Américas / September-October 1995
By Larry Luxner
WASHINGTON -- In one of South America's fastest-growing economies, calypso and reggae are vastly more popular than salsa, nearly everyone speaks English and the national sport isn't soccer -- but cricket.
Welcome to Guyana, a sparsely populated nation of 750,000,whose Gross Domestic Product shot up 6-7% last year. That growth, topped in the region only by Chile and Peru, was fueled in part by large foreign investment in mining, timber and agriculture. Even a massive cyanide spill at the huge Omai gold mine south of Georgetown, the capital, couldn't derail the country's economic boom.
"Guyana is on the brink of becoming the most dynamic emerging market in the Western Hemisphere," says Colin Vickerie, chief executive officer of Carivest Distributors Inc. in East Brunswick, New Jersey. "Its economy has made a 180-degree turnaround since 1992. A new free-market philosophy, the elimination of price controls, the liberaliza-tion of interest rates and an exchange rate based on market forces have all been essential to this turnaround."
Vickerie and his three Guyanese-born business partners -- Osmond Adams, Samuel Johnson and Winston G. Saunders -- believe their native land offers potential investors an excellent return on their money, and recently launched a three-nation road show to prove it.
Carivest's goal: to raise US$100 million via the Guyana Liberalization Fund, which seeks to collect money from ethnic Guyanese in the United States, Canada and Great Britain, and invest it in promising enterprises throughout the once-Marxist South American nation. Those enterprises include everything from garment factories and power plants to highways, pineapple-canning facilities and shopping malls.
"Our marketing strategy is to attract as many investors as we can," said Vickerie, formerly vice-president of the investment manager services division of the United States Trust Company of New York. "We're marketing Guyana as Latin America. The investment world will look at anything in that area, and Guyana is an emerging market."
Carivest recently registered the fund in the Cayman Islands, which qualifies it for offshore tax-exempt status. The minimum investment is US$3,000. During the first year, participation will be limited; thereafter, it will open quarterly.
Under laws established by the U.S. Securities and Exchange Commission, Carivest may not market the fund publicly in the United States or sign up more than 99 U.S. investors. Therefore, Carivest officials are careful to gear their seminars to the Guyanese diaspora, which includes an estimated 250,000 Guyanese nationals living along the U.S. East Coast, 100,000 in Canada and another 200,000 in England. A prospectus is mailed to every investor who asks for one; so far, nearly 700 requests have been logged.
"Most Guyanese have thought of investing in their country, but would lose their shirts in the process," said Vickerie, who has also worked for Bankers Trust Co. of California, Chase Manhattan Bank and Citibank during his career as an investment banker. "If we can attract 15,000 Guyanese for an entrance fee of $3,000 each, that's $45 million right there. We're also looking at finance and insurance companies in Guyana that have no other alternatives for investment besides government vehicles."
Vickerie said he's signed an agreement with the Guyana Office of Investment, which cannot officially endorse the fund but has given Carivest its full support. Half the capital, he said, will be invested in road construction and repair, housing, electricity and telecommunications projects; many of these projects will involve imports of capital and related equipment, technology and expertise. The other 50% will be invested in U.S. government securities as a less risky source of capital generation.
Vickerie says Carivest will be taking a particularly close look at manufacturing. Recent studies suggest that the cost of labor in impoverished Guyana is 65% lower than other nearby manufacturing sites -- even after a 300% cost-of-living adjustment. Agri-business is another lucrative possibility, with Guyana poised to export cassava starch, hot pepper sauce, tomato paste, nuts, coconuts and pineapples to nearby Caribbean islands.
"Latin America's top funds have lost an average 20% in value over the last 12 months," Vickerie said, adding that in contrast, "we'd average 11% in returns by the second year and 15% in the third year."
Nevertheless, partner Samuel Johnson suggests the fund shouldn't be seen as a get-rich-quick scheme, but rather as a sound investment -- and an act of patriotism.
"Our mission is to rebuild Guyana, one community at a time," he said. "We will not stop until the job is done."