USAID CBJ FY 2002: Guyana

Summary: The purpose of this strategic objective (SO) is to continue to strengthen the business environment to bring about more equitable growth. Implementation of strategic objective activities will lead to improved dialogue and a more participatory approach among the major stakeholders as they work together to improve the private investment climate and remove the legal and regulatory barriers to investment. The SO recognizes that both the public and private sectors have critical roles to play if Guyana is to achieve economic growth with equity. There will be increased job opportunities as investment grows, and the microenterprise sector is encouraged and supported by incentives and the elimination of bureaucratic impediments. The underlying premise is that a streamlined and transparent regulatory and policy environment coupled with a strengthened and more dynamic private sector will lead to increased private investment, foreign and local, and greater economic opportunities for all Guyanese.

Key Results: Four key intermediate results are necessary to achieve this objective: (1) increased capacity to implement economic policy for more equitable growth; (2) an improved climate for private investment; (3) strengthened capacity of the private sector to influence public policy; and (4) increased services available to support small and microenterprises.

Performance and Prospects: The year leading up to the March 19, 2001 election was characterized by continued economic stagnation and increased ethnic polarization. In response to these conditions, USAID's economic growth activities focused on laying the groundwork for future investment, strengthening the strategic and advocacy capacity of private sector organizations and the leading microcredit institution, and advancing the participatory dialogue between the government and the private sector. Significant progress was made in implementing these activities.

USAID's assistance was instrumental in drafting an investment code aimed at clearly defining the rights and obligations of potential investors. A Small Business Act was also drafted which will increase the Government of Guyana's (GOG) focus on the problems and needs of small businesses, the largest component of Guyana's private sector. The recently completed "investor roadmap" will lay the groundwork for the removal of bureaucratic requirements and facilitate new investments. The investment code, Small Business Act, and the investor roadmap were developed through a series of public consultations with the full participation of the GOG, the private sector, including regional Chambers of Commerce, and other key stakeholders. These efforts are also fostering democracy objectives by increasing dialogue on policy issues and creating greater transparency between the GOG and the private sector.

USAID continued institutional strengthening activities with the Institute of Private Enterprise Development (IPED), Guyana's leading microcredit institution, bringing best practice standards to its loan structuring, pricing methodology, delinquency management, and cash flow analysis. Due to USAID's continued technical assistance to IPED, loans to microenterprises have increased from 2,500 in 1998 to 4,554 in 2000, with over 77% of these loans provided to women, most of whom are single heads of households.

USAID assisted in developing the first strategic plan for the Guyana National Bureau of Standards, a key institution for helping Guyana meet sanitary and phyto-sanitary requirements under the World Trade Organization (WTO) and the Free Trade Area of the Americas (FTAA). USAID continued to promote a more dynamic investment strategy by conducting a study tour to two successful regional investment promotion agencies for officials of the private sector and the Guyana Office for Investment (GO-INVEST), the country's investment promotion agency, and by providing advocacy training for five regional chambers of commerce and three product-based private sector organizations.

In addition to the investment code and the concerns of the small business sector, policy issues addressed by USAID included Guyana's obligations under the WTO, competition policy, and reform of the consumption tax. USAID also provided advocacy training for eight private sector organizations based on a learn-by-doing model using issues of concern articulated by each local chamber. In FY 2000, USAID facilitated the creation of an association of the five regional Chambers of Commerce. In the Ministry of Finance, assistance was focused on developing a draft management information system which aims to improve both the quality and timeliness of project monitoring and reporting, and drafting a procedures manual for the Project Cycle Division. The purpose of the procedures manual is to facilitate the monitoring functions by clearly laying out the reporting, monitoring and operational procedures of GOG and donor-funded projects. USAID also provided assistance to the Ministry of Trade, Tourism and Industry (MTTI) and the Private Sector Commission. A seminar on competition policy was presented to members of the public and private sectors (attended by over 175 persons), and a training plan for the MTTI was developed to improve trade policy implementation and a trade data information system to improve trade policy analysis.

Guyana is one on the countries selected to participate in the Internet for Economic Development Initiative, and USAID is assisting the GOG to begin the process of developing an information technology strategy. Assistance is also being provided to the Private Sector Commission, the umbrella association for private sector organizations, to develop its website, and to GO-INVEST to improve its website to better promote exports and attract investment. USAID is continuing to work with other donors and the GOG in the preparation of its Poverty Reduction Strategy Paper, which is required to reach the completion point for debt relief under the Expanded Heavily Indebted Poor Countries program. USAID is also advocating for increased participation of the intended beneficiaries in the consultative process.

