The Challenges of Sustainable Growth and Development in Guyana

Aspirations of the South American-Caribbean Nation are taking flight…

The discovery of offshore crude oil has boosted the country’s GDP (38% GDP growth in 2023), but the dream of becoming the ‘Singapore of South America’ faces many barriers.

The United Nations Department of Economic and Social Affairs outlines ‘17 Goals’ to assess the country’s resources and potential. We looked at these metrics and have highlighted the findings here.

May 2024

by Nitya Modulla

Introduction

Guyana is a country located along the northeastern coast of South America. Many aspects of Guyana make it unique; however, the 2015 discovery of oil fields approximately 200 km off the shore, Guyana has led to a newfound global interest in the region.

The only English-speaking country in South America, Guyana has had varying European colonialism ravaging the region for centuries. Now, Guyana has the potential to become the Singapore or Dubai of South America. A Human Development Index (HDI) of 0.742 supports this possibility but it should be noted that this metric was at 0.496 in 1990, and the entry into the highly developed range was relatively recent for Guyana (in 2018).

 The region was originally exploited by colonial powers for cash crops (tobacco, sugar, cotton, coffee, etc) which later transitioned to mining for Gold and Bauxite. The people brought to work the land were from other colonial territories like India and Africa. East Indian immigration started in 1838 and lasted until the late 1910s while slaves from Africa had been arriving since the 17th century. Originally inhabited by the indigenous Arawak, the Carib, and possibly the Warou people, Guyana transformed into a nation with three main ethnic groups–Indians (40%), Africans (30%), and Amerindians (~10%).  Guyana gained independence from Great Britain in 1966, and with the discovery of offshore oil fields in 2015, the country is now at a crossroads. It sits on the 17th largest petroleum reserve in the world which gives it plentiful opportunities for the less than one million Guyanese people but also threatens the environment and community of the now-developing nation.

Peace, Justice, and Strong Institutions

After gaining independence in 1966, the country experienced an uncertain political future. The region known as the Guianas had been colonized by the British, the Dutch, and the French–today these are three separate sovereign nations–Guyana (British Guyana), Suriname (Dutch Guyana), and French Guyana (Guyana—Colonialism, independence, culture). The first leader, Forbes Burnham essentially acted as a dictator until the mid-1980s. Under his military leadership, the two major political parties- The PNC and the PPP were formed (Guyana—Colonialism, independence, culture). It is widely accepted that Burnham’s leadership involved Afro-centrism (leading to ethnic tensions between citizens of African and Indian origin), corruption, state-sanctioned violence, and election fraud (Guyana—Colonialism, independence, culture). After he died in 1985, the country started moving towards more stable politics. Since the early 1990s, the democratic government has been doing fairly well (Bahadur & Scarville, 2024).

Reduced Inequalities

The gap between the Indian and African populations has grown over the decades although the sociocultural and economic foundations of the country have the potential to bring more stability in ethnic relations. After Guyana gained independence, Premier Forbes Burnham, originally elected under a democracy, pitted Indian and African citizens against each other. Racial tensions were promoted by the dictator even though the two ethnic groups shared a common origin—Forced Labor. They could have found common ground in their history.

The landscape is changing now with advocacy groups and multi-racial, multi-ethnic organizations on the rise. Due to Guyana being a smaller nation that has recently become a country on a serious path to development, a reliable and significant amount of data does not exist. The United Nations Human Development Reports uses a metric called the Inequalities Adjusted Human Development Index (iHDI). The data for this is not available for Guyana as the inequalities cannot be properly measured thus far (United Nations).

No Poverty

Nearly half the population in Guyana is under the poverty line. This is a big concern for Guyana with its current political environment headed in the direction of complex geopolitical conflicts due to the discovery of oil fields. This includes the dispute with Venezuela whereby the Venezuelan government led by President Nicolas Maduro is engaged in creating uncertainty at border with Guyana. Since drilling began on Guyana’s shores in 2018, there has been economic growth unlike anything ever seen in South America. With an average GDP growth over the last three years of over 40%, this high number overlooks the living standards of the population (The World Bank in Guyana).

The graph shows that Guyana had been through years of low annual inflation rates (-0.86 to 2.39, averaging around 1.3% from 2012 to 2020) (Average inflation rate in Guyana from 2007 to 2029, 2024). From 2021 onwards the average has been approximately 4.8% (Average inflation rate in Guyana from 2007 to 2029, 2024). 

Zero Hunger

Due to inflation, items such as fish, vegetables, and other necessities are not as affordable to many Guyanese locals. Agriculture contributed to 15.4% of Guyana’s GDP in 2017 (Central Intelligence Agency, 2017), and the government plans to increase this percentage. Guyana, like many other Caribbean countries, relies heavily on imports for food. The government has proposed a new goal to decrease the percentage of food imports by 25% by 2025 (The implementation deficit and regional food import bill, 2022). The Guyanese government’s goal is to expand the agriculture industry so that the country can be the primary supplier of food for the greater Caribbean.

