Guyanese investors, including the government, are conservative. The big chances which need to be taken, the high risks which other investors assume, are avoided when investing in Guyana.
Major projects with high risks are avoided.
This is what differentiates investment in Guyana from that say in the United States, where the failure is not as dreaded as it is here.
Most successful investors in the world have had their fair share of failures. Some of the world’s richest investors have had their fair share of crashes; some have recovered from bankruptcy or near bankruptcy. They have not been afraid to take high risks or to crash.
The PPPC had begun to change the traditional investor mindset in Guyana. It began to break away from the conservative mould and take on projects which by local standards were considered too risky – by the traditional standards of thinking small and acting safe.
The PPPC unveiled a series of major projects which were seen as high risk. The old mentality of “playing it safe” led to criticisms that the government was courting disaster. To compound the problems, the PPPC involved some ingenious means of financing these projects.
The financial model of the Berbice River Bridge and the Marriott Hotel came under intense public scrutiny, drawing further attention to what many saw as the high risks of the failure itself.
The Skeldon Sugar Factor, now described as a behemoth, was not as severely criticized even though some political pundits, outside of the main opposition, did suggest that perhaps the investment was ill-advised.
The PPPC, however, was thinking big and acting boldly. It has clearly decided that if Guyana was to develop, the small conservative investment mentality, in which governments thought small and acted safely, had to be set aside.
The PPPC had highly ambitious projects. A hydroelectric facility was expected to meet Guyana’s present energy needs, but was never going to satisfy the country’s future energy requirements.
The Berbice River Bridge would ease the problems of travel to the Ancient County, but was suspect in terms of satisfying the anticipated returns on investment.
The Skeldon Sugar Factory, a more than US$300M investment, was intended to shift production eastwards, and to reduce the cost of production while the industry went into value added packaging rather than production.
The plans for a deep water harbour were laid and aligned to that of the country’s oil exploration plans. A road to Brazil was being conceived and to be linked to this harbour. A new bridge across the Demerara River was supposed to replace the aging one built forty years ago.
The problem with high ambition is that it often comes with dramatic failures. Investors who think big do not succeed with every investment. They have their fair share of failures. The people of Guyana, weaned on thinking small and acting safe, were never going to accept that for every ten major projects, you were bound to have a failure lodged in between.
The problems of the Skeldon Factory have pushed the national thinking back into the safety zone. Governments are now risk averse. Big projects are too big for a small thinking government. The APNU+AFC coalition is afraid of failure. This fear of failure is what has led to the imminent closure of the sugar industry. The government could have saved the sugar industry. The problematic sugar factory at Skeldon was built by the Chinese government, who also built the International Convention Centre.
The government has asked the Chinese government to do massive repairs and renovations to the Convention Centre, and the Chinese government has agreed to fund the repairs which will run into more than one billion dollars.
The Chinese government is aware that its construction reputation is on the line, and therefore has opted to do the repairs and renovations at no cost to Guyana.
The same approach could have been taken with the problematic sugar factory at Skeldon. There is no reason why the Chinese would not have been keen to fix the problem there in order to preserve their reputation.
Instead of downsizing the industry, the APNU+AFC government could have sought assistance from China to fix the problems at Skeldon at no cost to the people of Guyana. But if APNU+AFC did that, there would be no behemoth to point to as an example of the failure of the PPPC’s big thinking.
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