Shape up or ship out!

Maggie Schmeitz
Stichting – Ultimate Purpose

Surinamese society is moving towards privatisation and liberalisation among heated debates. Bad quality and high costs of public services make consumers demand the government to either shape up or ship out and give private initiative the chance to do it better. On the other hand, there is fear for the consequences to employment and the accessibility of quality services for the poor, and benefits from concessions to multinationals are questionable.

Liberalisationand privatisation are hotly debated issues in Suriname. Successive governmentshave successfully stalled the process of diminishing state control over a widerange of areas. The Constitution confers a predominant role for the State, whichcan be briefly described as too little and too much. On one hand, it isincomplete or vague on crucial issues, such as procedures for removing thepresident. On the other hand, it is excessively intrusive in economic and socialareas. This burdens the executive branch of government with commitments that arealmost impossible to fulfil. The extensive role assigned to the State impedesprivate sector development and increases the risk of the arbitrary use of powerby the State.[1]The private sector has often complained “that the government is like a giantCerberus, who watches over us constantly. Everything is forbidden, except thatwhich is specifically allowed.”[2]While the government has acknowledged the necessity to reform the parastatalsector, it has not taken action to do so.[3]

Governmentas main provider

Governmentcontrol takes the form of a political patronage system, where politicalfactions, supporters and friends can be rewarded with civil service jobs,houses, and other scarce commodities.[4]Government employment makes up 44% of total employment. Women have the majorityof lower echelon civil service jobs. Government spending (between 40% to 50% ofGDP) is overwhelming, with the focus on government consumption: expenditures onwages, salaries, goods and services. According to the Inter-American DevelopmentBank, in 1997 Suriname ranked first in Latin America and the Caribbean inexpenditures on goods and services at 30.5% of GDP (average 9.9%), and in totalgovernment expenditures at 45.5% of GDP (average 22%).[5]

Privatisationin Suriname

Theexecutive branch of government consists of the central government, localgovernment, and over 100 parastatal agencies, legal bodies in which thegovernment holds the main share. Parastatals can be categorised according toprivate law as non-profit foundations or for-profit corporations and accordingto public law as public or private enterprises. Governments delegateresponsibility to a parastatal agency in order to side-step stifling civilservice regulations. This delegation also enables ministries to attract staffoutside the civil service.[6]

Accessto water, electricity and telecommunication

Publicand semi-public goods such as water, electricity and telecommunication areprovided by parastatal utilities. The Central National Accountants Agency (CLAD)is responsible for controlling these utilities, and for reporting their findingsto the National Auditors Office. The CLAD has recently been expanded but stillhas only one qualified accountant.[7]From 1990 to 1999, the Energy Company and the Telecommunication Company ofSuriname did not once submit an annual report; the Surinamese Water Companysubmitted only one annual report. Of the companies under CLAD’s control, 80%showed a profit and 60% had enough liquid assets to meet their obligations. Only20% of the companies, however,were solvent, and none of themmet the requirement of at least a 10% rate of return on total and loan capital.For 60% of the companies thecosts for personnel were much too high related to total costs.[8]

Inmaintaining monopolies, the government is failing in its regulatory task ofproviding collective goods and services. Operations, whether delegated or not,are characterised by poor quality service, high costs, and missed opportunitiesfor development. For example, Suriname is the most expensive telephone calldestination from the United States in the whole western hemisphere (Suriname USD1.11, Guyana USD 0.87, Trinidad and Tobago USD 0.61, and the NetherlandsAntilles USD 0.26).[9] In addition to people inthe interior who have no access to running water or electricity, many householdsboth in rural and urban areas have no access because their neighbourhood is notpart of the power or water company’s infrastructure. A growing number ofhouseholds have been disconnected from these services because they have not beenable to pay the bill.

