Receive our newsletter - data, analysis and deep insights on FDI delivered to you
South America / Guyana

The state of play: FDI in Guyana

The discovery of oil in 2020 looks set to transform Guyana's economy, as well as make the South American country a more attractive location for FDI.

guyana-georgetown-fdi
Oil revenues looks set to transform Guyana and its capital Georgetown (pictured) as well as make the country an enticing prospect for FDI. (Photo by Luis Acosta/AFP via Getty Images)

The Bank of Guyana’s half-year report for 2020 shows that net foreign direct investment (FDI) was up 1% year on year at the end of June 2020, standing at $834.7m. The figure for the first six months of 2019 was $826.4m.

“The overall balance of payments is expected to record a lower deficit at the end of 2020, mainly on account of a projected decline in the current account deficit from higher exports earnings from crude oil,” the bank’s report explains.

“The capital account is expecting a decline in surplus from the outflow of oil revenue despite higher FDI levels,” it adds.

Since Exxon discovered offshore oil reserves in Guyana in 2015, the commodity has become an important resource for the country with regards to its FDI attraction. However, despite the Covid-19 outbreak and depression of oil prices, Guyana is still expected to have an optimistic projected GDP growth rate in 2020 exceeding 50% due to the first advent of oil, according to the US Department of State’s 2020 Investment Climate Statement.

“Guyana’s medium-term prospects remain positive with the discovery of vast oil reserves that will provide decades of substantial revenues,” the statement says. “The government of Guyana created a sovereign wealth fund for the oil revenues and plans to spend most of the near-term revenue on education, health and infrastructure.”

Guyana’s FDI-friendly environment

According to the UN Conference on Trade and Investment’s World Investment Report 2020, Guyana ended 2019 with $1.7bn in FDI inflows, up from $1.2bn in 2018.

The US was the main FDI partner for the country in 2019, and traditionally transport, communications and agriculture have been its most attractive sectors.

More recently, the energy sector has risen in importance as Guyana has brought in large investments in mining and hydroelectric projects. These have included China Railway First Group being the main investor in the Amaila Falls hydroelectric project, with a $506m stake, while the UK’s Whitefox Technology and Brazilian partner Green have financed the construction of a new bioethanol processing factory.

While Guyana’s government is keen to promote public-private partnerships to attract FDI, investors have often been held back by a weak local market. The government, however, provides several investment incentives, including a flat business tax rate, waivers of customs duties, export tax allowances and unrestricted repatriation of profits.

The Guyana Office for Investment is targeting investment in agriculture and agro-processing, manufacturing, services, energy, tourism, forestry, information and communication technology, and mining.

Viola Caon

Viola Caon

Senior editor

Viola Caon is a senior editor at Investment Monitor and joined New Statesman Media Group from Euromoney’s IJGlobal.