Smart City Clearing Company Global Chairman Steven Jasmin is interviewed on Emerging Markets Today to discuss the worlds newest oil producing nation - Guyana South America.
Ana Paula Picasso from Emerging Markets Today leads the interview with Steven to discuss a little-known South American country called Guyana, a new frontier market that has seen an influx of new investments in different sectors since the discovery of oil in its territory in 2015.
To talk about Guyana I invited Steven Jasmin, the managing director of Smart City Clearing Company Ltd.(Sc3) an internationally based Frontier Market Merchant Bank and Asset Management firm. Steven has spent a lot of time in Guyana since 2017, and he feels that the country’s status as a Global Leader and Regional Leader will only grow in importance over the next decade.
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Ana Paula Picasso is a Brazilian marketing strategist living in Sweden.
After working years working as research analyst with focus on Latin American consumer goods market for one of biggest market research companies in the UK, Ana decided that it was time to pursue new challenges.
In 2014, Ana became a freelance researcher and founded Emerging Markets Today (former The Emerging Markets Hub) as a platform for her passion for writing.
The blog aims to become a platform about innovation, tech, consumer and social media behavior in emerging economies.
*This episode is not an investment advice*
GUYANA: WORLD’S FASTEST GROWING ECONOMY
Interview by Ana Paula Picasso at Emerging Markets Today
You are welcome to emerging markets today podcast. I'm your host, Ana Paula Picasso. And this episode is about Guyana, a new frontier market that has seen an influx of new investments in different sectors since the discovery of oil in its territory in 2015. To talk about Guyana, I invited Steven Jasmin, the Managing Director of Sc3, and internationally based frontier market immersion bank, and asset management firm. Steven has spent a lot of time in Guyana since 2017. And then he feels that the country status as a global and regional leader will grow in importance over the next decade.
There's going to be before oil and after oil Guyana. Guyana before oil, everyone's going to try to forget which they should never forget because it's what makes Guyana so unique and special. And it's what gives Guyana its character. And you really need to understand the pre oil operating environment to be successful in the current operating environment. And then the future operating environment will be a byproduct of the ability to navigate those two environments.
And if you want to know more about SC3 and Steven Jasmine, I'll put all the links in the description. Hope you guys enjoyed this episode. And don't forget to check out emerging markets dot today and also you can help us keep him free from odds and pay well by donating any amount via PayPal or cryptocurrencies directly on the website.
Hey, Anna.
Hi, Steven.
How are you today?
I'm good. How are you this morning?
Excellent. Excellent. Thank you so much for the time.
You know, you're the first person I've met. That's been to Guyana.
They told you I'm from Brazil originally. I know and know next to nothing about Guyana which is quite embarrassing.
Well, unfortunately, I knew well, a lot of people don't know much about Guyana, like myself when I went in four years ago now in June of 2017. I had no idea what I was, what the country entailed or you know what to expect. I've quite frankly never even been to South America.
Yeah. And I've read some of the articles the median and there was some very bold claim just from you but from other articles or read about okay, and before we talk today, like Guyana is going to be the Qatar of South America. Okay, Guyana is the world's fastest growing economy. Is it true?
Yeah, no, absolutely. It's kind of crazy.
Guyana is according to the 2021 IMF predictions. They anticipated pre COVID That Guyana was going to grow have a real GDP growth rate of 85.6% I believe, and post COVID despite pretty much the entire globe being facing negative growth rates. Guyana ended up having a real GDP growth rate of about 43 46%. I want to say amazing, and so obviously it's due to the 10 billion barrel plus oil find that the country is you know, currently, yeah, monetizing.
So let's go back a little bit. Talk about the Guyana prior 2015. And what happened in 2015. If you could talk me through a little bit of the history up to five years ago, five, six years ago.
