Micro and small businesses in Guyana will now benefit from easy access to financing with reasonable interest rates through the Micro and Small Enterprise Development (MSED) project which was launched yesterday at the Guyana International Conference Centre (GICC) at Liliendaal, Greater Georgetown. The project aims to address two major challenges which hinder the development of micro and small enterprises and the ability of vulnerable groups to build alternative livelihoods in Guyana.
It will address limited access to financing by assisting those outside of the scope of the banking sector, while also addressing limited access to technical and business skills.
Addressing a gathering at the launching ceremony, President Donald Ramotar noted that one of the major impediments to small businesses has always been accessing finance at reasonable interest rates. He pointed out that while some may have been able to access finance, the interest rates have been oppressive.
But he said small businesses play an important role in development, and while big investments are needed as a push factor for development, sustainability of development also requires a place for the small business community.alt
He pointed out that small businesses make a huge contribution to employment, while providing very important services to the community. He also related that being small allows those businesses to be flexible and make decisions much quicker, in addition to having much smaller overhead costs, which allows them to provide cheaper goods and services to customers.
Nevertheless, President Ramotar emphasised, small businesses are not expected to remain small. He noted that many of them grow into huge businesses, and stressed that the MSED project would allow them to access financing at much cheaper costs and lower rates of interest.
Moreover, the President expressed hope that the initiative would have a special focus on the interior of Guyana, because while many of the issues faced by people in that area has been corrected, they can be helped to grow economically, and can contribute to the fight against poverty.
As such, he said, launching the project was very important for small businesses and for the country as a whole.
The project is being funded under the Guyana-Norway partnership, under the Guyana REDD+ Investment Fund (GRIF), which will see US$10M going towards the project. Funding would be implemented in two phases, with an initial tranche of US$5M for the first phase, which is to be implemented over a period of two years and is expected to create and sustain 2,200 jobs.
Finance Minister, Dr. Ashni Singh said it is important to note that the project is being funded under the GRIF, a fund established under Guyana's Low Carbon Development Strategy (LCDS).
He related that, for generations, there has been a compelling view that environmental responsibility may not always be compatible with accelerating economic growth.
“For far too long, these two objectives -- economic development and environmental responsibility -- have been seen as conflicting rather than complementary objectives,” he asserted.
Dr. Singh said the launch of such an important small business project demonstrates that good projects like this can be financed by resources mobilised as a result of global recognition that accelerated economic development need not conflict with environmental responsibility.
He stressed that the MSED project is a good manifestation of what can be accomplished under the ideals of the LCDS, and said it is also important to recognize private sector investment and growth, particularly investment by small businesses and the role of the small business sector in overall economic growth and development.
He related that effective mediation between banks and financial institutions and small businesses is also needed to meet the needs of the potential borrowing community. “I always encourage the banks and financial institutions to constantly endeavour to push the boundaries without compromising the portfolio of quality and without violating any prudential norms; to constantly exert energy in seeking out new lending opportunities and endeavour in bringing financial services to potential new clients,” he stated.
The MSED project is being implemented by the Small Business Bureau of the Ministry of Tourism, Industry and Commerce. It will be partnering with the Inter-American Development Bank (IDB) to obtain social, fiduciary and environmental safeguards.
Minister of Tourism, Industry and Commerce, Mr. Irfaan Ali, said that both small businesses and banking and financial institutions need to change their cultures, since there has been a misconception about small businesses.
“There is a misconception that we (small businesses) only wait for handouts; that we only wait for these opportunities. We have to change that misconception, and we have the power to change that misconception. We have to be the catalyst of change in the misconception,” he declared.
He said the banking sector needs to understand that “maybe the culture that they perceive small and micro business at is no longer relevant.”
The minister related that there is a challenge in the development of business plans, and in linking them in micro level to the more macro output in the economy.
He advised that the Small Business Bureau has been tasked with proactively developing business plans and concepts, in keeping with the direction of the economy, so that it can assist small businesses in meeting the sometimes very stringent requirements of the financial institutions, while enabling them to understand more importantly how the small businesses and investments are linked into the larger scene.
Vice Chairman of the Private Sector Commission (PSC), Mr. Ramesh Persaud, said that access to affordable finance and possessing the right business skills in micro and small enterprises has long been an issue plaguing the development and growth of small businesses. As such, the MSED project would assist in narrowing the gaps and providing hope to some of those small businesses faced with this challenge.
He posited that this is a remarkable step forward in supporting micro and small enterprises, and said that this initiative will go a far way in complementing the work done by other micro finance institutions and banks.
Division Chief of Capital Markets and Finance of the IDB, Mr. Juan Antonio Ketterer, said the project is very relevant to the development of the country, and noted that the IDB considers access to finance as one of the key pillars for improving business climate and promoting the economic activity of enterprises.
He further noted that access to finance is a problem faced by countries worldwide, and that the IDB has been helping governments with many interventions in this regard.
Financing under the MSED project can be accessed through the Guyana Bank for Trade and Industry (GBTI), which was the first financial institution to sign on with the project. However, Republic Bank (Guyana) Limited and the Institute of Private Enterprise Development (IPED) are also in the process of getting onboard with the project.