Theelectricity sector is also characterised by non-transparency. The majority ofelectricity is generated privately by a large bauxite company, the SurinameAluminium Company (Suralco). As part of an agreement concerning the constructionof the hydro-electricity plant, the bauxite company sells 80 million-kilowatthours (kWh) per annum to the government at USD 0.004 per kWh. Instead of sellingthe electricity to the state distribution and generation company EBS, thegovernment gives it to EBS for free. In return, EBS does not charge thegovernment for the provision of electricity to government buildings and for thestreet lighting it provides. The accounting is further muddled because thegovernment, which is often in arrears in payments, frequently deducts the costof its electricity bills from the bauxite company’s tax obligation.[10]

Thefeeble position of the government in trying to guarantee provision of servicesby international corporations was shown in October 2002, when Suralcosafeguarded electrical power for its own operations before restoring electricityto the national energy company. Members of the government party subsequentlyapproved the prioritising of power supply to the bauxite operations. Onelegislator stated, “since the bauxite operation is the cork on which oureconomy floats, it had higher priority than supplying the population.”[11]A high-level mission from the firm’s headquarters arrived to install acommittee to deal with damage claims, but did not allow the government toinclude a representative on the committee. As the President put it: “We werefriendly but surely dismissed by Suralco.”[12]This attitude shows how successive governments have been dealing withmultinationals.

Accessto and control over land

Article41 of the Constitution states that “The nation has the inalienable right to take complete possession of its naturalresources in order to utilise them to the benefit of the economic, social andcultural development of Suriname.” Virtually all land is state-owned; citizenscan apply for free short- or long-term leases (maximum 75 years). Although intheory any citizen can apply, statistics show that fewer than 1% of femalesactually acquire a title to useland.[13]Bureaucratic procedures make it common for citizens to wait ten years or longerfor a lease. In contrast, more and more private project developers have beenable to secure leases in exclusive residential areas quickly for theirbetter-off clients.

Hugeconcessions have been given out to multinationals from Canada, Indonesia andChina, mainly for logging and gold mining. The benefits for the nation arequestionable, as are issues of control, environmental damage and taxes.Furthermore, time and again tribal people living in the interior have enduredviolation of their traditional rights, as articulated in the Peace Accord signedin 1992. This treaty promised to create legal mechanisms by which citizens whoreside in a tribal setting could secure a title to land in their respectiveliving areas; it also determined the demarcation and size of these living areas,and the establishing of economic zones.[14]Ten years later, none of these promises has been kept and new concessions forthe exploration of bauxite in West Suriname are under negotiation with twomultinationals: Suralco/ALCOA from theUSA and Billiton from theNetherlands.

Healthcare hollowed out

Anestimated 89% of households in Suriname have a clinic or healthcare centrewithin a radius of five kilometres.[15]The Regional Health Service (RHS, 50 clinics or stations) is a parastatalfoundation responsible for providing primary health care to the poor in thecoastal area; it provides services to an estimated 120,000 free medicalcardholders and an estimated 25,000 people covered by the State Health InsuranceFund. The RHS is supposed to offer free preventive services in cooperation withthe national Family Planning Agency, an autonomous NGO, and Youth Dental Care.[16]Primary healthcare in the interior is provided by the Medical Mission, an NGOentrusted with this responsibility by the Ministry of Health in 1977. With 45clinics and stations, it is supposed to cover the medical needs of an estimated48,500 people (80% Maroons, 20% indigenous people).[17]

Asthe share of Total Government Expenditure (TGE) going to healthcare over thelast year was only 3%,[18]it comes as no surprise that this medical infrastructure has been severelyhollowed out. Clinics are in a bad state, understaffed, and have a continuouslack of medicine and equipment. In the interior, doctors are known to havesurgery hours from the windows of their cars.[19]Furthermore, doctors serving in rural areas refer more and more pregnant womento a hospital in the capital, since they are not equipped to deal with possiblecomplications at delivery, lacking, for example anaesthesia and blood fortransfusions.[20] Medical services are alsobecoming more expensive. Though services are supposed to be provided for free,in practice patients have to pay.[21]The whole medical infrastructure is suffering from the fact that the governmentfails to fulfil its financial obligations. In the capital, out of fourhospitals, two are private and religious-affiliated, one is a state enterprise,and one is a parastatal foundation. In the private hospitals, costs for patientsare higher and wages for nurses are lower.

Inrecent years, the parastatal foundation’s Lands Hospital has made headlinesbecause of its financial problems. First, the manager sued the State for notfulfilling its financial obligations to pay nurses and other staff. Thegovernment responded by suing the hospital for allegedly not paying incometaxes; that is, taxes on salaries and wages that were not received! Next, thehospital made headlines with the story of “kidnapping” babies. Since thehospital did not receive payment for deliveries, it resorted to holding babieshostage until their mothers paid their bills.