Yeah, no, perfect. You know, to start Guyana is a former British colony. It's also it got its independence roughly 55 years ago, and also in 2015 they found oil, Exxon Mobil came in and found oil. And so over the past five years, the country essentially, you know, has gone through a massive growth cycle as the resource continues to grow. You know, when I first landed in Guyana in June of 2017, they'd found 2 billion barrels of oil. Now it's up to over 10 billion barrels. And so as the country continues to go through these growing pains as a new nation, It has quickly become one of the largest oil countries globally and within the next five years, it'll be one of 11 countries in the world that produce over 1 million barrels a day. And with a population of only 800,000 people it's amazing as to how quickly it's grown, and will grow quite frankly. The growth truly, honestly hasn't started yet. On the ground, you know, and a large part of that's because of COVID and then political, you know, transitions that occurred, but now everything's settling into place and the markets are opening up and development is starting to begin and it's really exciting.
Yeah, sounds very exciting, indeed. But there have been already some investments like you, for instance, but what are the sectors have been receiving the most investments so far?
Absolutely. Well, you know, there's obviously the oil sectors received a tremendous amount of investment. Followed alongside that the commercial real estate in sectors is beginning to take off, Infrastructure investments are starting to really come together. The government's working to put together a comprehensive infrastructure development strategy in concert with their desire to bring and create a 100 mile deep-water pipeline, and a guest energy project that will serve as sort of the foundation of the growth for Guyana because like most Caribbean based and Latin American based countries, the cost of power is one of the big things hindering the growth. And so with that pipeline coming on board, some analysts estimate that the cost of power will drop to five to six cents a kilowatt hour for the country. And that's, as you know, when it comes to development, and development and economies, that growth is critical. And so, with that the other sectors that are starting to grow are continuing to grow. Now that the old saying, a rising tide lifts all ships so as a result of the infrastructure investment that's required from the oil and gas industry which is probably my guess nearing five to $6 billion to date, as far as the development of the oil fields go by the multinational oil companies. With that investment the country is starting to kind of pick itself up and other sectors are starting to become very attractive and so, you know, things like agriculture are being heavily invested in as well as traditional sectors like business process outsourcing and the call centers that are common throughout the Caribbean because of the language and the time zones. And so those industries are seeing tremendous growth alongside the oil and gas sector.
Oh, centers. I didn't know that.
Yes, absolutely. Jamaica and Guyana, both are large call center presidents as well as Belize.
Yeah, I'm guessing the I think the main difference in investment with Frontier Markets in emerging markets, is mostly investments go to infrastructure and construction, whereas a country like Brazil, there's some degree on investment and infrastructure still, but you see more like the tech investments is a different thing, which is good. And also going back to what you said about the oil sector, Steven, we talked about on the prep call about the UN SDG investment opportunities, which he was the first time I came across this, if you could explain a little bit what that means and what it means for Guyana.
Absolutely. You know, as a part of the oil sector development, the country is much focused on developing a green state initiative and a clean and aligning itself with the global initiative from the UN called the Sustainable Development Goals, which that's a big program. It's a 2030 milestone, where the UN has identified 17 key areas of economic growth to help frontier and emerging markets and actually globally as far as impact investing. And so you look to Exxon's boardroom battle in the past weeks, it's the first week of June currently we're doing this interview, you know two weeks ago, there was a boardroom battle, where a minority hedge fund owner in Exxon Mobil's stock and activist investor, if you will, helped, you know, align Exxon to focus on the UN SDGs and change the board so that they could be more climate conscious. And so this is something that's happening at a global level. It's affecting Exxon. And obviously, as Guyana grows the country their finance director, if you will, or Minister has come out and stated very clearly that Guyana wants all the investments coming into the country to have a un SDG oriented approach and goal and with the activist investors and the institutional investors all looking to follow the sustainable investment goals of the UN SDGs as part of their investment thesis is moving forward as part of their corporate social responsibility programs. Guyana is looking to follow that trend and is seeking capital partners and investors that are really focused on not just you know, coming into the country and building it up but doing it in an environmentally friendly way that really helps the population itself.
And is there any other sectors you want to highlight Steven construction for instance, I know you involved with that with real estate, am I right?
