previous political unrest in the 1960s.

Mr Hergash wants to know what my work and training in finance and economics have to do with the Pro Guyana theme of Unity and Human Development (UHD). The connection is obvious yet Mr Hergash attempted to insert personal motivations. Economics and finance are at the root of any set of proposals seeking to reach the goal of UHD. Let me give some specific examples. (i) Any development plan has to be financed. If we can’t finance the plan,  then it’s better to just pack up and go home. The financing must be believable and attainable, unlike the objective of the Low Carbon Development Strategy that sought US$580m in yearly payouts. (ii) Ethnic distrust will grow if people believe government spending and projects are not fairly distributed. The issue of distribution is intertwined with economic growth. Unfair distribution will stymie GDP growth in the long-term. (iii) Reckless government spending and printing of money will destabilize the exchange rate, resulting in suffering for the poor and those with fixed incomes. This can derail any attempt to achieve UHD. Therefore, any plan of UHD must also include a stabilization agenda to preserve the value of the currency.

Everything in life has an economic root and therefore has economic incentives intertwined with political, social, legal and moral solutions. A development agenda of UHD has to be financed. They are all connected Harry.

Yours faithfully, 
Tarron Khemraj

Dear Editor,

There is a healthy discussion taking place regarding the need for constitutional reform. Many acknowledge that the present constitution is a serious drag on progress and prosperity. The constitution contributes to the alienation and exclusion of many. So far the public discussion does not seem to be underpinned by core principles. What core principles should a new or significantly reformed constitution enshrine?

First, the constitution must not entrench ethnic elites. Instead, ethnic elites must face the possibility of losing an election. There must be regular turnover of government after free and fair elections. Facing no electoral consequence, elites will become complacent and less likely to accommodate transparency and accountability to the masses. Facing no electoral consequence for bad policies, they will continue to implement poor policies that are meant for meeting only elite fantasies. One example of a contemporary elite fantasy project is the destruction of an airport terminal to rebuild a fancy one, thus taking away scarce funds that could have gone towards building a deep-water harbour. Such a harbour could result in larger ships entering Guyana, thus allowing for cheaper goods that would benefit the masses.

Another contemporary elite fantasy project is the Marriott hotel, which is justified by NICIL and the Minister of Finance using the most unrealistic assumptions of the flow of future revenues. Of course, elites must use nonsensical assumptions to justify fantasy projects, which can never be justified using the most intense sensitivity analyses and cost-benefit appraisal. Owing to these assumptions, the government is forced to offer a significant discount to motivate a secret private investor to enter the deal. It means the people have lost money already on the capital side of this project. The Marriott fits in well with elite fantasy which holds that new buildings – often with limited architectural depth – indicate development. Development, however, means the enhancement of the choices and capabilities of the masses regardless of ethnic, religious, social or gender background. The gambling and high level prostitution that will eventually result do not enhance the welfare of the masses. These will not impart any technical or life skill to the masses.

Second, the party list system must never allow a political leader to select only like-minded persons to the people’s Parliament. Constitut-ional reform must allow for checks on a leader who plans to capture the political party and eventually the state apparatus and the resources of Guyana. Mr Jagdeo and his associates have chosen their own sycophantic executives, and have extended same into the Guyana Parliament and the Private Sector Commission. This has resulted in fantasy development projects and the selling out of the people’s resources to local and foreign interests with an abysmal record in democracy, transparency and accountability. There can never be development under the present arrangement, which the current constitution makes possible.

Therefore, one possibility is to allow MPs to be elected in their respective constituency, which is a form of power sharing, as independents can compete with the established political parties. Moreover, the process represents competitive power sharing instead of elite entrenchment. Some of the established ethnic elites will not want to give up privileges that they can only enjoy in the present system. The masses, however, must demand these changes. The masses must be aware of the fantasy developments Mr Jagdeo, President Ramotar and the present leadership crop in the Private Sector Commission desire.

Third, constitutional reform must reduce the powers of the executive president who must be impeachable while in government. Both Brigadier David Granger and Mr Ralph Ramkarran have called for a return to the Prime Minister as head of state. That is a good idea, in my opinion. The Prime Minister could be elected via proportional representation while the MPs are elected by first-past-the-post voting. In previous columns in Stabroek News (see SN, Feb 9, 2011), I have argued for an upper and lower House with similar voting features. The members in at least one of these could be elected via first-past-the-post in various constituencies.

Fourth, the independence of local government bodies must be guaranteed. President Ramotar and Mr Jagdeo were born and socialized in a Marxist-Stalinist world view; a view which has been projected today in the desire to control every aspect of the public service, local government and private enterprise system. This is why President Ramotar found it philosophically difficult to assent to the fourth local government bill that would allow for power to shift away from central to local government; yet another mechanism of power sharing in a democratic arrangement.

Yours faithfully,

Tarron Khemraj

Dear Editor,

Based on the media reports, several days have passed since Minister Rohee fell ill, and the government has not officially confirmed or denied the illness or the reports. With all due respect, we in Pro Guyana believe that the government owes the people of Guyana an explanation of the nature of Minister Rohee’s illness and the operation and future of the Ministry of Home Affairs.

