A nation of traders
EDITORIAL
Stabroek News
July 2, 2004
It was Napoleon who in 1807 famously described England as a nation of shopkeepers. Maybe his remark spurred the English to pursue an industrial revolution that would change the world forever. Actually the revolution was already well under way by then, with Scotsman, James Watt's refinement of a steam engine in 1763 that pumped water out of coal mines, that provided the fuel for the steel mills, that made the machinery for the cotton mills.
Two hundred years on, Guyana, on the other hand, has become very much a nation of traders. Manufacturing has never been in the blood and even in colonial days machinery had to be imported for the various factories.
After independence small traders kept the economy going while the previous government was disastrously experimenting with such fashionable concepts as socialism and self-sufficiency and driving the private sector out of business. But while many other countries went through the same phase and have managed to emerge from a position where everything was owned by the state to having a flourishing private sector; Guyana's manufacturers are a lonely band of brothers battling cheap imports, red tape, crime and poor infrastructure. The economic landscape is largely made up of small farmers, Guysuco, a handful of long established and hardly thriving manufacturers and then a huge retail and services sector. Sterling Products Chairman Dr Leslie Chin recently lamented the fact that the manufacturing sector only contributed 5.6% to the economy in 2003 and actually declined by 2%. This compares to 25% in Trinidad.
The real question is why is the Guyana economy so reliant on trading? Firstly, in times of political fragility it is the brave businessman who plunges into long-term projects that tie up large amounts of capital in immovable plants and machinery. Such investments expect returns only after several years of operation. When there is uncertainty the tendency is to turn over capital quickly. In other words instead of manufacturing soap, bring in a container, sell it out and then bring in another. You can sell multiple containers before you make even one bar of soap and the things that can go wrong are extremely limited compared to actually opening and running a soap plant.
Industrial estates at both Eccles and Coldingen have never really taken off. In the case of Coldingen it is a ghost estate, killed off by crime, with several failed or aborted projects. What is most disturbing is that in recent years some manufacturers have actually moved into trading. Demerara Tobacco Co. stopped producing cigarettes and started importing them much to the delight of its shareholders but dismay of the employees.
Now it would be easy to blame the government for this lack of progress and they have not always been the most accessible or efficient in helping businessmen get land or concessions. But it seems there is something in the psyche of many investors that is not prepared to wait, to make the sacrifices to get a business off the ground.
The fact is that the government can do little to spur investment once the fundamental stability of the country is lacking. Crime remains a huge factor and last week's incident when protestors were closing down stores on Regent St would give any investor pause. It's a broken record but still true that long lasting political stability is crucial and even then it will take many years before Guyana moves from being a nation of traders to creators of products and wealth.