Yeah, absolutely. So we're the first thing I did when I got to Guyana as I launched full service, commercial Real Estate Company collaborate properties. And so, you know, we've done a lot of business in the country today, and we're excited about our development pipeline. To your point earlier in the frontier markets, infrastructure is the critical component. You know, the country still to this date only has two internationally flagged hotels. And so with that there's a lot of that's where we need to start the country doesn't have a Starbucks yet. It doesn't have a McDonald's yet. You know, it's a blank slate. But before even those kinds of companies come in, you need to build theme roads and the highways and the places for the guests to sleep and the visitors to sleep last year before COVID hit Guyana was designated as one of the top eco-tourism locations in the world and so if Guyana or when Guyana more accurately properly, manages its oil revenue, and then diversifies it away from the core industry of oil production. You know, if they follow the model that Dubai followed and Norway followed where they diversified themselves, despite actually having more oil per capita than the Emirates or the Kingdom of Saudi Arabia or Norway or Qatar, there's that's where there's a real opportunity for investors to come in and participate in that growth.
Two main sectors for the moment attracting more investments on the oil and the infrastructure construction sectors.
Yeah, well, I think you know, commercial real estate, residential real estate, real estate development in general, it's been piece of it. Industrial development needs to occur. You know, it's all happening simultaneously. They're going to be building a massive deep-water Harbor. They're looking to have Guyana become sort of with its strategic location, even to your homeland of Brazil. You know, they're looking to create a road or rail network that connects the two countries together. So that all of the production and industrial development and creation that comes out of Manaus can be sent up to Guyana to be sent to market instead of having to go through the Amazon or over the mountains.
A study was done by the IDB And it showed that by creating a linkage between Guyana and Brazil, you would eliminate five to seven days of travel time for goods to be able to get out of the interior of Brazil. And obviously that's a critical component as business owners and industry, you know, anytime you can shave off a week's worth of your delivery times that has a major impact on your cash flow cycle. And so as a trading partner and sort of a Nexus, much like Singapore was 40 - 50 years ago, Guyana is going to I believe quickly emerged as the center of commerce and wealth and kind of be the gravitational center of influence and power for not only the Caribbean as a carrier combination, but also the rest of Latin America so Central America and South America.
Yeah, just which brings me to my next question, you start talking about the future a little bit. So how do you see these investments playing out for in the near future? Obviously, we don't know what's going to happen in the long term, but at least in the five years, 5 to 10 years time.
Also, I'm very curious because Ghana's only has 800,000 people living there. So and I guessing with concern, especially infrastructure construction, you need lots of labor. How do you see the developing in the next few years?
That's a great question. And I think I think ultimately, you know, the country is going to be facing an influx of people and with a border of 87,000 miles, it's very hard to control immigration in a country like Guyana.
You know, and so with that, when all of a sudden you are the fastest growing economy in the world and you're, in the center of an entire hemisphere that had negative GDP growth last year, and you're the only country that had positive GDP growth. Everyone's going to be looking to come to you and I think quite candidly, COVID is actually going to accelerate the development of Guyana because all these other markets and all these other places where industry is occurring, they're all reached a point where their is no organic growth, and so much like the same thing that happened during the 2007 to 2010 timeline, where the BRICS really came into their own and they were already more forward in their development cycle from a frontier market to an emerging market perspective.
As the BRICS came through it was because of the infrastructure development and growth that occurred that really channeled that. With the commodity super cycle and the inflation that's occurring globally as a result of all the money that was printed from, the COVID lockdowns by governments worldwide, there's people are looking for real tangible growth.