Good Health and Well-Being

In 1995, a cyanide leak that contaminated two major rivers led to Guyana implementing its first environmental protection law. Soon after that, the Constitution was updated to include the ‘right to a healthy environment’. At that time the top causes of death in Guyana were ischemic heart disease, cardiovascular disease, diabetes, and HIV/AIDS. Unfortunately, the same factors continue to be the top causes of mortality (Gampat, 2019).

Quality Education

The first University in Guyana was built after they gained independence; however, much of the population is uneducated and monetarily reliant on relatives who live abroad. The United Nations has funded eight programmed interventions targeting the Quality Education Sustainable Development Goal in Guyana (United Nations). Seven more interventions initiated by varying air organizations support Guyana and multiple other countries towards reaching this goal (United Nations).

Gender Equality

According to the United Nations Gender Development Index measurement, Guyana is at 0.992, which ranks it in the group with the highest levels of gender equality possible (United Nations). The value is determined based on comparing female HDI and male HDI in the country. The HDI value incorporates the potential for three factors: “living a healthy life, being knowledgeable, and having a decent standard of living” (United Nations, 2024). Therefore, males and females in Guyana have similar outlooks for these three factors regardless of their gender.

Clean Water and Sanitation

The 1995 cyanide leak affected the main water sources of Indigenous villagers in Guyana. A Canadian-owned dam located in Guyana broke, turning two rivers to a red color due to the contamination of 400 million gallons of cyanide-laced waste. The Indigenous people had to cover themselves in plastic to protect their skin. Water bodies are extremely important to Indigenous communities, and they rely on the rivers for a variety of things. However, clean water issues are not just limited to the Indigenous in Guyana. Although reports state that 90% of the water is treated in urban areas of Guyana, the facilities are not developed enough to adequately treat the demanded amount of water (Shako, 2015). Also, a major power plant sits on top of an aquifer that most of the country relies on for drinking water. This puts the country’s drinking water security in danger.

Life on Land

Norway paid millions in a deal where Guyana promised to prevent deforestation and keep the carbon stored in its rainforests, and this deal did a lot to help life on land, as rainforests cover 87 percent of the land in Guyana. Eco-tourism used to be a big part of Guyana’s economy so preserving their rainforests was an economic priority. However, as the oil industry begins to grow more and more in Guyana, the government’s attitude towards preservation of the rainforest might change.

Industry, Innovation, and Infrastructure

Exxon Mobil has defined a new industry for Guyana, the oil industry. In 2015, the company discovered oil reserves off of Guyana’s coastline. The company struck a deal with the Guyanese government and has been operating oil drills on the reserves ever since. Also, efforts are being taken to construct roads and advance infrastructure in Guyana. A 152-mile natural gas pipeline is being constructed. It cost $2 billion, and it is the most expensive public infrastructure project the country has ever done.

Climate Action

According to Climate Central’s projection based on the IPCC 2021, much of the city of Georgetown is projected to be underwater by 2030 (Sea level rise and coastal flood risk maps—A global screening tool by Climate Central). Guyana is now initiating efforts to rely on fossil fuels. Exxon Mobil discovered large amounts of oil under Guyana’s coastal waters. Oil drilling began there soon after, and now mostly supplies Europe with oil. After realizing the economic gains, the government began investing in fossil fuels even further.

Affordable and Clean Energy

Energy is a big issue in Guyana; most people do not have power or can’t afford it, and for the ones that can, there are often power outages. Power outages during working hours cause a huge loss for locally-owned businesses as well. Some people generate electricity by burning agricultural waste. Once the natural gas pipeline construction is complete, it will alleviate a lot of the energy issues in Guyana due to the fact that natural gas is cheaper than gasoline or diesel (U.S. Department of Energy).

Decent Work and Economic Growth

Even after independence, Guyana’s Sugar Corporation used to be the leading private company in the country. After the sugar plantation industry became unsustainable, the company had to fire a third of its employees, leaving a fifth of the Guyanese population unemployed. However, the oil drilling deal between Exxon Mobil and Guyana has produced $3.5 billion dollars so far, more than Guyana earned from conserving the rainforest. Due to this economic boom, land and housing values have greatly increased. The government has made efforts to secure jobs for locals that would otherwise go to foreigners. For example, oil and gas companies must employ a certain number of Guyanese citizens to operate in Guyana.

Sustainable Cities and Communities

            In the current economy of Guyana and with many living under the poverty line, access to public transport and public areas is crucial. In 1980 the Guyana Highway Project was proposed, and since then new highways have been constructed in Guyana, and construction and repairs on roads are constantly occurring over the past few years. In terms of air quality, Guyana is in great condition, ranking 8th best air quality out of 108 countries according to a study by Yale University (Guyana Ranks 6th out of 180 Countries When It Comes to “Air Quality”, 2017).

