Guyana, with its huge oil and gas reserves find, is never going to be the same. The possibilities are positively skewed with an upward trend, and its development into an ultra modern state, rivaling Gulf Cooperation Council (GCC) states in the middle-east, is a distinct outcome. But, let it be understood, Guyana also faces huge challenges.
The recent history of the country had been one of political and economic turmoil, resulting in mass migration to mainly North America, with Trinidad being a transshipment point. In as late as September 2015, Guyana was classified as Post-Completion-Point HIPC by the International Monetary Fund. Guyana has suffered greatly over the years, despite its enormous potential in natural resources.
Now, however, it’s going to be a different story, but Guyana, for it to be successful in the future it must resist the urge to spend expansively and not allow growth to take place in an adhoc manner. That is to say, given its new found wealth, growth and development of the country must be strategic and with an emphasis of preserving gains the country’s future will depend on. The Regulatory framework must be strong and given today’s technology, enforcing regulations is no longer an issue. The country, its governance, its society, business, education, health and economy depends on the mindfulness of its regime, and the will to act in the best interest of the country at the negotiation table.
There are going to be many issues in the growth stage, and this the point where it must be vigilant in ensuring its best interests are served. Political regimes in the CARICOM are not renowned for pragmatism, and this is an inherent problem, further exacerbated by the hypnotic charm of new found wealth. As an under-developed country, the threats are great, as the profit motive settles in. For this reason, investment in the Guyana market, will be tricky, as business is conducted in the same old manner and models that has stunted growth and development in the region.
Having said that, the opportunities are so great that it stuns the mind. Guyana’s interior resources needs to be harnessed and developed, in energy, infrastructure and services. It’s vast resources of arable land, harnessable hydro-electricity, forestry, agriculture, mineral resources in gold and other precious metals are tremendous. The remnants of its sugar industry, is another potential revenue earner as a biofuel producer.
Developing these others sectors of the economy will help the economy to be resilient to shocks that will be created from the volatility of oil markets. The importance of having a diversified economy, is easily demonstrable in the present zero growth circumstance faced by neighbors Venezuela and Trinidad and Tobago.
It is therefore of utmost importance that Guyana embark on a strategic plan that will ensure its sustainability in the far term!
The recent massive oil find in the Guyanese deep water economic zone places it amongst some of the largest reserves discovered in the region. It is estimated to be a fraction of the amounts of oil that exists there. OilNow estimates between 2.5 and 2.75 billion barrels in the Stabroek Block. With this sort of discovery, it is quite understandable the excitement being generated. Many foreign firms are flocking to Guyana in anticipation of the economic boom, and Director of the Guyana Oil and Gas Association, Nigel Hughes who is a lawyer, says his firm incorporates between 15-20 non-Guyanese companies per week. All of this is great news for Guyana, but Guyana must be prepared to deal with this frenzied influx of wealth, foreigners, and all the accompanying issues.
Unprecedented Growth and Wealth
Guyana will experience an inflow of money never before experienced, not even in the rest of CARICOM. The huge amounts of wealth will be the target of many, and the Guyana Government must ensure that it has the proper regulatory framework to effectively manage and preserve that wealth. It must learn from the mistakes made by Trinidad and Tobago and understand that with such great wealth comes great responsibility to ensure the people and country benefits. Diversification is a must for this resource rich country in gold, agriculture, arable land. Infrastructure to develop theses sectors of the economy is a must, as is education and Technology. Road infrastructure, housing, telecommunications, schools and training centers to equip population with necessary skills and tools of the Digital Age are an imperative.
With this sort of approach, Guyana can leapfrog in to the twenty first century and surpass such digital giants such as Estonia. Guyana can become the new model for economic development surpassing even Singapore.
This takes great foresight, and political will by the Government and people to reject corruption, embrace the rule of law, and not become arrogant because of wealth and prosperity. Whether this can be done is another question.
Pitfalls and Prosperity
Corruption will be the biggest challenge for Guyana, as wealth becomes easy to acquire. As Government starts increasing their spending, their fiscal discipline will be tested, severely. Procurement in Government will be an issue, as will moral and ethical behavior by Government. Services such as immigration, customs, law enforcement will be placed under immense pressure. As the rush to accumulate personal wealth takes priority, governance will be an issue, greatly.
Immigration to Guyana will be a priority issue for those seeking employment from CARICOM. Guyana must move swiftly to secure its borders, as impoverish nations nearby will compete heavily for entry into the country. Immigration, Customs, Police are all going to be challenged as well as impoverish, under-served sections of the society.
The Guyana Central Bank will be needed to setup and Lead, as certain financial institutions who already operate in the Caribbean seek to maximize opportunities for gaining further wealth.
Guyana now has before it, the opportunity to become a great nation. From being classified as a Highly Indebted Poor Country (HIPC) by the IMF just a few years ago, the leadership of this country takes center stage. Guyana must protect its interest at all times, and not allow a few to control its wealth, such as what obtains elsewhere in the CARICOM. It's economic wealth must be guarded by it values, and whilst frugality is needed, wealth amongst the Guyanese people must be distributed equitably.
Oil & Gas, Gold, Agriculture, Minerals, Vast expanses of arable Land, natural waterways, hardworking and honest people. Guyana right now, is like a dream.
It must nor allow itself to become a decadent society, drunken by its wealth, otherwise it doesn't have to look very far to see what can and will happen if the same mistakes are made.
The geopolitical power in the CARICOM has now shifted, Trinidad must humbly sit by and stand aside for the new giant in oil & gas.