A floating production system offshore Guyana (Credit: ExxonMobil)
Socio-political Background
Within the last few years, Guyana has become an oil-producing nation. With the backdrop of most countries in South America having sluggish economies this year, Guyana has boasted the globe’s record GDP growth rate of 2022 (57.8 percent). This massive GDP growth was made possible by an increasingly rising output from offshore oil production since December 2019.
Guyana’s oil reserves are so massive that the country’s daily production is expected to rise from around 360,000 barrels a day to around 1 million barrels per day by 2027, deposing Kuwait as the country with the uppermost level of oil production per capita globally.
Guyana was a relatively poor country before it first struck oil in 2015. It has a population of less than a million people. Its political order was race-based prior to independence in 1966. With political parties pursuing socialism/communism as the basis for development after independence, the USA and its allies were harsh on Guyana, contributing further to its underdevelopment. In 1985, Desmond Hoyte replaced the deceased Forbes Burnham as the leader of the People’s National Congress (PNC) and the President of Guyana; he reversed this trend and moved towards a free market with his Economic Recovery Program (ERP). This move set the stage for Guyana’s economic and social recovery. In 1992 the People’s Progressive Party (PPP) replaced the PNC in government and continued this free market trend. Guyana was the poorest country after Haiti in the Caribbean and South America. However, Guyana gradually came out of the rut with prudent management of the economy, the private sector’s expansion, and the government’s insightful intervention. It had a consistent economic growth of over 5 percent per annum for over a decade.
The discovery of oil happened in 2015, the same year the PPP lost power to the PNC. The government, now under David Granger, was spending anticipated income from Oil by depleting the country’s reserves and taking bank loans. It signed up contracts in 2016 stipulating that for each quarter, the oil companies pay a 2 percent royalty fee to the government on revenue from oil produced in the Stabroek block of mining. They were allowed to devote 75 percent of that revenue to paying the initial and continuing exploration costs, and the remainder was divided 50-50 between the companies and the state. The array of costs the oil companies can subtract before giving profits to the government is vast and largely unaudited.
Frustration over how the government handled Guyana’s oil contracts and its mismanagement of the economy were key reasons they were voted out of office in 2020.
The capital Georgetown is set to undergo huge transformation thanks to new revenues from oil exploration in Guyana (Credit: ExxonMobil)
New Deal
The PPP government that replaced it is responding to the criticism by adjusting its primary terms for the remuneration of oil. The new areas being auctioned lie between the Stabroek Block and the shoreline.
The draft rubrics include a 10 percent royalty fee to the government, set the cost retrieval portion of revenue at 65 rather than 75 percent, and introduce a 10 percent corporate tax. After cost recovery, profits are still divided 50-50.
The government indicated that the proceeds would be geared towards orienting the economy away from oil and gas so that in two decades, agro-processing, high-quality manufacturing, and financial and technological services will be the pre-eminent features of Guyana’s economy.
In July, the government published a low-carbon development strategy that includes plans to invest in forest maintenance, tourism, and sustainable housing.
President Irfan Ali estimates that Guyana has around 30 years before the global demand for oil dries up and argues that oil sold until then should benefit poorer countries most vulnerable to climate change. Barbadian Prime Minister Mia Mottley, a star at the most recent United Nations Climate Change Conference, has made a similar argument. Barbados is now preparing its auction for offshore oil and gas leases.
Looking Ahead
The implications of this newfound wealth for Guyana are far-reaching. Guyana will need more than one hundred and sixty thousand workers to sustain its oil-driven economic growth. Though there are migrants from Venezuela, Brazil, and CARICOM in Guyana, they are insufficient for this dire need. While the Government of Guyana has put much effort into attracting the Guyanese diaspora with offers of special incentives, it is evident that this will not alleviate the need for workers. The labor demand is not only for the oil and gas sectors but also for the expansion and development of other sectors to diversify the economy so it will not be vulnerable to oil price fluctuations.
Guyana needs a comprehensive migration policy to address evolving migration trends to meet its needs. It also needs to establish an information center to conduct labor market and skill gap analyses and take stock of skills and potential skills already in the country.
With Guyana opening to migrants to deal with the challenge of its ever-expanding economy in the coming period, Guyana will become a greater multi-ethnic and multi-cultural society. This relatively massive immigration of new labor force will have its implications.