Responsible Consumption and Production

            The Environmental Protection Agency (E.P.A.) of Guyana exempted all operations responsible for handling toxic waste or storing radioactive materials generated by offshore oil production from having to undergo environmental assessments. This is an exemplification of irresponsible production. Environmental assessments are necessary to ensure the safe handling of toxic waste and the safety of the life that comes into contact with the waste. In January of this year, the E.P.A. exempted the proposed Wales plant from undergoing an environmental assessment because Exxon Mobil had conducted an assessment for the pipeline. The irony of the situation is that Exxon Mobil had nothing to do with the construction of the Wales plant, and the construction certainly warranted another assessment.

Life Below Water

 Guyana’s E.P.A. did not require Exxon Mobil's local subsidiaries to maintain an insurance policy exceeding $600 million. This lack of requirement is concerning given the frequency of oil spills. Two occur globally every year. The most significant spill to date, the BP Deepwater Horizon spill, required the company to pay $64 billion (NOAA Fisheries, 2021). Considering the risky nature of the deepwater drilling in Guyana, this decision on the government’s part is concerning. The BP Deepwater Horizon spill contaminated sea turtle habitats, many sea turtles were found with oil in their bodies, and ingestion of oil-contaminated prey had toxic effects on the turtles (NOAA Fisheries, 2021). Many sea turtles and dolphins died.

Partnerships for the Goals

Guyana received 200 million dollars in aid money from Norway to protect its environment. $20 million of that went to protecting land and allocating land to the Indigenous people. Some other money has been set aside for eight small solar panels and a hydroelectric plant. Environmental protection increased due to the aid; however, once oil was discovered, progress has slowed and the aid money is not being put to use as much. Progress on the hydroelectric plant has been halted. Guyana has not received aid money since the aid from Norway.

Citations:

• Average inflation rate in Guyana from 2007 to 2029. (2024, April 23). Statista; Statista Research Department. https://www.statista.com/statistics/1392112/average-inflation-rate-guyana/

• Bahadur, G., & Scarville, K. (2024, March 30). Is Guyana’s oil a blessing or a curse? The New York Times. https://www.nytimes.com/2024/03/30/headway/is-guyanas-oil-a-blessing-or-a-curse.html

• Gampat, R. (2019). Guyana: Leading causes of death during the last 120 years. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3399003

• Guyana—Colonialism, independence, culture. Britannica. Retrieved May 9, 2024, from https://www.britannica.com/place/Guyana/History

• Guyana ranks 6th out of 180 countries when it comes to “Air Quality” . (2017, April 16). https://www.un.int/guyana/fr/news/guyana-ranks-6th-out-180-countries-when-it-comes-air-quality

• NOAA Fisheries. (2021, September 10). Sea turtles, dolphins, and whales—10 years after the deepwater horizon oil spill | noaa fisheries. NOAA. https://www.fisheries.noaa.gov/national/marine-life-distress/sea-turtles-dolphins-and-whales-10-years-after-deepwater-horizon-oil

• Shako, D. (2015). Enabling environment through public policies–achieving universal and sustainable access to ‘adequate’sanitation in Guyana and the wider Caribbean. In Technical Paper presented at the Global Water Research Public Workshop Group. Organized and held at the Global Innovation Partnership to Investigate, Restore and Protect the Urban Water Environment, Newcastle upon Tyne University, UK.

• Sea level rise and coastal flood risk maps—A global screening tool by Climate Central. Retrieved May 5, 2024, from https://coastal.climatecentral.org/map/7/-57.6696/6.3993/?theme=sea_level_rise&map_type=year&basemap=roadmap&contiguous=true&elevation_model=best_available&forecast_year=2030&pathway=ssp3rcp70&percentile=p50&refresh=true&return_level=return_level_0&rl_model=coast_rp&slr_model=ipcc_2021_med

• The implementation deficit and regional food import bill. (2022, June 10). Blog Del IICA. https://blog.iica.int/en/blog/implementation-deficit-and-regional-food-import-bill

• The World Bank in Guyana. [Text/HTML]. World Bank. Retrieved May 9, 2024, from https://www.worldbank.org/en/country/guyana/overview

• United Nations. (2024). Human development index. United Nations. https://hdr.undp.org/data-center/human-development-index

• United Nations. Specific country data—Guyana. United Nations. Retrieved May 9, 2024, from https://hdr.undp.org/data-center/specific-country-data

• United Nations. The Sustainable Development Goals in Guyana: Quality Education. United Nations | Guyana. Retrieved May 9, 2024, from https://guyana.un.org/en/sdgs/4

• U.S. Department of Energy. Alternative fuels data center. Energy Efficiency and Renewable Energy. Retrieved May 9, 2024, from https://afdc.energy.gov/fuels/prices.html

About the authors

Nitya Modulla is a recent graduate of the University of Georgia, Athens. She majored in Environmental Sciences and is interested in socioeconomic factors that affect the future of developing countries, specifically with respect to healthcare and climate concerns. She aspires to become a physician (currently applying to medical schools in the US) and hopes to start working as a clinician serving people in underserved and rural areas .

This piece on Guyana was edited by Dr. Rajat Singh, CEO at D&C Consulting.

Any questions should be directed to him via email. Contact information can be found here.