British Guiana - Report of exploratory mission

OTHIG coff! T.A.-1 SIm T Almm Dffm RESTRICTED This report is restricted to use within the Bank. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT of EXPLORATORY MISSION to BRITISH GUIANA June 26, 1952 June 26, 1952 REPORT OF EXPLORATORY MISSION TO BRITISH GUIANA Submitted by: Patterson H. French and Jacques Torfs The Governor of British Guiana requested the Bank on May 19, 1952, through the Colonial Office and the Executive Director for the United Kingdom, to send representatives there to discuss the organization of a Bank mission to make a general economic survey of the colony. In response to this request we were in British Guiana from June 4 to 13. In addition to conferring at length with government officials and others, one or both of us visited the principal centers of mechanized rice pro- duction and distribution, cattle raising, lumbering, gold mining, and bauxite extraction. We also conferred with the Secretary-General of the- Caribbean Commission and his principal assistants in Trinidad on June 3 and Mr. Torfs talked with the Development Commissioner and the Economist of the Regional Office of the Colonial Development and Welfare Organiza- tion in Barbados on June 1 and 15. Our analysis of the situation in British Guiana is presented in the following sections. In brief, we recomand that the Bank send a small mission emphasizing the economic, fiscal and agricultural elements of a development program, to spend a month to five weeks in British Guiana, commencing in the first part of October. We believe that a mission of this kind can perform a useful service. While various projects have been considered or planned and many technical studies have been made, there has been no adequate work on long-range development which would estimate the investment required, the amount of resources available, the allocation of resources among major economic sectors, or the time factors involved in a development program. All of the officials with whom we talked were eager to have the help of a mission on the job of over-,all programming and gave us the impression that a re- port would be well utilized. We told the government that we could make no commitment but that we would hope that the Bank could, quite promptly, indicate to them whether or not it would be prepared to send a mission. We then went ahead to discuss specific arrangements for a possible mission; it appears that these could be worked out without difficulty, along the lines of the Bank's usual policies. -2- The Situation In geographic circumstances and potential resources,-British Guiana is similar to Surinam., Its population of 10,000 (predominantly of East Indian and African origin, in about equal proportions) is concentrated on a narrow strip-of lowlands along the coast and is primarily engaged in the cultivation of rice and sugar.. The interior consists of jungle and an area of poor grassland devoted to cattle raising.- There is also an important bauxite-extraction operation, some exploitation of timber, and gold and diamond mining. The economic position of British Guiana is,..however, much less favorable than that of Surinam. Its population is twice that of its neighbor and-its cultivated area perhaps three times as large, but its national income is only 50% higher and government expenditures are not higher than in Surinam. Apparently, prices received for bauxite, sugar, and rice exports -are not favorable, taxes levied on metropolitan or foreign-owned corporations are low, and comparatively little financial assistance is being extended by the metropolitan government. A relatively small amount of developmental work is already in process. Several irrigation and drainage schemes are under construction. A large rice warehouse is being built. A.slaughterhouse and refrigeration plant to serve the savannah area of the interior is under way. Experimental work in agriculture is being done and new experimental areas are being talked about. A small amount of road surfacing is being done each year, and a few new air strips are being opened in the interior. Additional development possibilities are substantial and technical studies of a number of development projects have been made in recent years. The most ambitious studies are those made by Mr. Hutchinson, a British engineer, for opening up or improving approximately 1.3 million acres of land in the coastal strip through extensive projects for water diversion, irrigation, and drainage. (The area now under cultivation ib about 200,000 acres.) The total cost of these projects, according to Hutchinsonts estimate which might be too low, is U.S. $40 million. The new area would be used largely for rice, with some sugar, truck crops, pastures, and perhaps cotton. Some study has also been devoted to a paper and pulp mill in the interior to use a promising tropical wood species (wallaba);, a new rice mill in the Berbice district; a coastal highway to replace both-the present railroad which operates at a deficit and the present coastal road which is costly to maintain; and penetration roads to the interior. Among other subjects which need attention are a program for the construction of schools, hospitals and low-cost dwellings, improvement of the harbor of Georgetown, and equipping the ferry-boat services in several of the principal rivers with modern ships.. It is clear that investment needs are very substantial and that a well planned investment program would-yield great benefits to the colony. The government has not, however, attacked the problem of formulating an over-all program. The necessary economic information for this kind of planning is probably available in a raw state but no work has been done to provide the data necessary to appraise the rate at which development and social investment can appropriately take place, to determine the economic adequacy of the various projects and to pass judgment on their relative priorities. Indeed, the local government has no economic department and such statistics as exist are not centralized. A ten-year "development program" was drawn up in 1947 to cover the period 1946 to 1956 but it consists of little more than a relatively small list of emer- gency-projects and provides no basis for further integrated planning. In addition it was our impression that government officials have not been thinking in sufficiently large and affirmative terms about develop- ment. They are dissatisfied, for example, with the amount of government revenues but they have not really attacked the problem of.increasing them. They do not give sufficient emphasis to the importance of larger and more varied agricultural experimentation and demonstration. They do not appear to realize the extent of the investment that will be essential to maintain the present standard of living for the increased population expected, and the importance of starting to make that investment before there is an over- whelming'backlog of necessary projects. At the same time we believe that the government understands the value and importance