I see a very similar investment case and investment thesis as our firm where we're following kind of the same pattern that countries like Brazil, Russia, India and China have already been through. So now those BRIC countries are looking to take a leadership role in Guyana is future development as well. And so, you know, I can tell you over the past 8 months, 10 months since the government, new government took over in the there was a peaceful transition of power. The country has really started to grow there's been private jets just is flying in weekly, and money and interest from investors from all parts of the globe and you really would be hard pressed to find a region of the world or a country that hasn't put some form of boots on the ground in Guyana, trying to figure out how they can partake in it but the challenge is, as you enter these frontier markets, it's how do you turn ideas and opportunities in to action, what you want to do as an investor and an asset manager, and that's where Sc3 really has situated ourselves with our four year track record, we have a relatively clear understanding of how the market operates, what it takes to be successful, where the Country's going, how to get things done, and every time you get into a new situation, you have to you know, align yourself with the right partners that are already there and doing it and so, we look to be your Guyana asset manager and partner.
I was fortunate enough to find some amazing local partners we have built a phenomenal team and so now, we're really able to execute and grow and be one of the de facto asset managers to help protect and mitigate risk and execute properly because it doesn't matter where the money's coming from, ultimately, it's about actually turning ideas into action and action into execution and execution into profits. And so, through that cycle, that's where a lot of people get tripped up in a frontier market and they don't know how or they think they can come in and just start throwing money around and you know, they can that's their right and they but unfortunately, that's not responsible investing and that's not what successful frontier market investors do. And you know, to be successful at it, you need to come in, you need to learn the country, and you need to learn the cultures. You need to understand who's who at the zoo, as they say, and you really need to figure out how to navigate both politically and in the, in the private sector. And you know, when it's an unstructured environment like Guyana, because of the lack of regulation, and the lack of statutory judicial systems and things like that, that are really well balanced and have been refined over decades of development.
You know, we're kind of starting at that point. Zero now. I liken it to, there's going to be a before oil and after oil, Guyana, Guyana, before oil, everyone's going to try to forget which they should never forget, because it's what makes Guyana so unique and special. And it's what gives Guyana its character. And you really need to understand the pre oil operating environment to be successful in the current operating environment.
The future operating environment will be a byproduct of the ability to navigate those two environments. And so for us, that's what we're doing and it's a unique position to be in because we're truly a part of history and the Guyanese that we're working with, you know, want to participate in this, but they also have a lot to learn. They don't know what they don't know. I've spent my whole career you know, advising CEOs of Fortune 500 companies and boardrooms and working and speaking the language of international organizations. And that's a very new conversation for the Guyanese, and they're not used to navigating those waters. They don't understand the thought processes, the structures, the strategies, the imperatives, what they care about what they don't care about and how it works. And so those are some of the skills that make our position very unique as we move forward to help Ghana grow. And that there are not a lot of people in country that are in a position that know how to both interact on the global level, as well as work at the local level. And that's really where our value proposition as a firm comes in as an asset manager comes in.
Yeah, this brings me to my next question. How did you get involved in Guyana? And how long have you and your company been working as been working there? It's making business there.
Yeah, no, great question. So I got to Guyana in June of 2017. When I was working as a chief restructuring officer for some of my families in the oil and gas services industry in Port Fourchon, Louisiana, so most people don't know this, but in Louisiana and the United States of America and more specifically southern Louisiana, that's the center of the offshore oil and gas service industry for the United States. And so my partners and I owned a practice where we helped advise those companies and essentially as a management consultant and fractional family office manager. And so, as a part of that, role, we ended up being asked to help run some of the companies that had gone bankrupt as a result of the oil recession in 2015. And in doing that, we ended up selling some of the work boats that were being utilized by the offshore oilfield services industry to raise cash as part of their liquidation processes.
In doing that, I sold those boats to different families throughout the Caribbean because when those assets are not being used in the oil and gas sector, their next highest and best use is essentially as an island, hopping tractor trailer delivering goods, water and fuel between the various Caribbean islands. And so I Island hopped my way down through the Caribbean and I landed in Guyana June 2017 and formed the Merchant Bank Smart City Clearing Company Ltd. and established operations in Guyana.
I started out in Guyana spending two weeks a month in Guyana. One week a month on the road and when we come on at home and then proceeded to six weeks a month in Guyana and then culminated last year with me spending 330 days in country as a result of COVID and the lockdowns as you know, as well as the government transition and the just wanting to be a part of the rapid growth that's starting.
