Guyana  Insider View
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INTERVIEW

Lawrence Williams
Governor of Bank of Guyana
  LAWRENCE WILLIAMS
LAWRENCE WILLIAMS
Governor of Bank of Guyana

Could you provide a brief profile of your professional career and indicate how you intend to use your professional attributes to enhance the management of the Bank of Guyana?

Mr. Lawrence Williams: I assumed the position of Governor of the Bank of Guyana in June of this year (2005) by virtue of appointment. Prior to that, I was acting Governor for about six months after holding the position of Banking Manager for a period of about ten years. In terms of the organizational structure of the Bank, there is a Board of Directors, then the governor who is appointed by the President, followed by the deputy governor and banking manager respectively who are appointed by the Minister of Finance. Immediately below are the directors of the respective departments of the Bank. I've spent almost all my working life in the central bank starting out in 1979 at the supervisory entry level and gained experience by moving from one department to the other and at the same time moving upwards. In the early period, I served in what was then called the exchange control department. Guyana had a past that was plagued by severe foreign exchange constraints which necessitated very rigid exchange control. During that period, I also did a stint in what is called the export development fund, a World Bank-funded facility managed by the central bank which provided foreign exchange to the business community, primarily exporters, to finance importation of raw materials, packaging material and intermediate goods for the production of exports. The Export proceeds were captured and deposited to replenish the fund. Later, I moved on over to the debt management department where I spent some time dealing with both external and domestic debt. This was followed by placement in the operations department, which covered matters in relation to banking, currency and money market. Thereafter, I was appointed banking manager, and the rest is history.

What has been the highlight of your career so far?

My appointment as governor. It's an accomplishment that I never expected when I started out in 1979 although I did think I'd be promoted to a very senior position at some stage.

As governor of a country's central bank, you play a pivotal role in interacting with investors… How do you perceive your responsibility as governor of Guyana's central bank?

Well, it's a huge and very challenging responsibility but I am confident that with the support of the staff and the experience I've garnered over the years, I'll be able to deliver effectively.

What is the current state of Guyana's economy from your perspective as central bank governor?

I would say the local economy has much potential for growth but unfortunately; it has not been growing at the pace that we would prefer. It's an economy with enormous resource endowment waiting to be explored and exploited. It is my hope that we will be able to create an environment that attracts investors so that the level of growth and development to which we so eagerly aspire will be realized.

What do you perceive to be the main barriers to a more advanced pace of growth?

While lack of investment is among the foremost factors, the environment for investment is an issue that cannot be ignored. Creating the proper incentives for investors particularly in view of the fact that there are other economies that are competing for the same investment dollar is vital. Upgrading of the legal system to ensure the speedy enforcement of contracts is necessary. Investors who have researched the local legal system have not been encouraged by the backlog of cases pending before the country's courts. The high cost of energy could be an investment deterrent as some industries are energy-intensive. The country's tremendous potential in the hydropower area needs to be explored and once the energy can be produced at a competitive price, it will be able to attract increased investment in the primary products, agro-processing and manufacturing sectors.

As you would be aware, the emergence of CSME has, according to reports in the local press, elicited a fear among members of the private sector that Guyana's business community is not prepared to compete in a regional market system for reasons such as uncompetitive electricity costs; on the other hand, in meeting with the private sector members, the feedback has been very positive since they view CSME as an area of opportunity for advancement. Could you balance these two opinions against your own using your knowledge of the economic current circumstances of the country?

On a long-term basis, Guyana has the capacity to employ its comparative advantage in the agriculture and mining sectors to develop the corresponding industries and produce value-added products. Guyana also has huge potential in the forestry sector with a virtually untouched interior and the related industries, which could develop further within that sector such as furniture manufacturing. The CSME would provide local and foreign investors in Guyana with a significantly larger market than is currently available to them, and this would hopefully enable them to concentrate on developing value-added products and a better identity (through branding) to accelerate and guarantee access to the global marketplace. But there are widespread concerns among members of the private sector primarily as regards Trinidad and Tobago (T&T) because that country has natural gas and cheap energy which it has effectively utilized to develop and support a thriving manufacturing sector. Naturally, they will be starting off with an advantage. Some businesses will be concerned that they are not price competitive at this time and may be swamped by T&T but I believe that given some time, certain businesses will recover and achieve parallel competing status within a short time.

It appears that some of the synergies that could evolve from CSME are not adequately understood, and consequently, not adequately received among some CARICOM investors. Would you agree with this perception?

Yes, to some degree. For instance, in Guyana, several of the large companies are still family-owned and their management would therefore be reluctant to go public or consider a merger/alliance, with strategic partners despite the fact that such a move could positively re-position their economic status.

Could you provide a brief assessment of the current administration and the manner in which they have been conducting their administrative duties since assuming the leadership role in the country?

