Business outlook Editorial Guyana Chronicle December 21, 2000 The useful annual Business Outlook Survey published recently by Ram & Mc Rae, Chartered Accountants, has confirmed the widely held views that political risk and instability are the most important obstacles to investment. Ram & Mc Rae note that this has been the case in previous years and that this mirrors the findings in international surveys by major accounting firms. Indeed if one thinks of it for a moment it is obvious, no one wants to invest in a country where there is a reasonable fear that there will be riots or other forms of street activity. Not only is it bad for business but it is unpleasant to live in a climate of tension. And this is not just a matter of new foreign or local investment. All those who already have businesses here, the ones who responded to the questionnaires sent out by Messrs Ram & Mc Rae, will readily confirm that the fear of upheavals of one kind or another is their biggest concern and what deters them from expanding. Some of these businessmen have also been through the long years of the socialist experiment when they were miniaturised or marginalised. Their confidence is definitely not at a high level. They realise that businesses can fail for reasons beyond their control. It's hard enough as it is without having to contend with political instability. The prospect of elections has itself cast a gloom over the business climate, as Ram & Mc Rae note. Electricity supply continues to be a concern, the Survey reports, though there are definitely less blackouts and power surges than there used to be. There is concern, too, about the exchange rate though this has been relatively stable in the last two years, falling from l68/l at the end of l998 to l85/l now, just l0%. On the human resources front a shortage of skills is still a major problem and the Survey says middle and senior managers continue to emigrate. When asked the principal sources of capital they were likely to use if they planned to raise capital in the next twelve months over 40% of those businesses which responded to the Survey said from cash flow/operating profit. l5% said short term bank debt and virtually the same number long term bank debt. This may partly be due to continuing high interest rates. As all who have tried their hand at it know, from the smallest vendor, to those thousands of small entrepreneurs who have borrowed from the Institute for Private Enterprise Development, to the medium sized family companies, to the big businessmen, running a business is a never ending struggle. It can be challenging and interesting, it is sometimes profitable, but it is an ongoing learning process with onerous hours and which never ends, particularly if the business is growing. The few who do really well deserve our admiration. In most cases this would have involved nerve wracking crises, painful decisions of one kind or another and a serious sacrifice of leisure time. The business outlook for Guyana depends partly on a new attitude to business. Though both main parties now embrace it as the so called engine of growth in practice there are hangover attitudes from the old days that still create ambivalence, and this combined with bureaucratic ineptitude, have led to the loss of much potential new investment, ranging from the timber industry to the intermediate savannahs project. At the end of the day government has to become not just rhetorically committed to business but willing to do the detailed hard work to put the institutions and structure in place to make quick decisions. This demands a cadre of trained and efficient people in the agencies and ministries that deal with investors who have the power and the confidence and the desire to deal quickly and efficiently with such investors, local or foreign. Governments have to create conditions that encourage businesses to start and develop, as they did in Japan and South Korea. That has never been the case here. Follow the goings-on in Guyana in Guyana Today