It's been a long journey, and it's been exciting, but it's been difficult and challenging. And there have been a lot of lessons learned and it hasn't been easy. But you know, you got to you got to be in it to win it and you got to stay in the game long enough to win. And so we've definitely done that. And we've now got a tremendous pipeline of opportunity in front of us and the upsides, this is just finally starting.
So you've been there since 2017. So I'm guessing 4 years is almost nothing for Guyana, is it any habits is much longer. And it seems things are really accelerating in the next hopefully this year is going to say next year after the pandemic.
Things are already starting to accelerate. It's a valid point and it's much like an engine. I don't know if you know, mechanical engines but they have fly wheels, and as one wheels start spinning and gearing up the next gears go and everything's really starting to catch and the Fly Wheels are starting to really pick up speed and, and so the momentum is there, you know, there's still going to be fits and starts and it's not going to be easy, and there's still going to be challenges as a Country, figures it out as it's growing, where, what directions a want to goes and how it's going to do things but with the sheer amount of oil and with the transparency that the 21st century is now requiring at the financial services sector level and with everything going on in the world, Guyana is really positioned to take advantage of it.
I believe Guyana is going to be , a lifelong investment and a once a once in a lifetime chance to be a part of something transformative and historic, I've got a deep background in technology and startups and as well as investment banking and as you know, a financial advisor.
So with that background, I look at Guyana as what I call Startup Nation and so the country is essentially going through this growth process, and ultimately, it's not going to be easy, it's going to be processed, but at the same token, the opportunity to be a part of history is just amazing and that's really where we're sitting. You know, every day I wake up and what I'm working on is literally going to affect an entire hemisphere and is going to change the course and future of millions of people, not just the Guyanese and so with that great power comes great responsibility and a great opportunity to be a leader globally and Guyana will I have no doubt managed to get there may stumble a few times along the way but long term, they absolutely will get it right and especially with being so close to the essentially the US and the size of the oil reserve as a strategic reserve globally, because of COVID. The Guyana stories sort of been silenced. And it's been kind of squeezed out of the press. Because everyone's been focused on retrenching and kind of shoring up their own holdings and investments and positioning themselves and taking care of themselves and their families during this pandemic and this global upheaval. But as we come out of it, which is happening very quickly, Guyana is still going to grow tremendously. And it's growth that you can touch and feel, you know, and so that's the growth investors want to participate in and seek and that's what we're facilitating.
Yeah, you rise because my focus IS more on emerging markets, but I do follow other Frontier Markets focus publications, and you don't see much about Guyana. Even in those publications.
Guyana sits in a weird position. You know, it's the only English speaking country on the continent of South America. And so, essentially to the rest of Latin America, it doesn't exist historically. You know, there are no banks; there are no Latin American banks in Guyana. There are no influences from the rest of Latin America and then on the Caribbean side as a care combination, you know, everyone is always more focused on Jamaica and the Caribbean as a tourist destination. And so Guyana historically is home to the CARICOM Secretariat. And so it's always been more an administrative place. And so there are a lot of development banks there and a lot of government agencies that kind of spread their wings throughout the Caribbean. But outside of those circles no one's really ever even heard of Guyana.
Steven, how can people get in touch with you and with your company as SC3? Smart City Clearing Company?
Yep. Yep. Smart City Clearing Company, a SC3. We are, you know, easy to find online. Steven Jasmin. My Twitter's @smjasmin. I'm https://theguyanabanker.medium.com/ that's where you can find all of our kind of market research and reports. And my email address is SJasmine@SC3.ltd. Or you can email my team at info@Sc3.ltd.
I'll put the links in the description. So if anyone wants to contact you, Steven to know more about Guyana or your company and investment opportunities. They can just check it out. And maybe we do another episode in a couple of years even to see how things are going in Guyana, the follow up.
Absolutely. I would love that and you know, I got a feeling it'll be a lot quicker than a couple of years, you know, probably in another six months and things will start to be really moving quickly. So I appreciate your time.
Thank you.