Henry Jeffery, Stabroek

‘Work to rule’ and the rush for economic growth.

By  stabroek news. may 15, 2018

Apart from theatre intended to appease supporters of the coalition government, I am struggling to understand the case being made against former finance minister Ashni Singh and former head of NICIL Winston Brassington.  Succinctly, by my comprehension, Singh and Brassington are charged with public misconduct for at various points in their ministerial and executive careers selling pieces of government land in and around Liliendaal below the valuation price or without doing a valuation.  In their defence, the accused claim that they did nothing wrong as their actions were in keeping with the law and/or common practice and were agreed to by Cabinet and the NICIL board.

With regard to practice, there is an aptly titled letter ‘Many of the land sales by the Privatisation Unit looked at multiple development considerations’ in which Mr. Brassington gave examples to further buttress the defence’s contention (SN:2/5/2018). And leaning upon Odeen Ishmael’s ‘The Rush towards privatization 1989-1992’, former attorney general Anil Nandlall in support of the accused directed us to the late president Desmond Hoyte’s approach to privatisation, which he claims was highly untransparent and disadvantageous to Guyana. He claimed, for example, that many of the privatisation agreements were signed by Hoyte’s confidential secretary and that Demerara Woods Ltd was sold in 1991 to Lord Beaverbrook, who also obtained a 50-year lease for 1.1 million acres of rain forest, for £9.7 million. After some mergers, in 1992, Demerara Timbers was valued at £74 million and the rainforest concession alone was estimated at between US$160 million and US$206 million’ (SN: 5/5/2018).

Before we go further, let me make two points. Firstly, there is a school of thought that suggests that we should leave the police and the law to deal with this matter and if the accused are not guilty they will eventually be vindicated. The problem with this kind of formalistic theorizing is enormous, but given our concern and since the historic Malaysian election that brought 92 year old Mahathir Mohamad back as prime minister is in the news, it may be appropriate to remember how Mohamad utilised the legal system to imprison his erstwhile protégée Anwar Ibrahim on widely recognised trumped-up sodomy charges. And it was the judiciary that put and kept Nelson Mandela in jail for decades and was responsible for what happened to Mark Benschop and others. The only way to keep social institutions in line is to persistently chide them for all perceived and actual wrongdoing before or after their deliberations. Secondly, in goal-orientated public or private management environments, written rules need to be viewed essentially as important guides to action. It is for this reason that in the smallest companies ‘work to rule’ is a disruptive industrial relations tool with negative consequences. One of my own experiences below suggests that any judgment about a particular action must take into consideration laws, practice, goals and exigencies.

When the PPP/C came to office in 1992, the Hoyte regime had already allocated substantial pieces of housing property to developers and individuals, but given that wages were extremely low – the minimum in the public service about $3,120 (US$25) per month – no real housing development was taking place. The ministry of housing was closed, the developers were not building and squatting, which clearly reflected a dire national need, was rife. The government had no resources to restart in a meaningful way housing schemes with all the necessary infrastructure and there was frequent resort to the useless and unsustainable flooding of lands and interventions by the security forces to prevent squatters. Everyone appeared to agree that allowing random squatting (even relatively rich people were occupying government land) was unacceptable so what was to be done? Well, the Central Housing and Planning Authority (CHPA) took the decision to allocate to property-less people essentially free land and to take the $50,000 per lot they then paid to do the necessary designs and surveys and provide whatever limited infrastructure it could and gradually develop the schemes over time. Now this was illegal, unconventional and dangerous and to overcome the illegality Cheddi Jagan suggested that the law be changed to the lower standard.

For me the main problem was that, like squatting, the lower standards could contribute to a health epidemic. The most important thing was to get the schemes up to at least the minimum acceptable/legal standard as quickly as possible and by my reckoning changing the law would most likely have obstructed this process. For, once the laws were changed not only would it degrade the entire housing process but one important level of pressure on everyone to urgently bring these schemes up to the necessary standards would disappear. Political fallout is the standard consideration in the political process but so far as I was concerned in the event of some epidemic the fallout would have been similar if the government legalized the lower standard or not. Indeed, the outcry might be greater if the government deliberately lowered the standards. The law was not then changed but for years every time the rain began to fall one became anxious about the possible mass outbreak of some disease. With some luck the schemes gradually become more and more developed and the lives of thousands of people have been made better.

Regardless of what one may think of Desmond Hoyte and Bharrat Jagdeo, they were confronted by political difficulties that fundamentally affected the lives of all of us. In the first 7 years of the Hoyte regime the economy grew by an average of -2.4% of GDP and average foreign direct investment (FDI) for the same period was less than 1% of GDP per annum

(https://www.theglobaleconomy.com/compare-countries/). Hoyte was poised to face democratic elections in 1992 thus what Odeen Ishmael viewed as his rush towards privatisation was essentially part of the general dash for investment finance to grow the economy. In 1992, the year the PPP/C took government, Foreign Direct Investments (FDI)  was at its highest (39.81% of GDP) and the economy had already begun its rise: 5.8% of GDP in 1991, 7.8% in 1992 and 8.25% in 1993 etc. The political opening and economic development spurred by the PNC induced much enthusiasm and the feeling that ‘Guyana was coming back’.

However, the period of growth initiated by the PNC ended in 1997 and for the next 8 years the economy only grew by an average of about 1% of GDP and FDI went as low as 3.52% of GDP in 2003. It was the PPP/C’s turn to rush for economic growth as the 2006 elections beckoned. For example, yesterday Lincoln Lewis claimed ‘Berbice bauxite operations were given away to Rusal, ’ (SN: 15/05/2018), FDI never again reached the lofty heights of the Hoyte period, the economy was rebased to 2006, growing by about 70% overnight and of course the regime did not appear unreceptive to ‘funny money’.

I believe that in a more cooperative political framework this stop and start approach to growth and development would have been unnecessary. That said, from the beginning of our modern political history, where the sale of government assets, particularly land is concerned, policy considerations have always trumped price.  Almost from scratch, the housing programme grew to become one of the most successful initiatives of the PPP/C regime; Hoyte is still admired even by his detractors for politically opening up the society and turning the economy around, and barring some ‘jiggery-pokery’ and ‘funny money’, Jagdeo did return the country to a reasonable level of growth.

In passing, it might be useful to note that in 2016, FDI fell to its lowest in nearly three decades (1.66% of GDP) and in 2017 the economy tumbled to 2.1% – its lowest rate of growth for about 10 years. Perhaps another rush for development finance contributed to the extremely disadvantageous contract the government signed with big oil.

henryjeffrey@yahoo.com

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