Guyana will have a widening ethnic and cultural citizenry. In a decade, there will be a more educated population, massive infrastructure development, bustling traveling on Guyana to Brazil highway, an ever-expanding population (in millions), and a significant drop in energy costs. These developments will have a direct impact on our politics. Political parties will have to rebrand themselves and move away from the old colonial and cold war approach to be relevant. The younger generation will challenge the status quo. The first Guyanese immigrants (before the oil discovery) will demand more protection, rights, and a more significant share of wealth. Migrants will look to enhance their power and influence.
Muslim Community
For the Muslim community, the challenge will be how to mitigate these new realities. In the present, the Muslim community must focus on the development of the youth and join with them to co-create that exciting future.
The Islamic Worldview must be comprehensively taught in all its dimension. It is evident that rather than spending time teaching Fiqh, more time needs to be invested in Aqeedah. With Positivism and Constructionism taking on a more dominant role in today’s education and training, many youth are approaching religion as a family tradition and culture. Understanding their role as a part of the wider Muslim community will enable them to understand their context and identity. It will develop in them the confidence and certainty of this sublime path.
Additionally, the youth need to understand the changing gender roles and inter-relationships. With women’s issues dominating the headlines in the post-modern world, they must have a proper understanding of this matter from the Quranic teachings and not the cultures of people.
The future will provide more women in schools and colleges, the workforce, and significant leadership roles. Youth need the wherewithal to navigate this reality at home, in the Mosques, in schools and colleges, and at work.
It is vital to understand what an Islamic family is and how they must navigate it. Emphasis should be placed more on love and care (muwaddah) and mercy (rahmah) rather than on roles and duties. Roles and duties will be highlighted, but the epitome is muwaddah and rahmah.
The traditional family in the post-modern world is scattered through migration and job demands; the youth must be exposed to an understanding of the dynamics of relationships. The home with parents and siblings needs to be one of peace and serenity. Understanding the principles of relationships will enhance this tremendously. Their relationship with their neighbors, school/college mates, workmates, and friends are essential. Both religion and nature demand this. Family, society, and organization are complex, interrelating, interdependent parts.
Furthermore, the relationship is what creates the context for social organization. It is a network of relationships between people. The Muslim community, especially the Muslim youth, must be appropriately educated to optimize the new environment and the more complex relationships that the oil boom will impose upon the Guyana landscape.
In Guyana, Muslims are about fifteen percent of the population. With the influx of migrants recently and the expected growth in the immediate future, it becomes critical that an intensive program of Dawah for non-Muslims come to the fore. This designed program of Dawah will facilitate the potential growth of the Muslim community and create bridges of understanding with the wider Guyanese community. This program must be prioritized and launched immediately.
With the rapidity of change, we have to identify what the future might be in Guyana. Some emerging trends suggest that in addition to an expanding Muslim community by migration, birth, and conversion, the Muslim community will be more diverse ethnically and culturally. The dominant ethnic leadership can shift to the new migrants, particularly those from the Muslim world. Guyanese society will be more culturally, ethnically, and socially diverse. Wealth will grow exponentially, and people will be more educated. There will be an expansion of white-collar jobs, new players will emerge in politics, and access to the internet and social media will be universal, expanding diversity in TV channels and other media networks. To deal with the new realities of the future, we must prepare the youths to deal with multiculturalism within the Muslim community and the wider society. They must be educated to quickly build appropriate relationships with new Muslim migrants and understand that leadership should not be based on ” who was here first ” but on competence and effectiveness.
The next generation of youth must be trained to deal with expanding wealth accumulation. They must be encouraged and supported to pursue higher knowledge to contribute to formulating future alternatives for the Muslim community and Guyanese society. The youth must be prepared to take on important positions in the public sector, for example, industry, business, legal and medical fields. Muslim youth, grounded in faith and practice and with strong families, can provide the leadership and decision-making that will be required for the growth of the community and the nation.
The discovery of oil in Guyana is an opportunity for the Muslim community to demonstrate its inherent strength and methodology in securing the family entity as the bedrock of society, and to provide leadership in all areas of nation building. This is important as the new oil dynamics threaten Guyana’s foundational fabric.