Ali El Husseini, CEO of Medici Land Governance.
With at least 11 billion barrels of oil, the ExxonMobil-led Stabroek Block is considered among the world’s most important oil and gas blocks found in the last decade. Production is expanding rapidly, with Guyana officials expecting to move from 220,000 barrels per day in 2022 to 1.2 million per day by 2027.
I believe that Guyana’s booming economy is opening up unprecedented investment opportunities to help modernize its infrastructure, grow its industry sectors and solve problems associated with food insecurity and climate change.
Guyana’s Expansion And Resulting Business Opportunities
Problems of food security were magnified during the Covid-19 pandemic due to global restrictions and border closings. Guyana has typically imported much of its food, operating like a rolling pipeline due to a lack of large storage facilities in the country. But I see the experiences of the pandemic having stimulated the political will to correct this while emphasizing things like self-sufficient agriculture, climate-smart systems and the expansion of renewable energy and low-carbon projects.
The Office for Investment is pursuing a holistic bottom-up approach that emphasizes that energy security and food security are mutually synergistic. A large share of Guyana’s socioeconomic activities is based in its low-lying narrow coastal plains, which mostly sit below sea level. More than 90% of Guyana’s population resides in these areas, where major agricultural commodities such as sugar, rice, poultry, root crops and vegetables are grown.
But, Guyana also has targeted the hilly sand and clay regions, which encompass savannahs with large areas of brown, well-drained soils—ideal for a broad spectrum of agriculture such as livestock, citrus, corn, legumes, soybeans, dairy products and orchard crops.
With its rapidly growing economy, Guyana is looking at expanding existing and new partnerships in trade. Guyana’s trade agreement with the U.S. covers a diverse range of products; businesses that incorporate goods like rum, seafood, diamonds, precious metals, wood products, foods, coconut oil and crude oil may particularly want to look into the country. Currently, the country’s fastest-growing export markets include the United Arab Emirates, Ukraine and Germany.
Areas Of Interest For Outside Investment
Bolstered by the government’s political will to cultivate a business-friendly environment and to encourage investment in economic- and climate-resilient development, the following areas show some of the most fruitful potential for investment opportunities:
The biggest demands for external investment include opportunities to mechanize the agricultural industries, expand storage capacity and milling processing and rice production in the savannahs. Similarly, the government has been looking for climate-resilient agricultural projects with renewable energy prospects, including using milling waste to produce energy.
Soft activities include planning, education and research for development, targeting where climate change will have an impact on local plant and animal life. This could include developing new plant varieties resilient to climate change, managing pest infestations and facilitating how water and other critical natural resources are managed and conserved.
Hard activities will require infrastructure projects such as sea and river defenses, drainage and irrigation systems, land management/settlement development and institutional cooperation for commercially cultivating inland fish, shrimp, rice and sugarcane. Industry incentives for specific infrastructure needs such as feeder roads and regional conservancies look to anchor the country’s master infrastructure plan.
Still in its embryonic phase, I believe Guyana’s energy sector will be conducive to capitalizing upon mutually beneficial synergies. The government’s Local Content Act and Act No. 18, which were enacted in 2021, should make it easier for multinational oil companies to hire Guyanese nationals and procure goods and services from professionals and companies based in the nation.
Tax Incentives And Investment Requirements
The government’s tax code provides incentives for importing equipment for the oil and gas industry along with companies that rely on renewable energy options. Guyana’s gas-to-shore projects, as well as investments in hydro, solar, wind and biomass, are intended to cut energy costs by half. This can help prime the country’s manufacturing sector for investments in spin-off industries surrounding the project area and the country.
Investors will be expected to demonstrate that projects take environmental preservation and conservation into consideration. Every proposed project is statutorily mandated to secure authorization from the country’s environmental protection agency. High on the priority list are projects for fortifying the electrical grids in the hinterlands and coastal plains, with a focus on establishing renewable energy resources and equipping a wind farm development program at Hope Beach.
In the forest industry, the development financing window is critical because the sector is currently capitalized with limited availability and high costs of capital. This could foster joint ventures with existing forestry operators along with partnerships on environmental initiatives such as forest carbon services, biodiversity and other watersheds. The government is also looking at reforestation programs, covering 200,000 hectares of land in environmentally degraded areas like former mining extraction sites.
With a current extraction level of 40% of what the government considers a sustainable maximum level, the most impactful investment opportunities will likely focus on primary extraction as well as expanding the scale of downstream processing to deeper integration in the supply chain and stronger local capacities. I see opportunities here to target niche export markets in the production of flooring, decking, prefabricated housing and furniture.
The government has identified various manufacturing categories where companies that export more than half of their products will qualify for fiscal incentives, including tax exemptions on raw and packaging materials, exemption from paying the custom duty as well as securing the zero-rating of value-added tax. In addition to forestry products, those manufacturers processing and canning or bottling agricultural products, along with those that make fertilizers, insecticides and weedicides, may qualify for exemptions, per approval of the GRA.
Likewise, manufacturers of packing materials, jewelry, items made with precious stones, leather and clay, kaolin and silica sand, as well as textiles and clothing may qualify for tax exemptions.
The government’s commitment to creating a business-friendly environment, coupled with strategic investment opportunities in areas like agriculture, conservation and manufacturing, positions Guyana as an attractive destination for foreign investors seeking to capitalize on the country’s expanding economic landscape and its sustainable development.