THE Inter-American Development (IDB) Resident Representative to Guyana, Ms. Sophie Makonnen, has highly commended the Guyana Private Sector for the laudable role they played in Guyana achieving eight consecutive years of positive growth. She referred to them as the protagonists of economic development in this country.
Ms. Makonnen made this observation as she delivered the keynote address at the launch of the 5th edition of the ‘Business Guyana’ magazine, held at the Pegasus Hotel on Friday evening.
Speaking on the topic “How to foster a sustainable environment for promoting private sector development and international investment,” Ms. Makonnen said, “Firstly, the Guyanese Private Sector must be recognized for their laudable role in Guyana’s achieving eight consecutive years of positive growth. Through your risk-taking, your diligence, your hard work and your perseverance in the face of uncertainties, you generated output, provided valuable services, created jobs, and in the process, increased government’s tax revenues.”
She commented that, too often, we tend to dwell on the many constraints entrepreneurs face, and the weaknesses in the overall business climate, issues in developing economies; but, Ms. Makonnen said, in reality, over the last few years, the private sector in Guyana has helped propel the country to higher levels.
“Thus my first main message to you is that you are the protagonists of economic development in this country. You have done a good job, sometimes in challenging circumstances, and you must continue to play this role and strive to do even better.”
And offering guidelines on ‘How to do better,’ she said, “You have to continue to lead the path in gross fixed investment, exports, job creation, adding value to the basic commodities produced, diversifying the economy, product and service delivery innovation, adaptation of cleaner and more efficient technologies.” Those, she said, would allow the economy to expand, have a broader base of activities, be more resilient to shocks, and increase income.
Ms. Makonnen noted that the IDB has long been a partner in Guyana’s development, and added that it will continue to be.
“We have an active portfolio of US$240M ($100M still not disbursed). We will be approving over US$95M in the next two weeks (Funds include a $30M Euro grant from the EU). In our current country strategy 2012-2016, private sector development is one of four priority pillars that we stand ready to assist and facilitate,” she said.
She said that while the IDB is often perceived as directing its assistance only to the public sector, this is, in effect, not the case. “In fact, we have had 20 projects with the private sector since 1996, and we want to do more,” she affirmed.
Noting that the private sector faces myriad challenges, she opted to share with the body thoughts on ways in which it can contribute to expanding the economy, highlighting: public/private partnerships, clusters and value chains; access to business credit and improved payment services; diversification and innovation.
The DB Representative outlined that, invariably, in the sector, many investments are needed – be they infrastructure, factories, or radical changes in productive technologies; and that they tend to be costly. Often, the cost is beyond the reach of a government that has to worry about debt sustainability, or an individual entrepreneur, or companies that just don’t have sufficient capital to leverage the deal.
To this end, she said, here is where joining forces and collaborating can help overcome an obstacle that seemed insurmountable from an individual firm’s standpoint. She added that governments are interested in promoting public/private partnerships (PPPs).
WHAT ARE PPPs?
Public/private partnerships (PPPs), she said, are contracts from public to private actors to provide public services; and in which the private party shares a fair amount of the financial, technical, and operational risks.
Commenting on its benefits, Ms. Makonnen said that PPPs are often used to fund infrastructure projects. She also said that the bank perceives PPPs as a legitimate instrument, and would encourage internal and external private sector actors to get involved.
Clusters and value Chains
Meanwhile, at another level, she said much can be done to form, strengthen, and promote joint ventures, clusters and value chains. For example, where a stand-alone producer of, say, coconut water, may not be able to satisfy an export contract, by banding together with other producers, receiving training in quality assurance, engaging in joint marketing, and joint purchase of expensive common inputs, and coordinating logistics, much more can be achieved.
And commenting on the thousands of small and micro-enterprises in Guyana, Mackonnen added, “There is strength in numbers,” and declared that these smaller firms are the ones that could account for most of the employment.
Notwithstanding, she said, “To be competitive in an increasingly globalized market, you have to be efficient, innovative and agile.” Against this backdrop, the IDB Representative emphasized the need for smaller businesses to band together in well-functioning, coherent agglomerations, or well-integrated chains, in order to compete effectively both inside and outside the country.
DIVERSIFICATION AND INNOVATION
On this very important topic, Ms. Makonnen stressed that: “In order to continue to grow and to develop resilience to commodity price shocks, the economy has to diversify and add more value to its primary commodities.”
She observed that Guyana’s economy is based on extractive activities (gold, bauxite, manganese and logging) as well as agricultural pursuits (rice, sugar, shrimp, vegetables, fruits). Gold accounts for 35% of exports, and rice accounts for 13%. That apart, many of Guyana’s existing manufacturing activities are closely related to agriculture, such as food processing; distilling beverages; rice milling; and fish and meat processing.
While foreign direct investment (FDI) has been successfully attracted for mining, due to large endowments of minerals and low cost of extraction, more FDIs have to be attracted to other sectors, Ms. Maconnen affirmed.
“The competitive and comparative advantages are promising, but undeveloped sub-sectors have to be touted to both outsiders and nationals,” she declared.
In this regard, the IDB Representative gave the private sector representatives a short and thought-stimulating list by which to be guided.
Prime Minister Samuel Hinds, in brief remarks, noted that while Guyana would have been doing well with 5% growth rate and such like, it becomes incumbent on Guyanese, particularly the young people of this land, to ‘lift their eyes’ and embark on working resolutely towards achieving a 10% growth rate for this country.
Prime Minister Hinds alluded to China which, he said, initially had very little or nothing, but through diligent work has seen its Gross Domestic Product (GDF) doubling over the years. “That is what growth is all about,” he commented.
The Prime Minister also called for a change of attitude, noting that emphasis should be placed on an even playing field and expediting the process.
Reiterating his call for getting on to higher levels of growth rate, the Prime Minister stressed: “The challenge we now have is to get on to the 10% growth (GDP) trajectory.”
And Mistress of Ceremonies (Emcee), Dr. Dawn Stewart-Lyken, Chief Executive Officer of NuDawn Consulting Inc., noted that Guyana is a country of promise, a blessed land; and until we are able to take ownership of it, harness our strengths, open our doors to investments and trade, make the continual development of Guyana’s human capital, we would not be able to fully realize our potential.
Ms. Stewart-Lyken said that coming together as a unified group to produce such a distinguished investors’ guide provides the private sector with a platform to share best practice principles and foster partnerships, allowing members to grow stronger and become leading advocates in their individual industries.
Meanwhile, Senior Vice President of the Guyana Chamber of Commerce and Industry (GCCI), Mr. Vishnu Doerga, in his remarks, gave a description of, and background to, the business magazine, which was first published in 2010 with a mission to identify, investigate and invest.
Considered one of the best ways to promote Guyana internationally, some 5,000 copies have been printed this year for global circulation. The magazine is credited as being the highest income-earner within the GCCI.
The Vote of Thanks was delivered by GCCI Secretary, Nicholas Boyer.