Remarks by Ambassador Sarah-Ann Lynch
Guyana Manufacturing and Services Association (GMSA) Business Luncheon
Tuesday, June 25, 2019
Salutations
Ladies and gentlemen, a very pleasant good afternoon to you all.
Thank you Mr. Dookhoo for those warm words of welcome. On behalf of the United States Government, I wish to thank the GMSA for inviting me to today’s lunch. I’ll try to get through this quickly so we have 5 to 10 minutes for questions.
First, I want to belatedly congratulate the new GMSA Board of Directors, particularly the President, Mr. Williams, for his leadership at various intervals for the past decade. Your commitment to the development of the manufacturing sector and to the Guyanese economy as a whole is evident. I very much look forward to collaborating with you.
With its mandate to promote the development of the manufacturing and services subsectors in Guyana, GMSA is well aware of the multi-faceted challenges facing manufacturing: the high cost and unreliable nature of the electricity supply, relatively low production volumes, workforce challenges, and the need to access cheap finance. On the other hand, the services sector has been faring much better while increasing its contribution to economic growth. This bodes very well for the future.
Let me say that promoting responsible economic growth is one of my top priorities as U.S. Ambassador to Guyana. Expected first oil early next year will make the growth part easy. But as the country enters into another phase of its economic development, the responsible part may be more difficult. Boom times don’t always result in the most responsible choices. I urge the GMSA to continue being proactive in ensuring that its members are at the forefront in participating in and benefitting from the economic growth, while defending their rights and interests and those of their communities. In this regard, I am heartened by developments such as your joint initiative with the Ministry of Finance to improve the agro-processing sector and your Discussion Forum and green paper last year on a sovereign wealth fund.
Even though management of wealth funds is primarily a public sector responsibility, their operation and success is heavily dependent on a proactive private sector participating in administration and oversight of the plan. Studies have shown that the most effective sovereign wealth funds are four things: (1) independent, (2) transparent, (3) inviolable, and (4) nonpartisan (notice I did not say bi-partisan – but rather, NONpartisan). You, as representatives of Guyana’s private sector, can help ensure each of these four principles is instilled in Guyana’s NRF.
Let’s look at the first principle: a plan that is Independent. The NRF law says that the fund will be overseen by independent committees comprised of individuals who are not beholden to any interested entity. This is important because no process can be considered truly independent if it is controlled by persons who stand to benefit inordinately from a particular outcome, whether financially, politically, or in other ways. The law provides that the Public Accountability and Oversight Committees will have representation from private sector bodies including the Bar Associations of Guyana, the Guyana Press Association, and the Private Sector Commission. Similar provisions have been made regarding the private sector in the other committees. I know this chamber has a working relationship with the Private Sector Commission, and that the PSC has in place a Natural Resources Management Committee which looks at matters such as the NRF. I urge you to continue taking a leading role working with the PSC, as well as educating the populace to ensure the NRF is implemented in a way that can make all Guyanese proud.
Looking at the second principle: Transparent, we all know how important transparency is in the fight against corruption. But fiscal transparency refers to something more. It means publication of high quality information on how a government (or an independent Natural Resource Fund) receives, spends, and manages a public resource. The GMSA should push to ensure transparency at all phases of implementation. For instance, one of the provisions of the legislation provides that the Minister may, through a competitive and open procurement process, hire an investment advisory services company to provide advice on fund investments. In all likelihood, this would be a private sector company. The GMSA and other private sector agencies can exercise due diligence to ensure that this advisory company is competent and reputable, and advise the Government as it develops its shortlist of potential firms.
You can constantly advocate for regular public disclosure of the investment objectives of the NRF, its funding, withdrawals, and spending, as well as other pertinent information, to help ensure that there is no misuse of the Fund and that all of Guyana benefits from its operation. You can also offer insights and guidance to the budget authorities on various NRF-related matters as the Government prepares the national budget, such as you did last fall at the Discussion Forum.
In all these efforts for transparency, remember that you have the strong support of the international community; we all have an interest in seeing the oil resource lead to the best possible outcome for Guyana and its people.
Moving on, a successful fund is Inviolable, or secure. The Natural Resource Fund is not just any law. It will play a very important role in the economy. Now that a framework is in place, it should remain in place for the foreseeable future. Of course, as times goes on, amendments and adjustments may be needed, but time is now short and it is critical that the framework remain. Advocacy by the GMSA and your sister private sector agencies must be directed at ensuring that the fund remains sacrosanct. You should discuss this need with legislators, policy makers, community leaders, and across society as a whole; everyone may have different opinions on the fund and its implementation, but the baseline framework needs to remain to ensure the fund achieves it purpose of bringing prosperity to Guyana well after the resources are extracted. It is important to talk to more than just your friends. Political fortunes ebb and flow, but a sovereign wealth fund and its defense must be constant across all governments for decades to come, so that all those current and future governments remain accountable for staying true to the spirit of the fund and keeping it alive. This requires a constant, pervasive message regardless of who is in power at any given time.
This need for stability and accountability across the years is why the final principle is so important. The fund must be Non-partisan. It is for the good of all Guyanese, regardless of political persuasion, hometown, or ethnicity. Nor is it just for today’s Guyanese, but for your children, your grandchildren, and even your grandchildren’s grandchildren. As such, the NRF must not be tied to any part of the political machinery. This is not about politics; it is about economics. You, as representatives of the private sector, must do your part to ensure that the decisions your organizations make are impartial, objective, and free from political bias so that they remain focused on economics rather than politics. This will help keep the fund non-partisan, giving your counsel on the fund more respect, and so more weight.
In the end, what the GMSA and other private sector groups do to ensure the hallmarks of a successful Sovereign Wealth Fund are instilled in the NRF boils down to this: embrace your role as an engaged stakeholder, lobby for expertise, information-sharing, and transparency, and broaden the exchange of ideas. You have a unique opportunity to advocate for government action with the goal of ensuring that the NRF is implemented properly from the start, before the profits from first oil begin, to ensure those profits benefit the Guyanese people well into the future. You are not alone. This chamber, and others like it throughout the country, represent a diverse array of Guyana’s citizens, voters, and taxpayers. Together, I encourage you to collaborate with other stakeholders to devise a calculated strategic plan of action that targets job creation, investment, and long-term revenue management.
The benefits of doing so go well beyond the natural resources sectors. In many parts of the world, Sovereign Wealth Funds are becoming pacesetters for entrepreneurship. The spirit of entrepreneurship, in turn, can help tackle some of the greatest challenges that you face, by bringing fresh perspectives and ideas. It also attracts youth. When young people see opportunities for self-driven enterprise, it propels the entire nation forward, and fights the debilitating influence of high youth unemployment and emigration away from Guyana. The long term stability the NRF can provide can help create the climate for entrepreneurs to thrive. Of course, it will take more than an NRF; you can also help small businesses through training and mentorship programs, by helping entrepreneurs access capital and connect to markets, and by improving educational opportunities and exchanges.
As I keep telling people, this is an exciting time to be in Guyana, but it is also a critical time for Guyana’s future. That future starts now, and I look forward to the GMSA and other private sector agents playing a vibrant role in molding it, including by creating a robust framework to implement the Natural Resources Fund and manage the opportunities and risks associated with it.
Thank you.