Yours faithfully,

Mark Dacosta

Hubert Wong

Tarron Khemraj

Introduction

Recently Minister Ashni Singh declared that the PPP will only implement the Public Procurement Commission (PPC) if cabinet gets an influence in the public procurement of goods and services. On the surface this may seem like a reasonable request to which the opposition should acquiesce. Here is the Minister of Finance on the issue of the PPC: “The government’s position on this matter is quite simple, that you cannot exclude the executive from any participation in a process that you may want to turn around and hold the executive responsible for” (SN Nov 8, 2013).

Obviously the minister is reflecting the philosophical position of the PPP which often involves controlling the public service, the private sector, and semi-autonomous agencies. However, there is another path that does not require getting fixated on control, yet allowing the elected government to implement effectively its policies and projects. In this column, I would discuss the mechanism of a developmental state (or developmental public service) and briefly extend the principle to the PPC. The central argument of this essay is that an independent PPC and the developmental public service are some of the essential institutions for national unity that go beyond the perfunctory calls for unity. Unity is more likely to be achieved when proper systems, suitable institutions and a better constitution are in place.

The Developmental Public Service

The scholarly literature uses the term developmental state; however, I prefer to use the term developmental public service (DPS). Since the 1970s, excluding a brief period when President Hoyte tried to reform the public service, the service is seen as an extension of the political party in power. It was certainly the case under party paramountcy and it is the case today under elected oligarchy. This is a major impediment of development, one which is often forgotten by many economists working in the mainstream of the profession. However, the great scholars like Alice Amsden, Robert Wade and Peter Evans have explained how the public service has played a crucial role in the early development of South Korea, Singapore, Taiwan and other economies. More recently the role of the public service in laying the foundation for development has been analysed for Mauritius, Botswana and Malaysia. Closer to home, the government services have also played a crucial role in modernising and developing Barbados.

It is important that Guyanese understand these examples so that we can see the damage that was done to the public service under party paramountcy and contemporary elected oligarchy. Moreover, this understanding is essential if future governments are going to avoid the serious mistakes of the past. Lacking a developmental public service, it should be no surprise why many of the good ideas of President Burnham failed. The President and cabinet obviously have the vision and often conceptualise them. But it requires the DPS to implement them. Other factors like the perpetual foreign exchange constraint – worsened by the oil shocks of the 1970s – and the non-cooperation by Dr Jagan’s PPP worked against Burnham’s vision. Of course, Dr Jagan offered critical support for nationalisation; but that also worsened the foreign exchange constraint (see Development Watch column, SN Sep 2, 2009). I think the oil shocks certainly played a significant role in preventing many of Burnham’s plans to industrialize the economy. However, that’s the whole point of having a DPS to anticipate, advise and help the executive to mitigate external shocks.

What are some of the features of a DPS? For these I refer to recently published working paper from my alma mater, University of Manchester. The 2013 ESID Working Paper is titled: “Building state capacity for inclusive development: the politics of public sector reform”. According to the authors, Bukenya and Yanguas, the DPS has six features. In a sense the features are institutions that allow businesses to flourish without political favouritism. The institutions reduce the cost of doing business, particularly costs associated with graft and favouritism.

The authors outlined the following as characteristics of a DPS. (i) Bureaucratic capacity to implement policies and to be accountable. This is perhaps the most crucial capacity of the public service. The state would employ workers and technocrats with the capacity to implement. These workers will be embedded yet autonomous of the government and private oligarchs in the society. They will have tenure after going through a probationary period. They will not be paid as short-term contract employees, a mechanism that is used today to control the public service. Promotion will be based on merit and qualifications. They will be properly paid, both in terms of money and status (or a combination of both).

(ii) The state will have the legal capacity such as a fiercely independent judiciary. (iii) It will have the territorial capacity to project power. (iv) It will possess the fiscal capacity to extract tax revenues. The taxing authority is completely independent of political control or foreign interests (it will not accept gifts from foreign companies). The taxing authority will not be used as a political tool against opposition politicians. (v) It will have the capacity to shape societal behaviour. For example, if the political regime thinks rice flour (these days a gluten free hit in the United States) should be promoted, then it is the task of a meritocratic and credible public service to convince the society to use rice flour. (vi) The state must possess the coercive capacity to deter and repel internal and external challenges.

We could add that the public service will not be headed by a politician, rather a technocratic position could be created for the position Dr Roger Luncheon currently holds. The DPS will remain focused and resolute even as the political regime changes. It will not be loyal to any political regime, but it stands ready to implement the vision of the regime.

Public Procurement Commission

In keeping with ideas outlined above, the PPC ought to be an independent body that is not captured by the government or influenced by the opposition. It must be an independent body making sure that public spending is transparent and fairly distributed, minimum conditions, I believe, for achieving national unity. Building the PPC is the first step towards creating a developmental state that is a meritocracy, technocratic, autonomous and yet embedded in the social relations of the country. The elected political regime will come and go; but the PPC must remain neutral overlooking the fairness of government procurements.

Furthermore, the PPC is never involved in creating economic policy. It merely oversees the fairness in the distribution of the people’s money. The PPC will not take away Minister Ashni Singh’s role to conceptualise and implement economic policy and projects. If the minister is serious about policy independence he would see that the essential data sets are collected and reported. Where, for instance, are the new population census data? Where are the unemployment data? What about the analytical and research capacity of the Ministry of Finance, the Planning Unit, the Financial Intelligence Unit, Foreign Affairs, Bank of Guyana, Bureau of Statistics and so on? These are the substances that will allow the minister to conceptualise and implement policy, not control over the PPC, the public service and the semi-autonomous agencies.