Emigrants hold out opportunities
Stabroek News
February 5, 2004
Remittances are a vital supplement to Guyanese incomes and are more potent than any aid flows as beneficiaries spend these sums directly to improve their welfare and these are not lost in the inefficiencies of administration.
Manuel Orozco of the Inter-American Dialogue, in a recent study, estimated that between US$116M and US$233M is remitted to Guyana each year. This works out to an annual average of US$1900 per year from remittance senders to recipients.
There seems to be an error in the computation of these figures but not for the reasons Finance Minister, Saisnarine Kowlessar has cited. The minister said the US$230M figure does not reflect in the country's balance of payments or in the monetary aggregates. How will these figures get there if they are channelled through informal means and are spent in an economy where underreporting and tax avoidance are the names of the game?
Orozco used the US Census Bureau estimate of a Guyanese population in the US of 300 000 for his computation. He used conservative estimates of between 20% and 30% of that population remitting funds to Guyana. But even if the US Census Bureau figure is underestimated by say 100% and the true population in the US of Guyanese emigrants is 600 000, remittances are not done by each member of a family but rather each family.
If we estimate that the size of a Guyanese family is six, we end up with a population sample of remitters of 100 000. If we assume even that 60% of the emigrant population (Orozco 2001) remit monies, then this will translate into 60 000 families. At an estimated remittance of US$1900 per year this will yield on the high-end remittances of US$114M annually and not US$233M. If we use the conservative estimates of 20% and 30% of the population remitting then this will realize US$38M to US$57M. It should be borne in mind as well that because of the pull factor of emigration and the mass exodus where family members resort to any means to get relatives abroad, remittances will be on the decline. It also should be noted that unlike India and Mexico where remittances are the main means of livelihood, in Guyana, this is used to supplement other means of income.
This is not meant as an attack on the veracity of the data provided by Orozco. All data are to be worked on and improved.
Orozco found that remittances to Guyanese households are mainly to supplement poor income levels and are estimated at 80% of recipients' personal income and 50% of per capita GDP.
"The money is predominantly sent to manage basic needs of the household such as food and clothing," Orozco found. Seventy-two per cent and sixty- two per cent of recipients sampled spent their remittances on food and clothing. Only 16% saved some of it and nine per cent invested in some form of business activity. Thirty-three per cent invested in housing and twenty-seven per cent spent the resources on education.
It is clear that remittances are not a resource which can be readily harnessed for productive investments as it is available mainly for consumption because of low income levels in Guyana.
But what Orozco's work shows, is that with clearly defined and tailored policy initiatives, advantage can be taken of the emigrant population abroad given the pattern of their remittances, their visits to Guyana and their taste and preferences for Guyanese foods - the nostalgic products as he calls it.
He recommends that the country forge transnational alliances to reduce the cost of transferring money, to expand the market base of banks and businesses and to increase this nostalgic trade.
In the case of remittances, he noted that companies can forge alliances with banks to have the costs of remittances reduced and suggests that one way to enable this is to link with Visa International with a money transfer operator and a bank in Guyana and the US.
Additionally, Orozco sees the benefit in the formation of alliances between small local businesses and larger businesses to serve the nostalgic taste and preferences for Guyanese abroad; in the government promoting mutual confidence with Guyanese emigrants to improve the economic welfare of Guyana; in the US government supporting a project to encourage young Guyanese- Americans to join the Peace Corps to work in Guyana; in supporting Guyanese-American students to visit for summer camps; in offering attractive interest rates to attract emigrant capital to be harnessed in a pool of savings for investment locally; in micro finance institutions reaching out to receivers of remittances to make better use of resources; in fostering sale of non-traditional produce to Guyanese-Americans and in targeting returning Guyanese for tourism packages.
Guyana, in other words, needs to get up and explore the possibilities that having a large emigrant population abroad holds for it. Relationships can be forged for trade and investment as well as investment promotion. Home Town Associations can also play a structured role in the country's development.
The government and the private sector should look seriously to tap into the potential of having a large emigrant population abroad.
Inaccurate data
Dr Mike Sarhan [ please note: link provided by LOSP web site ] , Director of USAID, has accused this editor of irresponsible reporting in last Thursday's editorial "Stemming the tide", in particular for the use of data to support the position on the mass exodus of skills from Guyana.
Clearly, the responsible thing for Dr Sarhan to have done was to have written to this newspaper since January 15 when the lead story in this publication dealt with the issue and pointed out any errors he perceived.
Responsibility cuts both ways. USAID cannot see in the public domain data which it perceives to be inaccurate and which it believes it has a credible take on, and leave this unchallenged. On January 15 Stabroek Business ran a story captioned "Migration threatens Guyana's future growth" and it was on January 29 that an editorial followed on the issue. Why wait until the editorial appears before making a statement?
Did Dr Sarhan speak with the World Bank on its Development Policy Review report, which contained these figures and which was the source of the article? Did he challenge these figures if USAID was not the source of them? If the figures were wrong and the World Bank acknowledges that it erred, Stabroek Business will willingly publish a story to this effect.
However, the crux of the editorial was the loss of skills. USAID discussant, Dr Percy Hintzen, confirmed publicly at the said forum with Dr Sarhan that in excess of 70% (77% according to the World Bank report), of persons with a university degree were leaving Guyana. That is what the editorial sought to address; finding creative means to stem the brain drain.