How Guyana Plans to Get Insanely Rich in Just 5 Years
[Music] as the sun rises over guyana's Capital City a transformation is taking place that few could have ever predicted amid the Old Colonial thoroughfares and crumbling Timber Cathedrals the first signs of an unbelievable economic boom can be seen the one sleepy streets are now bustling with activity as the sounds of construction and heavy machinery fill the air cranes Tower over newly constructed ports which are instantly overrun by vessels grandiose infrastructure plants have been set into motion including Giant gas-fired in hydroelectric power plants sprawling highways set to connect its remote regions in neighboring countries and a new deep water port to keep up with insatiable Global demand dramatic increases in funding hope to revamp the health care in Educational Systems into the best in the region while hundreds of thousands are projected to be lifted out of poverty in just a couple years all of this is being funded by an unprecedented tsunami of economic growth indeed guyana's economy in 2022 grew at a blistering 57.8 percent vastly outperforming all other countries in the world and in just a matter of five years Guyana plans to become the richest nation in South America with a projected GDP per capita on par with Italy yet all of this is unique for Guyana which has historically been better known for its economic ineptitude than its successes in fact it was just a few years ago that it was among the most underdeveloped and stagnant nations in South America unemployment was painfully High almost half of the population lived in poverty and Education Health Care and infrastructure were almost non-existent crumbling from Decades of neglect along with a half century of ethnically polarized and bitter politics and the highest suicide rate in the world when you adjust for age the people of Guyana suffered terribly and things looked unlikely to change anytime soon so with the current miracle currently unfolding a few questions come to mind why was Guyana so poor to begin with how is it developing so incredibly fast and is this all just a little too good to be true while guyana's economy shattered growth records in 2022 the S P 500 just wrapped up its worst year since the 2008 crisis and Bank of America is warning that it could Flatline this year the markets demanding a much more active approach in Masterworks the sponsor of this video has already helped over 600 000 people take control they've been featured in Publications like Business Insider and financial times and recently awarded one of linkedin's top 50 startups but why because from masterworks's office in downtown Manhattan their team drawn from institutions like Bank of America and Sotheby's is revolutionizing Art investing now Masterworks doesn't do nfts or cryptos you are investing in real physical paintings qualified with the SEC which I've Linked In the description and while many have been Panic selling or dip buying Masterworks paid out over 25 million dollars in the last 12 months alone that includes three sales in just the last 60 days which returned 10 13 and 35 net to their investors paintings have sold out in less than an hour but use my link below to check out Masterworks and your account will be pre-loaded with Priority Access as Spanish explorers scrambled to exploit most of South America in the 16th century they largely ignored the region known infamously at the time as the wild Coast because of its perceived lack of resources the Dutch eventually settled in the area in what today makes up the Modern Nation of Guyana the coastal Mudflats in vast estuaries soon proved ideal for sugarcane cultivation to fuel the industry's expansion tens of thousands of African slaves were imported each year peaking in 1833 with over one hundred thousand active slaves which was 60 percent of the entire colony's population yet by this point Guyana was now a colony of the British Empire and soon after in 1838 the abolishment of slavery throughout its colonies sent a seismic disruption through the slave dominated sugar industry which by this point represented a vast portion of guyana's economy faced with their industry's looming Extinction guyana's plantation owners started looking elsewhere to fill its new extensive labor shortage seeing as the brutal and unforgiving work was not very appealing for most workers they turned to employing indentured servants from other British colonies most of which ended up being from India these servants would be contracted to work for five years in return for food housing and a one-way passage to the Colony from the end of slavery until 1917 almost a quarter million indentured Indian servants were brought to British Guyana this is why today Guyana is largely divided by the two dominant ethnic groups the Indo Guyanese who still disproportionately work in agriculture in the rural regions and the afro Guyanese who make up most of the nation's Urban population as the 20th century donned Guyana would start exploiting a new Resource as the world started exploring the many uses of aluminum The Ore that produces it bauxite was found in abundant quantities in Guyana in fact Guyana is so rich in bauxite that by the 1960s despite being a relative small nation it became the world's fourth largest producer however its continued over-reliance on Raw resource exports combined with its Colony status meant Guyana was largely relegated to having its vast resource wealth exploited without seeing any substantial improvements in quality of life but as the world entered a new era of decolonization following the end of the second world war the people of Guyana hoped they could finally take fate into their own hands in 1953 Guyana was granted Universal adult suffrage however with the election of Teddy jagan who was largely seen as two pro-communist the British temporarily suspended the Constitution and sent in troops at the same time the party jagan ran under the PPP broke along ethnic lines with Forbes Burnham becoming the leader of the afro Guyanese dominated PNC this incited a significant number of violent ethnic riots that further polarized the nation's population and as you might have suspected coinciding with the Cold War the United States lent its support to the perceived less communist PNC an in combination with a less than fair election Forbes Burnham came to power and took Guyana into Independence in 1966. yet as Guyana gained political Independence it was far from being economically independent most substantial economic