Micro and Small Enterprise Development
- Published: 19 August 2011
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Total Project Budget: US$ 10 Million
Implementing Agency: Small Business Bureau, Ministry of Tourism, Industry and Commerce
Project Background and Summary
Micro and Small Enterprises have proven to be catalytic in creating employment. Small and Medium Enterprises’ (SME) contribution to Guyana’s GDP in 1998 was estimated to be around 28%, with approximately 22,000 micro and small firms in operation and contributing 40% to the overall employment. MSE will be the vehicle to target the creation of employment in Low Carbon Sectors in Guyana, since it is considered the first step in business formalization.
The Low Carbon Development Strategy (LCDS) sets out the Government of Guyana's (GoG) commitment to address two of the major constraints to the establishment and sustainability of micro and small enterprises (MSEs) and to the ability of vulnerable groups to build alternative livelihoods in Guyana, namely: i) limited access to finance; and ii) limited technical and business skills. By facilitating the expansion of the business development support sector along a low carbon path, the GoG aims to provide economic opportunities to some of the most marginalized groups in Guyana, while promoting self-sufficiency, sustainable business initiatives and working closely with the private sector in a sustainable manner. Access to finance will be addressed through the following mechanisms:
1) A Credit Guarantee Fund (CGF) The CGF is a pool of money that is used to guarantee enough of the collateral requirements of the lending institutions to allow a good MSE and vulnerable group business development loan proposal to be accepted by both parties. By assuming part, but not all of the risk, this fund seeks to entice the lending institutions into lending to the MSE at attractive commercial rates. The CGF will guarantee a certain percentage of the debt for loans across all sectors of the economy, as long as they are low carbon sectors.
2) An Interest Payment Support Facility will help the MSE pay off a percentage of its interest obligations on the loan, and will target key low carbon sectors that have been identified in the LCDS as being the basis for new economy: aquaculture, fruits and vegetable farming and agro-processing, sustainable forestry, eco-tourism and business process outsourcing. The capital allocated to this facility will be smaller than the allocation for the credit guarantee facility.
3) A Grant Scheme
The Low Carbon Grant Scheme is a pool of money that will be set aside to assist vulnerable personss to access financing for their existing or potential business venture.
Access to business and technical training, including financial literacy, will be addressed through:
1) A Skills Voucher Scheme
This is a scheme whereby MSEs and vulnerable groups are provided with training vouchers (grants) which can only be exchanged for the training enrollment they need at registered training institutions. Training will be targeted towards strategic skills such as business management, marketing, accounting, financial management, and technical training.
The MSE project was launched on October 14th, 2013 at the Guyana International Conference Centre. Project implementation is currently ongoing.
This first two (2) year phase of the project will be funded by US$ 5 million from the GRIF. The second phase of the project can be funded with an additional US$ 5 million for another two years.
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