Business consultant says…Chinese investments in Guyana threaten private sector

By Gary Eleazar

There is an abundance of Chinese investments in Guyana and this can threaten the local economy, which holds a private sector that is relatively small.
This is according to University of Guyana Lecturer and Business Consultant, Eric Phillips, who was at the time a feature speaker at the ‘I Am Guyana Solutions Tank’ facilitated this past week by Global Perspective Inc.
Phillips was examining models relevant to the future and growth of Guyana under the broader theme of facilitating development in a highly charged political environment.

Eric Phillips

“We have an abundance of Chinese who are being invited to our country with tremendous offerings and assets we are providing to them that undermine not only our cultural and economic and psychological well being but our economic wellbeing and these things aren’t talked about.”
Referring to the structure of the local private sector, Phillips noted that there are a few large foreign export companies; about 30 large enterprise primarily family owned; 500 small and medium enterprises which he says do not earn US$5M in profits inclusive of some large companies; and 30,000 to 40,000 very small businesses.
“It is a very young private sector because we have only really been in a free enterprise environment since the ERP (Economic Recovery Programme,” according to Phillips.
He said that in a normal developed country’s architecture, “you would see domestic companies followed by export companies followed by international followed by multinational followed by global companies.”
He used the opportunity to lament the fact that while there is a push locally to be an innovative economy, the University of Guyana is not churning out enough engineers; “innovation is based on mathematics and science and we are failing math.”
Referencing the current Low Carbon Development Strategy (LCDS) he said that the dilemma faced is that Guyana is a small country with a young private sector and “to ask our private sector to lead this growth is problematic.”
He referenced too to the bilateral relation with Norway with which the country will receive US$250M over a five year period and questioned “what happens after that…if there is no other Norway, where are we?”
In presenting his overview of Guyana’s economy, Phillips firstly drew reference to the fact that Barbados and Guyana achieved independence the same year and Guyana’s GDP per capita was US$760 while in Barbados it was half of that.
According to Phillips, 48 years later the GDP per capita for Barbados is US$27,000 while Guyana’s GDP per capita is US$3,000.
Phillips posits that there are several fundamental reasons why this situation obtains.
“A lot of it has to do with our politics and a lot of it has to do with bad decision making…we have had many options but we have chosen for political reasons to do other things.”
He noted that Guyana has available to it “an amazing platform of resources from which we should be one of the richest nations in Latin American Caribbean.”
Phillips pointed to the fact that Guyana stands as a bridge between the Caribbean and South America with an abundance of gold, diamond bauxite, water, possibly oil, an abundance of pristine rainforest, a diversity of fruits and vegetables as well as arable land.
“We have a ton of agreements that help us if we were smart to really platform our economy globally.”
Despite all of the resource available to Guyana, Phillips laments “yet we are poor.”
He observed that Guyana is an export country with agriculture and services dominating.
According to Phillips, politically there is a lot of discussion about which government had the best policy but an assessment of the statistics over the year would reveal that between 1966 and 1992 when the Peoples National Congress was in power and from 1992 to present under the current administration, there has only been a slight difference in performance.
He did point out that there were difficulties with oil during the PNC administration and in 2005 the great floods that caused significant negative effects on the economy.
According to the data however there has been more growth in the economy under the PPP administration “but there are other externalities that are hidden.”
He pointed to the fact that there is a significant level of remittances to Guyana to the tune of some 12 per cent of GDP. “We have an underground economy that is significant and if you were to abstract those you would see a very different picture.”
According to Phillips, despite the figures demonstrating sustained growth under the current administration, “the real reality is fundamentally different.”
Phillips suggested that in Guyana there needs to a redefinition of local politics, “We have to redefine democracy.”
He suggested that in Guyana’s politics, it cannot be a case of winner takes all, “it is inconsistent with economic growth.”