decisions continued to be made by those in other countries as a vast percentage of the economy was owned by large foreign companies one company for example british-based Booker McConnell controlled 85 percent of the nation's sugar production which was a third of the economy 13 of the entire Workforce and it took in almost 40 percent of guyana's Foreign Exchange earnings and it wasn't just sugar just two American and Canadian bauxite mining companies raked in an additional 45 percent of the nation's export earnings many Guyanese argued these companies not only exploited the the nation's resources but were actively blocking the nation's development due to their overwhelming influence over the economy despite what the U.S and UK had hoped for Forbes Burnham agreed and in 1970 he proclaimed Guyana to be a socialist Cooperative Republic what was meant by this is that the government would require at least 51 ownership in any business venture in theory this would curtail foreign domination of the economy while still leaving room for the much needed foreign expertise managerial experience and required investment in practice the foreign company scoffed at the idea of shared ownership and refused to concede to requirements over the next decade the government then nationalized all major foreign-owned companies eventually having direct control over 80 percent of the economy initially it appeared as though these efforts had worked elevated Global sugar and bauxite prices allowed the government to increase spending which resulted in elevated economic growth yet by the early 80s the favorable commodity prices that propped up the Guyanese economy declined sharply despite this the government continued to increase spending choosing to take on International debt to finance its agenda the result was an economic death spiral not only did the economy contract as a result of declining prices for its main exports but as the government had nationalized the major corporations they crucially lost the skilled foreign management teams in the steady supply of investment necessary to maintain the major industries as a result productivity took a nosedive everything from bauxite sugar and rice production declined significantly which accounted for a vast majority of the economy and foreign currency earnings instead of addressing the root issues the government took on more debt and opted to place stringent controls on the flow of currency to avoid a financial crisis conditions deteriorated so rapidly that between 1976 and 1981 72 000 or a tenth of Guyana us entire population fled the country and while the government continued to take on debt eventually mounting to more than six times the GDP money was diverted away from productive Investments like infrastructure health care and education further worsening the nation's standards of living and making the prospect of paying off its debts in the future Impossible by the late 1980s faced with looming bankruptcy and immense International and domestic pressure the Guyanese government enacted an ambitious economic recovery program that dismantled the socialist economy broke its decades-long self-imposed isolation and eventually privatized large portions of the state-owned economy along with imf-backed austerity measures the country avoided a Calamity at the same time in 1992 elections deemed fair by International observers saw Indo Guyanese Cherry dragon come to power who unlike a few decades earlier was now in support of democratization and economic reform however the most critical event that allowed these reforms to happen was the death of Forbes Burnham who for decades ruled with near absolute power had refused to omit the failings of his Cooperative Republic and allowed the situation to spiral out of control while in the aftermath of Reform Diana returned to modest growth and the dire economic situation had stabilized What followed was far from ideal the indo-gynese government in its 23-year long rule was mired in nepotism and Corruption and allowed for rampant smuggling and organized crime to take root a continued lack of opportunity meant that 80 percent of skilled workers migrated away he's still over Reliance on exporting raw resources stunted development while infrastructure education and Health Care continue to be neglected and to make it worse the bitter in ethnically polarized politics continued to worsen undermining the stability and the effectiveness of the entire system Itself by the mid-2010s Guyana was the third poorest nation in South America forty percent of the population lived in poverty and it now had the highest suicide rate in the world it appeared as though too many obstacles stood in the way of Guyana making substantial improvements leaving its citizens to suffer or move away in 2015 a discovery was made that forever changed guyana's fate after 80 years of speculation and seven years of exploratory drilling Exxon Mobil discovered a literal ocean of oil sitting beneath guyana's Coastal shelf in fact so much has been discovered in the region that it represents two-thirds of the world's total oil discoveries over the last seven years in just a short period of time Guyana went from zero estimated oil reserves to 11.2
billion barrels which today is valued at almost a trillion dollars pumping only began in late 2019 yet by 2027 Guyana is projected to be producing over a million barrels per day making it the largest producer of oil in the world on a per capita basis dwarfing the outputs of Saudi Arabia Norway the UAE Qatar and Kuwait as foreign investment continues to flow in and is oil production ramps up guyana's economy is going to 2 and already has started to Boom since production began Guyana has seen growth rates of 43.5 percent and 57.8 percent by far the fastest growth of any other Nation over the last three years and it is now possible that by 2027 Guyana will have a GDP per capita of 35 000 which would place it on par with Italy not only that but guyana's government will be receiving up to 10 billion dollars a year worth of oil Revenue which for reference is double guyana's total economic output in 2019 and by some estimates the total revenue the government will receive by 2035 is 157 billion dollars which is almost two hundred thousand dollars per citizen this sheer amount of money could in theory fix all of guyana's economic problems and many residents hold out hope for this possibility especially in the face of the severe hardship they have had to endure over the last half century yet others fear that