Saturday, January 21, 2006


Big Business Should Invest More In Rural Communities

(By Dr. C.A. Johnson)

In most of the developing states, especially those that depend on agricultural products as a means of generating domestic and foreign revenue, private monopoly companies are reluctant or at best, hesitant to invest in materially-poor communities. The fact is that the goal of any business is to generate a profit, not to count its losses through poor investment. Management of large companies however, should not regard ploughing resources into poor communities as a “bleak vision.”Over the past 15 years much of this situation has occurred in the global economy and has caused middle-income economies such as Guyana to be deprived of the innovation and technology that big businesses bring with its resources. Here, a balanced approach to investment is being advocated or better still, one based on sustainable development – balancing the demands of customers with the protection of the natural environment, not forgetting fairness and economic parity are integral to the investment planning and development. Guyana has a fair measure of appreciable economic growth, but how much of that growth has been attributed to rural productivity? There is no real figures to suggest how rural agricultural, semi-processing or services sectors growth is measured. This is important to determine gaps in production and productivity and the requirements needed to redress such imbalance. If the wider Guyanese economy is doing well and the rural economy in particular is underperforming, this situation can give rise to deflation and it means that the apparent stagnation of other agricultural products such as citrus, vegetables, ground provisions, among others, will require examination. Thus the value of big business investment, along with capacity support from government, is an absolute necessity. Deflation in any economy of any size usually threatens and exacerbates the gap between rich and poor, leading to incidents of economic chaos, governmental collapse and civil unrest, some of which Guyana has experienced over the past few years. Civil unrest is not a not a recipe for both internal or external investment, but with the right mechanism in place, funds required to build basic infrastructure such as bridges, farm-to-market roads, irrigation canals, booster services in local markets and support for micro business advertising can help a long way to defuse the plight of the rural and suburban poor Guyana. It is known that some large companies in Guyana especially, public entities, through organizations such as the rotary, Lions Club International, the Jaycees and other civic bodies, do show some of form of altruism, but more is needed. As someone who has been associated with civic causes, I am acutely aware of the limited funds civic organizations can muster at any one given time and therefore mainstream businesses are often needed to input into local economic initiatives. The general perception is that large concerns find it difficult to expand, and many are risk averse, slowing investment and pulling back from either non-developing or gradual emerging markets. For instance, how many private companies have thought about investing in Buxton, East Coast Demerara, Belladrum, West Coast Berbice, Soesdyke on East Bank Demerara and the outskirts of New Amsterdam or East Bank Berbice – areas where historic poverty threatens to scupper the lives of hundreds? Let us however, consider a brighter scenario where studies in other parts of the world have shown that driven by private investment and widespread entrepreneurial activity, the economies of developing regions have grown steadily, creating jobs and wealth and bringing hundreds of millions of new consumers into the global marketplace every year. China, India, Brazil and, gradually, South Africa are today’s new engines of global economic growth, promoting prosperity around the world. The resulting decrease in poverty produces a range of social benefits, helping to stabilise many developing regions and reduce civil and cross-border conflicts. The threat of civic unrest and conflict recedes. Private companies can expand rapidly in an era of intense innovation and competition, and both of these scenarios are possible in Guyana. By helping and supporting commerce and development at the bottom of the economic pyramid, large companies could radically improve the lives of thousands of citizens in rural communities in Guyana and help bring into being a more stable, less dangerous world. Achieving this goal does not require businesses spearheading local or national social development initiatives for charitable purposes. They need not only to act in their own self-interest, since there are enormous business benefits to be gained by entering developing markets. With a carefully thought-out strategy of selective incentives for businesses investing in rural regeneration, the government can unleash the entrepreneurial talent of many young and matured rural citizens, some of whom are no longer interested in farming pursuits because of either poor returns or lack of available agri-extension (officer) support. In other cases, young people do not possess the experience, the patience and the investment portfolio to pursue agriculture in a commercial way, let alone (basic) subsistence farming. Rural citizens are more keen to compete in the ordinary buying and selling of products that attest to their latent enterprise skills, which often need harnessing and developing by a financial “godfather” or “godmother.” National business or trade associations, along with neighbourhood co-operatives and districts, can spearhead this initiative by identifying the needs of rural communities by prioritising locations that are vulnerable to economic suffering, social decay, skill deficiencies and non-investment. Setting up various committees within various rural communities is also an ideal way of dealing with the issues, since a process of consultation will be useful in obtaining factual information and data to proceed. Of course, no one expects these companies to solve totally, the plight of the rural poor in Guyana, but their very involvement can encourage and boost confidence among these communities. Through corporate involvement, a more targeted approach to financial support can allow for improvements in the governance of rural and suburban areas. Prosperity can come to the poorest areas only through direct and sustained involvement of companies, working with government and non-governmental organizations and private individual, committed to relieving poverty and raising the standard of living among the underclass in Guyanese society. Equally, businesses can further enhance their own prosperity and reputation as socially responsible citizens, in the process.

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