Althoughpolicy efforts have been made to reorganise the health sector and to expand thesystem of public health insurance, they have fallen short. Health institutionsand the State Health Insurance Fund were faced time and again with governmentdefaults. As a consequence patients are often confronted with the “no pay, nocure” treatment. More and more individuals and companies who can afford itmade a shift to private health insurance, thereby eroding the basis for generalhealth insurance further, and widening the gap between those who have access toquality healthcare and those who do not.[22]

Genderstatistics for indigent and insolvent households who are issued a free medicalcard (29,335 in 1990 and 60,200 in 1998)[23]indicate that roughly twice as many women heads of households as men areregistered.

Education:NGOs and private schools filling the gaps

Historically,religious-affiliated NGOs have been taking responsibility for providing primaryeducation in rural areas and the remote interior. However, large groups ofchildren in the interior do not get primary education on a regular basis becausethere are no teachers available, or because facilities (schools and houses forteachers) are inadequate. The education sector in general is badly affected bythe social, political and economic situation (including strike after strike, anda shortage of qualified personnel) resulting in a wider gap between parents whocan send their children to a private (paid) school, and those who cannot.

Facingthe liberalisation of services; urgent need for domestic capital formation

Surinamesesociety is moving towards privatisation and liberalisation. On one hand, badquality and high costs of public services make consumers (households andindustries alike) demand the government to either shape up or ship out and giveprivate initiative the chance to do it better. On the other hand, there is fearfor the consequences to employment and the accessibility of quality services forthe poor, specifically those living in remote areas.

However,there is broad agreement that government needs to shape up to face thechallenges of competing in an increasingly globalised economy. Human resourcelimitations are just one of the obstacles defined for most members of theCaribbean Community (CARICOM).[24]

InSuriname, building productive capacity and strengthening institutions will becrucial to overcoming the heritage of a highly centralised, partisan policy.National competition will have to be stimulated, while clear and transparentregulation must be established for the distribution of public goods andservices, taking into account structural and social concerns, as well asmacro-economic and financial concerns.


[1] Inter-American Development Bank. Economic and Sector Study Series, Governance in Suriname, Washington, April 2001.

[2] A.J. Brahim. “Wat verwacht het bedrijfsleven van de overheid,” in: De efficiency binnen de Surinaamse overheid, Progress Rotterdam, 1991.

[3] Government of Suriname. The National Reconstruction, Multi-Annual Development Plan 1999-2003.

[4] For a history of patronage, see Edward Dew, The Difficult Flowering of Surinam, 1978.

[5] Inter-American Development Bank. Central Government Consumption in Latin America and the Caribbean, 1997.

[6] Dr. H. O. Prade. “De verantwoording van het financieel beheer door de overheid en parastatale instellingen” in: De efficiency binnen de Surinaamse overheid, Progress Rotterdam, 1991.

[7] Inter-American Development Bank. Economic and Sector Study Series, op. cit.

[8] National Auditors Office of Suriname. Annual Report 1999, Paramaribo, 2000.

[9] 9-line Communications. International Long Distance Rates, USA 1999.

[10] Inter-American Development Bank. Economic and Sector Study Series, op. cit.

[11] Radio 10. Interview with members of Parliament on the black-out, October 2002.

[12] Radio 10. Interview with the President of Suriname on the consequences of the black-out, October 2002.

[13] Sheila Ketwaru-Nurmohamed. Situational Analysis of Women in Suriname, Paramaribo, 2001.

[14] Economic zones should safeguard traditional economic activities such as agriculture, hunting and small-scale logging and mining.

[15] Ministry of Public Health. Questionnaire, Health Conditions in the Americas, 1997.

[16] W. Bakker. Health Conditions in Suriname, 1996.

[17] Ibid.

[18] Ministry of Finance. Statistics from the Budget Office, 2001.

[19] Interview with women’s organisations in the district of Brokopondo, 2002.

[20] Interview with doctors from the Regional Health Service in the district of Marowijne, 2002.

[21] Seminars on Health Sector Reform, Ministry of Public Health/ PAHO.

[22] Ibid.

[23] Ministry of Social Affairs and Housing, Department for Research and Planning. Table of Free Medical Card Clients 1990-1998, 1999.

[24] Judith Wedderburn, “Capital Investment and requirements for competitiveness,” paper prepared for the working group on CARICOM’s Single Market and Economy, Jamaica 2002.