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