The 1999 Outlook Survey coincided with the end of a seven-year period of outstanding economic growth under the Economic Recovery Programme initiated by the People’s National Congress Government and continued by the PPP Civic. The setback, partly caused by the El Niño weather phenomenon resulted in the depreciation of the Guyana dollar which along with political tensions contributed to the deteriorating performance of local businesses in 1998.

The poor performance continued into the first half of 1999 which also witnessed a fifty-seven (57) day strike by public sector workers. However, spurred by phenomenal growth in sugar, the economy recovered in the second half of 1999 growing by over five percent compared with two percent in the first half of the year.

In the 2001 Survey, respondents have once again expressed a great deal of pessimism about national issues affecting the state of the economy. Only forty percent (40%) are confident or fairly confident that the economy will improve. Despite the low level of confidence in the outlook of the economy, seventy-seven percent (77%) are confident about their own company’s profitability increasing in 2001. A similar view was also expressed in the 1999 Survey which emphasises respondents’ confidence in their own businesses.

There was only one issue - the privatisation of the GEC - which contributed to overwhelming optimism. Issues over which overwhelming pessimism was expressed include crime/drugs, smuggling, corruption and the value of the Guyana dollar. Although optimists/ pessimists about the Presidential change was three to one, sixteen respondents did not think the change in the Presidency would make any difference compared with twenty who were optimistic. Very few of the respondents saw the Presidential change as an issue that would affect the success of their company. Despite this, there were many issues which they wanted to see the Government address - sixty-four percent (64%) - would like to see a reduction in direct tax rates whilst large percentages are also looking forward to reduced exchange and interest rates.

When asked about the major issues impacting the success of businesses in the past year, Survey respondents identified exchange rate (40.6%), political stability (risk)(37%), Government policy (34.2%), inflation (33.6%) and lack of confidence in the economy (32.6%) as the top issues. The views expressed this year were very similar to last year’s responses though Government policy was given a higher ranking and only two of the top five issues are of a financial nature as compared to four last year.

A great majority of the companies surveyed indicated increased expectations in turnover (36 companies or 80% percent) and profitability (35 companies or 78%) in 2001 despite their gloomy outlook for the economy. Companies expecting turnover to rise base this expectation on a combination of factors including productivity, competitive pricing, bringing new product/services to market and product/service improvement.

If companies find it necessary to cut back on resources, the key areas identified for cuts are their capital investment programmes (35%), advertising (25%), public relations (23%), developing new markets (22%) and research and development (21%).

The source of capital that companies are most likely to use is cash flow/operating profit (28%), long-term bank debt (16%) and short-term bank debt (10%). There was a noticeable decline from 29% to 16% in the number of respondents who would opt for long-term bank debts as compared to the previous year.

Even as the Government of Guyana and the Private Sector Commission advance the concept of a Guyana Stock Exchange, businesses continue to demonstrate a reluctance to dilute control even if spreading the risk and ownership increase the size of the pie. A very small percentage of respondents are planning a public issue of shares whilst none is planning rights issue of shares.

Those companies that are planning to raise capital (71%), identified the following as the main reasons for raising capital:

• To embark on capital expenditure/ expansion program – 29%

• To fund new products/ services – 27%

• To fund current operations such as working capital – 20%

• To retool – 18%

• To fund diversification – 18%

The preparation of financial information, electricity supply, the exchange rate, cash flow management, enhancing customer service and gaining greater market penetration were the operating, financial and marketing and sales issues respectively that are most important to respondents’ businesses. Environmental issues, taxation and access to capital, foreign competition and smuggling are the issues that were of least importance to the respondents.

In terms of size of workforce, fifty-three percent (53%) reported an increase in the size of their workforce and thirty-eight percent (38%) in the number of professional staff. Six percent showed a decrease whilst for fifty-six percent (56%) of the companies, the number of professional staff employed neither increased nor decreased.

Thirty-three percent (33%) of the respondents expect that their staff levels will increase in 2001 whilst twenty-nine percent (29%) expect to downsize. The majority of companies shared financial results with their employees (67%), offered a company-wide bonus programme (77%) and offered other incentives to employees (73%). Fifty percent (50%) had an employee information participation programme. Ninety-one percent (91%) of the respondent companies felt that it was absolutely necessary to update and educate employees on technological trends. Only a minimal number of the companies surveyed (11%) had equity participation for its employees.

Encouragingly training is now accorded a higher priority than in previous years. With the country’s education system still facing difficulties, a high level of theoretical and practical training is necessary to equip newly recruited staff to perform effectively. In previous years cut back in employment was one of the most favoured options for the chop. Recognising the challenges of human resource problems, respondents now prefer to retain staff even during difficult times.

On a weighted basis, thirty-six percent (36%) of the respondents felt that upgrading technology was the number one strategy for growth. Thirty-three percent (33%) identified new products/services development, thirty percent (30%) believed in investing in PR & advertising programmes and twenty-six percent (26%) believed in expanding into new, domestic markets and improving their existing products.

Only forty-nine percent (49%) of the respondents this year felt that they were subject to a great deal or fair amount of external competition as compared to a majority of sixty-one percent (61%) last year. Fifty-one percent (51%) felt that it had little or no impact on their businesses as compared to thirty-seven percent (37%) last year.

Twenty-one (21) respondents or forty-seven percent (47%) expect no change in the level of external competition as compared to thirty-eight percent (38%) in the previous year. Eighteen (18) companies or forty percent (40%) anticipate increased competition whilst only one company expected it to decrease. Two companies did not know what competition would be like in the upcoming year.

The following pages offer a more detailed evaluation of the responses.