|In the early 70s, Guyana’s market economy was quashed by a social experiment, which the government of that period had implemented. Consumers were no longer the focus; importation on many goods was banned; the illicit trade bloomed; and with that, the economy plummeted to an all-time low. Guyana was in debt and it appeared as if the economy would never recover.|
Several decades later, Guyana remains rich in exploitable resources; there is gold, diamond, bauxite, human capital, suitable climatic conditions for agriculture and the recently discovered oil in the Essequibo River. However, despite the abundance of natural resources, the country remains relatively poor, especially when compared to other CARICOM member states.
But economists say that while the manufacturing industry has been making efforts to stand strong on its own two feet, it continues to hold unending potential to take the nation’s growth to higher levels.
The industry contributes about 10 percent towards the country’s gross domestic product (GDP), providing hire for 12 percent of Guyana’s population.
Over the decades, the industry has limited itself to the processing of agricultural products, mainly rice and sugar; logging; gold and diamonds; and food and beverage [Banks DIH and DDL]. There has been no impressive growth of a value-added, export-oriented industry, where the country moves beyond manufacturing alcohol and agricultural products to large scale production of a clothing manufacturing, manufactured forest products, technology and glass factories.
However, there is some hope for the possible growth of the industry. Guyana is a gold mine for investors interested in establishing or expanding manufacturing operations.
There is competitive cost of labour, in which Guyana has one of the lowest manufacturing wage rates in the Caribbean and Central America; there is availability of human capital; there are advantages to be had with the country’s close proximity to the US market and not forgetting the availability of industrial parks and access to local inputs. These factors have been observed by many investors in the past and present.
The erection of a self-governing administration in 1962 led to the implementation of important measures with respect to manufacturing the Government at that time (The People’s Progressive Party, PPP) established the first industrial estate at Ruimveldt and provided economic breaks to investors, particularly in the rice milling and sawmilling subsectors, whilst facilitating further secondary manufacturing in fields such as paints, packaging, confectionery, etc.
The industry might have extended further in these directions had the Government had access to external resources or control over all aspects of macroeconomic and financial policies.
However, after the introduction of a new economic policy which favoured the import-substitution model, the downward spiral began. There was state control of the “commanding heights” of the economy in terms of public ownership of the operating entities in the production and distribution of both essential and non-essential services.
This, according to the National Development Strategy, was accomplished via an extensive nationalization programme, which zoomed in on foreign investment and later on domestic investment. The policy affected even the mixed ownership of the education system, which was altered in favour of State ownership.
There was deficient management of the public sector enterprises (PSEs) and tax policies that worked unremittingly against the manufacturing sector as the economy became subject to harsh supply management measures.
Tax policies included control over foreign exchange. Furthermore, as the export earnings dropped , foreign exchange became scarce. The management of the exchange rate , the pricing policy and consumption tax policy were all under threat .
This contributed to a significant decline of the GDP for a period of eight years. It is stated in the National Development Strategy that with the economic activity virtually retrogressing year after year, it became obvious that the core of the problem was rooted in a mixture of incorrect policies administered by the political directorate, as well as too tight a stranglehold of the Government on economic activities.
History has indicated that following the collapse of the economy, the government pulls to bits its socialist mindset, and introduced an economic recovery programme which paved the way for the privatization of smaller manufacturing companies.
According to the National Development Strategy Chapter 34, the manufacturing sector and technology, some of the first companies to be privatized were producers of food and beverages such as Demerara Distillers Limited, which produces rum among other alcoholic beverages. This was a deviation from the customary business structure where companies were co-owned by the government, and small manufacturers of textiles, ceramics and pharmaceuticals were also all produced in state-owned factories.