Dec 14, 2020 Letters
As I travelled around conversing with the business community, there is unanimity that every business has been severely impacted by the five months election dispute and the pandemic, some businesses experiencing a greater contraction than others. Both the formal and informal (underground) economy is affected. I don’t think the coalition government recognized the severe impact the election crisis had on the economy, not to mention the toll it took on people’s health, psychologically if not physically. There is an estimated 50 percent contraction in revenues in the private sector.
The election dispute, violence, and associated political instability took a heavy toll on economic activities across the board in almost every sector. And it was made worse by the Corona pandemic. As I observed or gathered information from my travels in interviews and general conversation, the health and economic consequences of the pandemic are worse among the poor and rural dwellers, farmers in particular, than among urbanites. Each region or community is faced with its own vulnerabilities to the pandemic and the associated downturn.
The rural areas have been affected the most economically whereas the rural areas have less of an impact in terms of cases of the virus.
Those who are government employed and have a guaranteed income fare much better than those in the private sector; they have ready, disposable income as opposed to people in the private sector, itinerant farming and mining workers, the unemployed, and rural areas where sugar factories were shut that have no economic activity. The rural farmers have complained that there have not been or were not enough takers for their produce and have suffered enormous financial losses.
One does not have to be an economist or statistician to recognize the economy has been in decline since the start of 2020. Fearing trouble, people conserved resources. The official government or Bank of Guyana contraction (growth?) rate is not known. It may not reflect reality on the ground, certainly not the same as speaking with business people and consumers who feel direct impact of the pandemic and the closure of business due to election conflict. I traversed the markets and shops and I spoke with owners, managers, and clerks of many business. Almost every business, including market vendor and shops, said their revenues went down by as high as 50 percent. Some shops even closed down for good because not enough revenues were generated to cover costs.
Every market seller, grocer, and person shopping said “things bad”. I observed markets with more sellers than buyers. Everyone attributed the economic contraction to disruptions associated with the election and or pandemic, depending on political affiliation. Many lost jobs because of pandemic; the numbers are not known because neither the government nor Central Bank has undertaken a study of the pandemic on human cost.
One must not forget that the pandemic has taken a heavy human toll with the country losing some 160 lives on official record. Unofficially, many more may have lost their lives because of COVID-19. During the coalition, government was secretive of Corona and information was under strict control. Since then, there has been open information of tests and victims. This is quite unlike in white man countries where information flows like water, nothing is hidden.
In Guyana, almost every economic activity has been (was) affected by the attempt to ‘tief’ the election and the ongoing pandemic that has upended lives. Perhaps the only business that did not see much contraction is banking and mining; people need money and by extension, there is bank demand. Mining has continued normally because it is largely export related. Fishermen and farmers have taken a big hit. Their catch and produce are not selling; people lack spending power. Money has not been circulating normally because of the thousands who lost their jobs because of the slowdown caused by the pandemic and because they were dismissed by the coalition regime for political reasons. The cyclical effects of spending money have been largely missing. Stores have been devastated grossing just about half the normal revenues of the same period of time last year. And this is on top of the contraction of the economy and revenues between 2015 and 2019 as a result of terrible economy policy of the then government. Overall, shopkeepers say they barely to make payrolls and pay bills.
Almost all of them let go of several staff and or reduced their hours of operation and by extension employment. Some have adopted a rotational policy of employment where a different set of workers man the store each other day in order to keep staff on payroll with reduced salary.
Since the change in administration in August, there has been a slight improvement in the economy and by extension standard of living. The President Ali government has taken measures to cushion the effect of the pandemic. Except for the violent disturbances in West Berbice and occasional flooding, there has been an increase in economic activities.
The government is applauded for taking some stimulus action.
Money has begun to circulate. The Ali government has attempted preventive measures to curb the effect of the pandemic (with additional testing) and to increase spending with a stimulus package. The government’s handout of $25K has created a lot of economic buzz. People are spending it on basic goods increasing much needed macro consumption that creates demand for production. Output has begun to increase in most sectors of the economy with some employment creation. Market vendors and shopkeepers have some sales in recent weeks. Also, with sugar estates reopening and hundreds employed with workers receiving pay, some money is back in circulation good for short- and long-term effect on the economy. And with the onset of the year-end holiday season, people will spend more creating greater demand for goods and services that should result in a further increase in employment across all sectors this year-end and into the new year.
The pandemic highlights the urgent need for additional health and economic policy action. Rather than doling out further handouts, government should consider some immediate work projects in infrastructure that would create temporary jobs while investments pour in for construction relating to oil and gas that would create more permanent jobs.
I will eat a piece of Exxon Christmas Cake with your ingredients inside.
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