The president (Bharrat Jagdeo) came to office with a lot of goodwill. He is the youngest political leader to become Head of State in Guyana and this contributed to the goodwill. Additionally, he was born after the ethnic conflicts of the early sixties and therefore was not deemed to be saddled with such baggage. However, it appears that some of Jagdeo's initial goodwill has waned notwithstanding some of the infrastructural improvement that has been accomplished 'under his watch'. The political environment in this country is a very tense one, almost like 'walking a tight rope' and I think this is primarily because the country has two major political parties that are split along ethnic lines. This phenomenon appears to affect decision-making and the response(s) to decisions of the ruling party. As a result, the pace of decision-making has been consistently hindered and there is always an issue of perceived prejudice towards one group or the other. In 1998, the central bank legislation was amended to provide greater autonomy and in November 2004, it was further amended to enhance its governance systems. However, since the Bank is a public sector institution, complete independence does not exist and we are required to operate within a certain framework. Moreover, the appointment of senior officers of the bank and their respective term(s) of office are decided upon by the government. The governor, deputy governor and banking manager are appointed for periods not exceeding five years.

Among the objectives of the central bank is to achieve and maintain price stability, an issue that has been prominent within the last year. What is your position for the future?

It's a role that is assigned all central banks and one which this bank intends to discharge as effectively as given circumstances allow. The central bank has managed to work in conjunction with other economic players in the economy to accomplish relative stability.

How would you describe the liquidity issue?

At the moment, there is the phenomenon of excess liquidity in the system, and the central bank is obliged, based on its responsibility regarding price stability, to take measures to ensure that the liquidity in the system does not promote inflationary conditions. Towards this goal, we have been seeking to influence credit conditions in the market through open market operations in order to absorb some of the liquidity when necessary.

How would you introduce the banking sector and the need for development with regard to a better approach to investment capital?

The banking system in Guyana is still relatively under-developed and we're examining how to improve competitiveness, performance and the range of services that can and should be provided by the banking system. The commercial banks have evolved from a system that provides financing primarily for trading services and are not geared to and have shown very little interest in granting loans on a long-term basis, and this is where perhaps the quest for a development bank has evolved. Earlier this year, a development bank was licensed so that there is some attempt to introduce facilities that could possibly bridge the development gap.

Regarding your statement about raising the level of competitiveness within the sector, are you also envisaging inviting foreign investment in the sector, inviting new banks to do business in Guyana?

No. Over the past ten years, it has been our expectation that the new entrants to the sector would have contributed towards bringing new technology into the industry. There is one bank that has been around for a long time and from which the government has sold its shares to the Trinidadian-owned Republic Bank. They have introduced a significant amount of innovation in the banking sector and it's the intention that by forming strategic alliances with foreign banks, some of the other local banks could improve their technology and quality of service. For instance, The Bank of Baroda which is a subsidiary of the Bank of Baroda in India has been operating in Guyana a long time, and it is hoped that some of the efficiency that the Indian banking system is reputed to have will eventually be assimilated here. The Bank of Nova Scotia is Canadian and they have already, they have lodged requests with the central bank to introduce innovations in the banking system that will have a positive impact on the payment system.

The banking sector is always the leading sector in any economy. For instance, one private sector official noted that the top ten or fifteen companies in the Caribbean are all banks. Do you believe the banking system in Guyana could experience future growth or would you say there is need for more investment in technology?

There is definitely need for more investment in technology. We note this impediment by the extent to which the economy is still heavily reliant on cash thus emphasizing the need for more non-cash means of payments and settlement. There is the need to orient our population and educate them about the alternative payment mechanisms and the banks need to mount aggressive marketing campaigns and ensure that the infrastructure is in place to support some of these new ventures.

You mentioned export… The local entrepreneurs have encountered unexpectedly positive feedback at the international trade shows they participated in and this indicates that markets exist for Guyanese products… How would you recommend that these entrepreneurs improve the access to export markets by improving the quality of their products?

Aside from the traditional products, good packaging and marketing strategies for the other products need to be emphasized, and proper contact contracts with potential importers must be secured by working alongside personnel with intimate understanding of the target markets to provide appropriate advice on the issues of packaging and marketing. It's easy to start by targeting those markets where sizeable Guyanese diaspora may be present, but local exporters need to aim beyond that type of captive market because increasing market share is very important.

What are the values you would like to see identified with Guyana?

I would want to be recognized as having come from a country that despite being small has made its mark on the international scene. Further, that it would be noted that the Guyanese have made significant contributions globally, and possess tremendous skills and are honest in their approach to every aspect of life. Also, as a country that has been able to use its abundance of natural resources not only for its own benefit but also for the advantage of its regional partners.

Governor, thank you very much for your comments.


 
 
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