of formulating an over-all economic policy and investment program. We feel that a Bank mission could make its greatest contribution in this -general economic field. To the extent that specialized technical information is not available in the fields of agriculture, industry, mineral resources and the like, the mission's contribution could be that of indicating the kind of additional investigation needed and pointing out the benefits that might result from it. In anticipation of the possible visit of a survey mission we presented a questionnaire to the government, designed to stimulate the collection of available figures on economic and social matters. Officials there felt that a good deal of work could be done before the arrival of a mission; this would enable the mission to get a quicker start on its work than if the information had to be assembled after its arrival. We feel that it might be worth while to send one economist to British Guiana three or four weeks ahead of the rest of the mission to assist in the final stages of processing the statistical material that might be collected during the summer. Some additional information can .be obtained from the Caribbean Commission in Trinidad and the Colonial Development and Welfare Organization, Regional Office for the Caribbean Islands., in Barbados. Principal. Areas for the Mission's Attention As already indicated., the principal purpose of a mission would be to provide the broad economic outlines of 'a long-term economic develop- ment program. We believe -that a mission might make the following approach to the major sectors of the colony's economy. 1.. Economic and Fiscal Considerations-. The mission should assess the possibilities for the development of the economy of British Guiana in terms of the magnitude of investment needed, the amount of resources that might be mobilized for development, the allocation of resources between the various needs, and the timing of developmental activities. This would involve a general examination of fiscal and budgetary policy, borrowing and debt policy, monetary problems, banking) balance of payments, export and import policies, and related matters. Estimates should be made of total national capital assets, the annual rate of investment needed td provide for annual population gains and for depreciation and maintenance, and the amount of capital available for increases in the per capita income level. Also-, the implications of the execution of these capital works, in terms of additional current government expenditure, should be carefully studied. This examination will provide the principal basis for the for- mulation of a long-range investment program with attention to amounts, priorities, and timing among the principal economic sectors. 2. Agriculture. The principal effort of the.inquiry into agricul- ture should center around such questions as the selection of crops, costs of production, markets and the cost and methods of marketing, and the relation between investment and economic benefits in various kinds of agriculture. Where technical studies have already been made, as on rice mechanization, drainage and irrigation, and improvement of the grasslands of the interior, the mission will need' to assess the present status of the work and make recommendations for action or for further study. One field in which specialized advice would probably be useful is the production of lumber and lumber products from the colony's vast re- sources of timber. Various studies have been made in this field, but adequate attention has not been given to possible enlargement or diversi- fication of the industry. We feel that the obstacles which appear to stand in the way of development could be overcome by the use of proper methods. An effort should be made to determine what methods might be used to enlarge the lumber industry on an economically sound basis, what new activities might be undertaken, such 'as the manufacture of plywood, pulp, and hardboard, and what investment would be needed to bring about substantial economic returns. 3. Social Services. With an annual.population increase of around 2%, or more than 8,000 people, and with health, education, welfare services and housing that are now inadequate in many respects, any development program will have to include substantial expenditures in these fields both for current operations and for capital improvements. It will be necessary for the mission to assemble and analyze the necessary informa- tion to determine the proportion of total resources to be devoted to these fields. h. Transportation. The matter of additional road construction, because of the virtual absence of access to most parts of.the colony except by air or by laborious boat-and-trail travel, is important; One question now being debated in British Guiana is whether-the coastal rail- way should be abandoned in favor of an improved highway. Other questions needing study.are the choice between constructing improved roads and maintaining existing ones, construction of roads into the interior, improvement of river transportation. and ferry services, and the place of air transport in future development. 51 Industry and Power. It is not likely that the mission will need to make detailed technical recommendations in this field. However, some estimate should be made of future power requirements and the mission will need to make some comment on the industrial situation and its possibilities and to make some analyses of the future supply and demand for power. Organization,.Timing, and Operations of the Mission We believe that the mission should be substantiallS similar to the Bank's Mission to Surinam. It might be made up of the following experts, with a recognition that there may be some internal shifting according to the fields of ability of the available candidates: Two general economists An agricultural economist An agricultural production expert A forest products expert A transportation economist An engineer to advise on industry, power, drainage and irrigation. We suggest that the mission go to British Guiana during the first part of October. This would allow the group to assemble in Washington after the Bank's annual meeting.. We believe that.a stay of a month to five weeks in British Guiana would be sufficient. We recommend that one of the economists be sent ahead of the mission, to spend three to four weeks working with officials on the final stages of compiling the data requested in the questionnaire already.submitted to the government. This would enable the'mission to get a quick start on its arrival. -6- The administrative and financial arrangements could be generally similar to those of previous missions. The government would be willing to accept our standard pattern whereby it will pay half the salary of consultants recruited from outside the Bank, plus all local expenses. The government is also prepared to publish the reporti Possible arrange- ments for the payment of local expenses were discussed and appear to present no special problems. Patterson H. French Jacques Torf's