Helping Guyana improve the climate for private investment is a critical component of USAID's program. Both domestic and foreign investors have taken a wait-and-see attitude over the past several years before making new investments. The willingness to invest will depend in large part on the legal and regulatory environment necessary for investors to protect their economic interests. Thus, the enactment of the investment code within the next year will be critical to attracting investments, especially foreign investment. USAID will continue to assist the MTTI to improve trade policy and meet FTAA and WTO obligations and commitments. It is expected that GO-INVEST will be re-organized to become a one-stop investment and export promotion agency, and USAID will continue to provide the necessary technical assistance to ensure that the reorganization meets the needs of potential investors and exporters. The future expansion of a market-oriented economy and the enhancement of the environment for business and investment will depend on an effective, proactive advocacy for change on the part of the private sector, and by individual associations for specific productive sectors and regions. USAID will assist the public and private sectors to place key information from the investor roadmap on to several governmental internet sites, as well as conduct awareness seminars and internet training. USAID activities with private sector organizations will also focus on institutional strengthening and building their advocacy skills. Technical assistance to IPED will include study tours to successful regional microcredit institutions, and staff training to assist the institution to adopt generally accepted best practices in micro-finance.

Of the $2,000,000 in FY 2001 funds, $200,000 will be used to increase the capacity to implement economic policy for more equitable growth; $900,000 will be used to improve the climate for private investment; $ 500,000 will be used to strengthen the capacity of the private sector to influence public policy; and $400,000 to increase services to support small and microenterprises. Of the $1,600,000 in FY 2002 funds, it is anticipated that $300,000 will be used to deepen organizational and advocacy capacity of private sector organizations; $360,000 to enhance FTAA/WTO compliance; $300,000 to expand microcredit loans; and $640,000 to strengthen the Government's ability to facilitate trade and investment.

Other Donor Programs: The USAID program is implemented in coordination with the programs of the World Bank, International Monetary Fund and the Inter-American Development Bank (IDB) which provide the macro framework for economic and policy reform, especially for HIPC debt relief. Other key donors providing assistance in economic growth and reform include the European Union, Canada and the United Kingdom, each of which participates with USAID on a private sector donor working group. Their focus is private sector workforce training, budget reform and microenterprise development. USAID serves as a catalyst for the multi-donor funded support to strengthen the analytical capabilities of the Private Sector Commission which continues to play a critical role in the private sector/GOG economic dialogue, and an increasingly important role as brokers in the political arena.

The GOG's planned voluntary reduction of the civil service, supported by the World Bank and IMF, could result in over 2,000 persons becoming unemployed late in 2001 with a further 2,000 person reduction in the following year. Because of the lack of detailed information available on this reduction, it is difficult to predict the extent of negative effects on poverty reduction or to work with other donors to formulate plans to help ameliorate these effects. In the long-term, the IDB will take the lead on civil service reform.

Principal Contractors, Grantees, or Agencies: USAID implements its activities through the U.S. contractors Chemonics International Inc., in association with Management Systems International.

Guyana 504-001

U.S. Financing

(In thousands of dollars)

	Obligations		Expenditures		Unliquidated
Through September 30, 1999	1,915	DA	358	DA	1,557	DA
	0	CSD	0	CSD	0	CSD
	0	ESF	0	ESF	0	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA
Fiscal Year 2000	1,399	DA	1,164	DA
	0	CSD	0	CSD
	0	ESF	0	ESF
	0	SEED	0	SEED
	0	FSA	0	FSA
	0	DFA	0	DFA
Through September 30, 2000	3,314	DA	1,522	DA	1,792	DA
	0	CSD	0	CSD	0	CSD
	0	ESF	0	ESF	0	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA
Prior Year Unobligated Funds*	0	DA
	0	CSD
	0	ESF
	0	SEED
	0	FSA
	0	DFA
Planned Fiscal Year 2001 NOA	2,000	DA
	0	CSD
	0	ESF
	0	SEED
	0	FSA
	0	DFA
Total Planned Fiscal Year 2001	2,000	DA
	0	CSD
	0	ESF
	0	SEED
	0	FSA
	0	DFA
			Future Obligations		Est. Total Cost
Proposed Fiscal Year 2002 NOA	1,600	DA	336	DA	7,250	DA
	0	CSD	0	CSD	0	CSD
	0	ESF	0	ESF	0	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA

Guyana

Activity Data Sheet

Guyana 504-001

U.S. Financing