the money will never trickle down to ordinary citizens or worse yet that the nation will actually crumble from too much wealth too quickly indeed a quick look at neighboring Venezuela shows how disastrous oil can be for a nation this is called the resource curse which has been talked about extensively on the channel but in essence when a nation particularly a poor or developing one comes into or starts exploiting a resource that generates vast amounts of Revenue quickly a few negative consequences often start to spiral out of control the first is the local currency starts experiencing a dramatic increase in demand which inflates the exchange rate this makes Imports much cheaper and exports much less competitive on the global stage this has disastrous consequences for local Industries and companies which are not directly dealing with the resource in question as these domestic Industries get bankrupted and as production ramps up the economy becomes ever more Reliant upon single resource the government often looking to gain legitimacy continues to Cave to public pressure to spend money today at the expense of tomorrow yet when prices eventually decline the entire economy is thrown into chaos yet worst of all the resource curse almost always corrupts weak governments Who start enriching themselves at the expense of the nation's citizens time and time again this has happened to developing nations across the globe and none more emblematic than guyana's neighbor Venezuela who possesses the largest reserves of oil on the planet was once the third richest nation in the world and yet today competes with Haiti for being the poorest nation in the Western Hemisphere so does this mean Guyana will share the same fate and if not what is it doing to avoid the resource curse Guyana having watched Venezuela descend into economic chaos over the last 50 years has taken some notes firstly it has planned on funneling large amounts of oil Revenue toward very productive Investments this includes dramatically increasing the quality and capacity of the educational system including the promise to make it all free to complement this Guyana is actively overhauling the Health Care system with the aim to become a net exporter of healthcare services to the region this in theory would act as an important source of foreign currency earnings in the future while at the same time substantially improving the health and therefore the productivity of its citizens adding to this historically Guyana has had a significant disadvantage because of its harsh climate and geography with 87 percent of the entire nation covered in dense forests infrastructure is more expensive and harder to maintain however with the windfall of oil Revenue Guyana seeks to build a sprawling Road and Highway Network work to not only connect the cities in the more remote regions of the country but to also establish better links to its neighbors along with a new deep water Port which will boost the cargo capacity of the nation the aim of all of these projects is to make Transportation costs cheaper reduce transit times and overall boost the nation's economic competitiveness yet maybe the most important action Guyana has taken in attempting to achieve higher productivity is its investments into massive new energy projects which includes hydroelectric power plants solar farms and most critically a 300 megawatt gas-fired power plant which when combined with a new oil pipeline Guyana will be able to utilize its own oil production to substantially reduce energy prices this will make its goal of switching to value-added manufacturing more viable in turn bringing in more revenue and better jobs there has also been progress toward making Guyana a service economy specializing in call centers and it key something it has a key advantage in as it is the only English-speaking South American Nation yet the most critical action Guyana has taken in working toward not becoming another Venezuela is that it established a sovereign wealth fund with strict rules on saving and spending the massive investment fund which will see all government oil revenues go into has rigid guard rails governing just how much money can be used each year in theory it has been set up to avoid washing the economy in too much money too quickly meaning the exchange rate shouldn't hyperinflate which will make it easier to grow and diversify the rest of the economy at the same time it will safeguard against short-term fluctuations in the price of oil all the while saving and investing money for future generations to use all of these efforts if they go as planned are likely to make Guyana a very prosperous nation in just a few years however all of this hinges on whether guyana's political institution can remain intact unfortunately though guyana's government and politics have a history of corruption and inefficiency and the fact that it's largely ethnically polarized only makes it less stable this will likely lead to making unsound economic policies to Pander for votes including but not limited to financially supporting money draining state-owned sugar plantations in order to attract more Indo Guyanese votes which under now president Irfan Ali has already happened multiple times and outside observers fear that the wealth fund's relative lack of transparency could provide cover for less than ideal utilizations of the oil money and when combined with relatively weak Law and Order property rights and the enforcement of legal contracts for an investment in sectors other than Mining and oil are likely to remain subdued it also does not help that Guyana is in a race against the clock to take advantage of its oil Lottery by some estimates Peak Global consumption of oil will happen in less than a decade which thereafter would significantly weaken guyana's Revenue potential Guyana therefore needs to extract as much oil as quickly as possible while diversifying its economy and investing in its people while at the same time ensuring that its institutions can't be tempted in degreed from the mountain of cash that's already starting to pour into the country so far it appears to be doing things right but it's too early to tell and history has not been kind to nations in similar circumstances in a decade Guyana will either look more like Norway or Venezuela both of which I already have videos on if you are interested guyana's name translates to land of water but as it transitions to the land of oil only time will tell if that benefits its people foreign [Music]
2023-01-25 20:25
