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Guyana: Strategies for Reducing Poverty

Dominican Republic FY01 PA

Full Report (11.13Mb PDF)

Poverty Profile

The Guyana poverty assessment found that an estimated 43 percent of the population fall below the poverty line using data from the recent Living Standards Measurement Survey. Roughly two thirds of the poor, or 29 percent of the total population, can be further classified as being extremely poor, with an expenditure level below that required to purchase a minimum low-cost diet. The majority of Guyana's poor live in rural areas, while extreme poverty is concentrated in the interior regions. The rural poor are self-employed in agriculture or work as agricultural laborers. Poor rural households have access to adequate land resources, indicating that low productivity is a major cause of poverty. Along the coastal areas, poor households are involved in subsistence agriculture and small-scale rice production. In the interior, subsistence farming is most prevalent. In urban areas, the poor include those employed as wage laborers in a variety of occupations, in small informal businesses, as public servants at the bottom end of the salary scale, and pensioners.

Rates of employment among the poor are similar to those for the non-poor suggesting that low income is related to low wages and underemployment rather than unemployment. Because the poorest 20 percent of the population work an average of only 10 days a month and few workers have second jobs, there is scope for increasing incomes through additional employment.
Poor households tend to have more children and have attained lower levels of education than non-poor households. Levels of poverty are similar among male and female-headed households, although overall female labor force participation is only about half that of men, with the majority of women involved primarily in domestic work. Across ethnic groups, the incidence of poverty is highest for the Amerindian population, although it is still significant among the Afro-Guyanese, Indo-Guyanese, and racially mixed households.

Incentive and Regulatory Framework

The reforms carried out under the Economic Recovery Program have had a positive impact on the economy, with real GDP averaging 7 percent per year during 1991-1993. Reducing poverty will depend on maintaining and consolidating the macroeconomic framework and further refining policies that will sustain growth. To do this, the government needs to accelerate the privatization process to help to stretch scarce government resources, to refocus public sector expenditures and investment, and to increase the opportunities for new investments. There is an urgent need to reform pricing and subsidy policies for basic services. The lack of fiscal resources and the demonstrated willingness on the part of the public to pay for services highlights the need for cost-recovery schemes for water, drainage, and irrigation and health and education services. The country also will have to become more competitive and to increase and diversify exports in order to sustain economic growth and thus reduce poverty.

Public Expenditures

To increase the impact of public expenditures on poverty reduction, there is a need to refocus spending. The public sector, still involved in direct productive activities and heavily commited to financing social services, is overextended and inefficient. Although access to basic services such as education and health care is widespread across all welfare groups, the quality of services provided is inadequate because of dilapidated infrastructure, a lack of supplies, and shortages of personnel. The poor, limited by welfare and geographic constraints, are particularly affected by the low quality of services offered because they cannot afford to seek the better services now being offered by the private sector and because most of them live in rural areas where only fewer, lower quality services are offered. For example, the nationwide shortage of qualified primary school teachers is most acutely felt in the rural interior areas where poverty is highest. A bias in public funding towards expensive, hospital-based medical care has channeled resources away from lower-level facilities designed to provide basic health care in rural areas. Inequities also exist in the housing sector where the government, already stretched by limited resources, is providing subsidized housing to residents from all income groups, including many who sublet their units for significant income. Prioritizing investments in health, education, and water with an emphasis on increasing staff salaries and improving the operations and maintenance of existing infrastructure will have the biggest impact on the poor. Improvements in quality will also require a more efficient use of existing resources, a strengthening of institutional capacity, and more provision of necessary inputs such as essential medicines and learning materials.

Safety Net

There are several "formal" safety nets in Guyana, including the National Insurance Scheme (NIS), a World Bank-financed Social Impact Amelioration project (SIMAP), and a large number of non-governmental organizations. Other "informal" coping mechanisms, such as help from relatives abroad, also exist and provide an important safety net in Guyana. While the safety net covers many of the poor, the level of benefits is generally low and some groups are left out of the network. Coverage through the NIS is limited to employees of the formal sector. SIMAP has assisted many people through its short-term cash payments, employment schemes, and nutrition supplements, but it has not necessarily benefited the poorest groups in Guyana and it has suffered from the fact that its sub-projects have been slow to be implemented. NGOs in the country are increasingly active, although the effectiveness of their programs would be strengthened if coordination among them were increased. Overall, increasing the coverage and effectiveness of each safety net mechanism and the level of coordination among organizations will optimize the use of total resources available to the poor.

Poverty Strategy

The priority areas in the poverty reduction strategy include promoting rapid economic growth that will create employment, and refocusing public expenditures to improve infrastructure and the delivery of health, education, and water services. Policies to ensure sound environmental management as a base for sustainable development must also be put in place. Privatization will be essential for stretching scarce government resources and for increasing the opportunities for new investment. Growth in the agricultural sector is particularly important for reducing poverty because of the heavy concentration of the poor working in the sector. This can be achieved by improving water management, infrastructure, and agricultural technology, expanding the access that small farmers have to credit, and diversifying products to expand export markets. Strengthening the existing safety net mechanisms will provide further assistance to those who, for various reasons, will take longer than others to benefit or will never directly benefit from economic growth and improved social services. Individuals must also take on a more proactive role in efforts to reduce poverty at the community level to ensure a sense of ownership and sustainability in the process.

Statistical System

The 1993 Household Expenditure Survey/Living Standards Measurement Survey has provided a wealth of information that adds to the understanding of the nature and extent of poverty in Guyana. The need for additional data has been identified as a priority in all sectors, particularly information on the labor force, demographic and health indicators, information on agricultural and farm management practices, the number and physical condition of school buildings, and periodic income and expenditure surveys such as the HIES/LSMS. Despite the fact that the Statistical Bureau was recently revitalized, it still has institutional weaknesses due to the small size of its staff. If data collection efforts in the country are to improve and increase, further strengthening of the Statistical Bureau will be necessary. In addition, effective poverty management will require establishing a social policy unit to undertake sophisticated social policy analysis and to use the findings of this analysis to design more effective and targeted social sector programs.

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