By Jerry Haar
Guyanese place great importance on education, and this bodes well as the country seeks to capitalize on its oil and gas largesse and finally build the nation that all Guyanese have been hoping for since independence in 1970.
An encouraging development in this direction is the recent announcement that the government will offer 20,000 online scholarships to prepare Guyanese for the energy sector, among others. The training is intended to be very practical, linked to the industry and aimed at the development of local human capital, since oil-related jobs are currently occupied by foreigners. Fellows have a choice of over 80 programs offered through GOAL (Guyana Online Academy of Learning), including the University of the West Indies.
This statement by the vice-president follows discussions with ExxonMobil regarding the establishment of training centers in Guyana. It is to be hoped that other energy companies involved with Guyana such as BP, Total, Hess, Shell and CNOOC, will also come forward and support the development of human capital in the country, whether for their specific industrial sector or for others. .
The latest World Bank projections indicate that the oil sector is expected to create 3,850 direct jobs and 23,100 indirect jobs by 2025, employing 0.7% and 3.9% of the workforce, respectively. While the government is keen to ensure strong local content, the job creation potential of the oil sector is limited by its capital and skill intensive nature; and Guyana’s small and undiversified manufacturing base is unable to produce many of the specific inputs the sector needs.
At present, the skills profile of the workforce and the structure of the country’s labor market are poorly aligned with the needs of the petroleum sector. As the World Bank has found: “Workers with technical skills that can be employed in the petroleum sector are currently engaged in construction, transport and agribusiness, which are closely linked to agriculture.
For Guyana, the challenge of developing human capital and the workforce is threefold. First, to provide the local human resources – at all levels – necessary for a productive, efficient and high-quality oil and gas sector. Second, do the same for non-energy sectors where Guyana has the potential to compete in global and regional markets. However, it should be noted that there is a risk of removing highly skilled human capital from other important sectors before training can catch up. Third, to provide the educational infrastructure – primary, secondary, tertiary and vocational-technical – for the development of the skills required for a competitive 21st century workforce.
The relationship between education and increased levels of economic growth in non-resource sectors of oil-based economies has been well documented. Cullen Hendrix, a non-resident principal investigator at the Peterson Institute for International Economics and author of one of these studies, adds, however, that a lot depends on the decision-making environment.
So how could Guyana position itself in the non-resource sectors to take advantage of the huge economic growth trajectory it is destined to experience? Clearly, the nation needs to ride the wave of higher value added service industries such as business process outsourcing, IT and software, design, and communications / media. Hospitality and tourism, renewable energies and the marketing of agriculture and natural resources also have great potential; and even light manufacturing, such as wood-based home accessories, provided that small producers can form a cooperative to produce the volume and scale needed to compete effectively.
With the blessing of oil comes a curse as well, namely the invariable over-reliance on this commodity for economic growth. Countries like Algeria, Iraq, Kuwait, Libya and Venezuela depend on fuel for 90% of their exports. (Guyana’s neighbor, Venezuela – a failed state, derived 88 to 92 percent of its export earnings from oil, whether the price per barrel was $ 35 or $ 135.) However, there are exceptions. United Arab Emirates, Oman and Qatar lead the way for industry diversification as Oman exports vehicle parts; the United Arab Emirates exports or re-exports gold, diamonds, machinery, equipment and electrical appliances; and Qatar with steel, fertilizers and tourism.
Guyana’s future may be bright, but it will require a strong, transparent and results-oriented infrastructure development program and an efficient and effective public administration system and business-friendly tax and regulatory policies to boost attraction. , retention and expansion of businesses, as well as with a reliable and strong financial and banking sector. Unfortunately, the progress to date has not been impressive. According to the World Bank’s latest Doing Business report, Guyana ranks 134th out of 190 countries in the world and the Caribbean behind Jamaica, Trinidad and Tobago and Barbados. So there is a lot of work to be done.
The challenge of human capital and economic development in Guyana cannot be met and overcome with money alone. This will require dedication and individual, cooperative and collaborative efforts on the part of the public and private sectors and civil society. As one Guyanese business owner and activist said, “You have to respect what money and success give you, and then have the responsibility that goes with it. For Guyana, at this point in history, it starts with responsibility.
Jerry Haar is Professor of International Business at Florida International University and Global Fellow of the Woodrow Wilson International Center for Scholars in Washington, DC