Guyana is a small South
American country that is considered one of the poorest on the continent. Guyana
is the only English- speaking country in South America and due to its location,
has strong ties to the Caribbean. In fact, the Caribbean Community’s
Secretariat is hosted in Guyana’s capital, Georgetown.
You might think a small
country that is relatively unknown wouldn’t have much to do with the world’s
trade market, and you could be right. However, Guyana is about to make a name
for itself. The Guyanese have weathered economic storms in the past and will
welcome the big changes that lie ahead.
A Difficult History
Guyana has relied on exporting
sugar for much of its history, but Guyana's sugar industry has had ups and
downs. In the 1970s and 1980s, the industry faced a number of challenges. There were years of too much rain
and not enough rain which led to small harvests. The country nationalized
historic sugar companies, and a loss of talent in the country's industry led to
sugar tonnage falling by 50 percent over a decade during that era.
The country has made
adjustments over the years since these difficult times, but the world sweetener
market has continued to be difficult. US corn subsidies and the development of
High Fructose Corn Syrup (HFCS) in the 1970s lowered demand for real sugar somewhat, and Guyana found it
difficult to compete on cost.
In more recent times, Guyana
has made adjustments that have been painful, but which have helped the industry
regain profitability, like closing production plants and reducing sugarcane
acreage. Better access to capital from financial institutions like Guyana Bank
for Trade and Industry Limited has also helped.
The Gold Shield
Gold is a critical component
of the Guyanese economy. The gold region in Guyana is believed to be largely
untapped and the potential for growth is extremely high. After Guyana gained
independence from Great Britain it maintained a strong hold on its resources,
including gold. The country was closed to outside investment or mineral
exploration until 2004. During 2004, the Land Tenure Act was passed by the
government allowing outside interests to pursue gold and mineral mining in
Guyana. What was once a well-kept secret, is now a big part of many
international operations and this growth is supported by the Guyanese
government as long as their strict rules and regulations are met.
It is believed that the country
sits on top of the Guyana Shield, which is described as an area of almost 1
million square kilometres of land rich in gold deposits. It is estimated that
this shield shares a common border with the Leo Mann Shield of West Africa and
that both were formed prior to the Atlantic Ocean during the Proterozoic Age.
The layers of metamorphic rock that make up this shield has a vast number of
gold deposits that has just begun to be explored. Gold will continue to be a
huge part of Guyana’s trade market given the fact that the Guyana Shield is
thought to hold around 110 million ounces of gold.
Oil Opportunity
In 2015, Exxon Mobil
struck oil off
the coast of Guyana. This discovery has rocked the Guyanese government as they
try to establish themselves as a new petrostate. The original Guyanese
petroleum laws were decades old and didn’t provide the structure they needed to
effectively manage oil production of this magnitude. Almost five years later,
the country is still working to establish all the necessary laws and regulatory
bodies required to handle the continuing exploration and production.
In the meantime, Exxon continues to drill and produce around 120,000 barrels a day off the shore of what was once a poor South American country. While it will take time for the small country to gain wealth from the oil production, but it will happen. It is estimated the country of Guyana will earn around 5 billion annually from the oil production by 2025. Guyana’s oil reserves will make it one of OPEC’s top 15 producers.
A Whole New World
Guyana’s Cinderella story
stands to change the entire country’s way of life. This quiet, simple,
Caribbean-like country will go from trading sugar cane and gold to barrels and
barrels of oil all across the globe. The government has a lot of decisions to
make and will have to decide the best way to spend the estimated
300-million-dollars in revenue from 2020 alone.
If managed well, this money could
reshape the entire country and create a strong thriving economy. Many of the
Guyanese people are excited about the growth, while others worry about
instability and the unknown. In the next decade, Guyana could be one of the
richest countries in the world. On the other hand, if mishandled, this abundant
natural resource could turn into a curse. All eyes are on Guyana.
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