How will Guyana spend its oil windfall?

The discovery of large deposits of natural resources is something many developing countries long for. When it happens, it can be like winning the lottery. But just as so many lottery winners mismanage their winnings and end up poor again, the same frequently happens with countries that find themselves with newfound windfalls from oil or gas.

Learning from those that have suffered this rags-to-riches-to-rags fate, it seems careful stewardship of revenues, investment for the long term and the pursuit of diversification are key.

Diversification drive

Such is the strategic situation facing the small South American country of Guyana at present. Now one of the poorest countries in South America, offshore oil discoveries stand to make it one of the richest – if it plays its cards right.

Oil giant ExxonMobil has drilled eight discovery wells off Guyana’s coast, sparking estimates that there is potential to generate nearly $20bn in revenues annually from its findings by the end of the next decade. Under a revenue-sharing agreement, the Guyanan government is set to receive half the proceeds after the company’s costs are deducted. It is predicted Guyana’s GDP could triple over the next five years as a result.  

But how to best spend it?

Catherine Hughes, minister of public telecommunications, is among those banging the drum for diversification. “The discovery of oil is a big blessing for Guyana. We see the revenues of our future oil industry being used to help support the development of other industries and services in Guyana. We see them boosting the expansion of our agricultural sector, building more hospitals, and improving our telecommunications landscape and our infrastructure,” she says.

“We are extremely excited, but want to be very realistic in how we emphasise... that it doesn’t begin and end with oil, but it is an opportunity to build and develop other sectors.”

ICT focus

Ms Hughes would like ICT infrastructure investment to be among the top budget priorities. Already Guyana is carrying out a development programme to make the country better connected. “Guyana has been behind the rest of the Caribbean region when it comes to telecommunications, so I was very excited in 2016 when our president recognised that and created the Ministry of Public Telecommunications,” she says.

The focus of that ministry, which Ms Hughes now leads, is to drive the digital agenda to improve telecommunications.

“The big challenge is that we have a population that is concentrated on a coastal strip but then we have several areas in our interior that do not have good telecommunications access. So that has been our focus,” she explains.

“We have been improving broadband access and connectivity into various places in Guyana’s hinterland by ensuring that all the schools are connected with the internet and free wi-fi access – we have done this in about 174 schools. We’ve also done that with all our government ministries [and public authorities]. And we created 176 ‘ICT hubs’, where internet access in provided in community centres or other public spaces.”

A broader e-government strategy is set for launch, based on a model used by Estonia, another small country that has earned international kudos for its own such scheme. The goal is to have close to 200 government services online by 2020. To date, the telecoms market has been monopolised by Guyana Telephone and Telegraph Company but new legislation passed should liberalise the landscape and open the door for more foreign investment, according to Ms Hughes.  

A BPO boost

Among Ms Hughes' hopes is that improvements to the ICT infrastructure will also create new opportunities in the currently small business process outsourcing (BPO) sector in Guyana. “Right now we have just about 6000 seats. The challenge is that we feel we need to have more robust internet and telecommunication access. Hence we have started kind of slow, but we feel once everything has fallen into place then it’s certainly going to be an industry that we can build on,” she says.

The minister was speaking with fDi Magazine, in fact, at the Outsource to the Caribbean Conference, which took place in Curaçao in May, where she gently teased her counterparts from established BPO locations such as Jamaica and Trinidad and Tobago that, given time, Guyana would be rivalling their offers.