Plenty oil, plenty poverty

Introduction

The list of topics that I had proposed some weeks ago indicating what I intended to revisit going forward, along with an updating of my recommendations on these, identifies the Buxton Proposal as being the next topic. Considering however that I have very recently dedicated as many as 13 consecutive columns to the task of re-visiting and making recommendations on the Buxton Proposal; ending on January 9, earlier this year, I have opted instead to substitute this item with an analysis of “Guyana’s poverty challenges in a time of plenty oil, and relatedly transformative windfall foreign earnings/ revenues.”

Further, I make bold to stake a claim to an additional benefit this affords me: that is, the opportunity to respond to a query raised by several readers in regard to my rationale for singling out poverty [from among many contenders] as Guyana’s preeminent development problematic.

To be frank, such a query coming from Guyanese has bothered me given that there have been massive collective global efforts, involving every United Nations Member country, beginning this Millennium designed to: 1] conceptualize poverty and development; 2] reach global consent/agreement on global, regional and national coordinated policies to promote “development for all” as a priority; 3] pursue parallel efforts to measure and monitor global development performance; 4] ensure Guyana’s full participation in all these global endeavors and; 5] result in in Guyana’s sovereign pledge at two successive global United Nations Summits to the Millennium Development Goals and the Global Sustainable Development Agenda.

Starting Point

After some reflection on how best to proceed I believe a logical starting point for this presentation is start with a succinct re-cap of the timeline of Guyana’s modern experience with oil and gas, and then secondly, to provide a brief summary of the details that inform the five givens listed in the above paragraph.

By all written accounts, Guyana’s written modern history of oil and gas effectively begins with the incorporation of Esso Exploration and Production Guyana Limited, EEPGL, in 1999, to explore and develop petroleum resources in Guyana (later, in partnership with Hess Corporation Guyana, 30 per cent, and China Nexxen OOC, 25 per cent, with the remaining 45 per cent with EEPGL. The year 2008 witnessed the beginning of major offshore exploration, resulting in group’s First Discovery in May 2015, to be quickly followed with its First Oil in December 2019. Today the group remains the sole producer, with EEPGL the lead Contractor operating in the Stabroek and Kaiteur blocks.

Concurrently, based on global reporting, the World Bank and United Nations data reveal that an estimated 1.1 billion people, or about 16 per cent of the world’s population, lived in extreme poverty in 2010, while as many as two billion persons did so two decades earlier in 1990

Recent Global Poverty Trends

Poverty trends in recent years reveal that the world’s poorest have encountered extremely difficult times in recent years. The COVID-19 pandemic has led to major reversals. Regrettably, these reverses are being compounded by: 1] rising inflation; 2] supply chain bottlenecks and related issues; 3] sanctions and threats of sanctions; and 4] the impacts of the war in Ukraine on agriculture [food], and energy. Indeed, the World Bank estimates that these combined crises could lead to an additional 75 million to 95 million people falling into extreme poverty this year, compared to pre-pandemic projections. As a matter of fact, if the worst occurs, this year could well turn out to be the secondworst year in terms of progress made in reducing extreme poverty this century. That is, behind only 2020, when there was an actual increase in global poverty.

United Nations data reveal that last year there was a total of almost 700 million persons, or 9% of the global population who were living in extreme poverty – that is, living on less than US$1.90 per day. Over one-fifth of the global population are estimated to live below the higher US$3.20 poverty line (1,803 million people), and over two-fifths (3,293 million people) live below a US$5.50 per day line.

Between 2019 and 2020, the number of people living in extreme poverty increased by an estimated 50 million as a result of the COVID-19 pandemic and related global economic downturn. The number of people living in extreme poverty is estimated to have fallen during 2021 as the global economy has started to recover, but there remains an estimated eight million more people living in poverty today than there were in 2019.This follows decades of impressive poverty reduction. An estimated 1.1 billion people, or 16% of the global population, lived in extreme poverty in 2010 and almost two billion in 1990.

Caveat

I have liberally cited UN/World Bank global poverty data above. Given the standards I try to set in these columns I introduce a caveat to these data. Writing in the Third World Quarterly of December 2021, A Sumner et al challenged the ‘official’ estimates of global monetary poverty up to and during the COVID-19 pandemic [See Measuring Global Poverty before and during the Pandemic] They argue, there is a political economy of over-optimism in the measurement of global poverty. They sought to establish specifically the methodological and presentational choices can lead to an overly optimistic view of both the levels and trends in, global poverty. They offered an updated critique of the global poverty estimates and sought to demonstrate how patterns of poverty would differ if small changes in methodology were introduced. They concluded with a theoretical discussion of why such methodological choices that lead to an optimistic view of global poverty levels and trends are made. Following this, an alternative approach to global poverty measurement was proposed.

Conclusion

Going forward, I discuss Guyana’s poverty predicament next.