Plans to fund micro-business announced
By Gitanjali Singh
Caribbean Development Bank (CDB) President, Sir Neville Nicholls, yesterday announced that the bank is looking to establish a micro-enterprise guarantee programme for Guyana to facilitate credit to that sector. Speaking with reporters at a media briefing, Sir Neville said the CDB will provide a guarantee either to a commercial bank or a financial institution willing to provide credit to the small and micro-enterprise sector. The bank has been in discussion with the Institute of Private Enterprise Development (IPED) on the issue as well. The CDB board was still to consider the issue, but Nicholls noted that commercial banks were reluctant to lend to the micro sector, which often was a source of many jobs, because of the perceived risk. However, he said, experience in other states indicated that this sector had a high pay back rate. Additionally, the CDB is reviewing its direct lending policy to the private sector with the intention of extending the credit limit from US$5 million. A study is being done to determine what the new limit should be. "We are also working to extend the scope of our involvement in providing financing to the private sector in Guyana by establishing lending operations with private sector financial intermediaries," Sir Neville said. No commercial bank in Guyana has approached the CDB to be such an intermediary as yet and the criteria to do so would be a sound track record, according to the CDB president. Sir Neville also said that the CDB was working to raise the necessary funding to enable the Basic Needs Trust Fund (BNTF) operation in Guyana and other countries to continue. "It is a very vital programme for countries like Guyana and the CDB is optimistic it will find the resources [to have it continued]." Sir Neville was scheduled to make a presentation at the Forest Products Association's annual general meeting last evening and met, among other persons, President Bharrat Jagdeo during his brief visit. Guyana, which at one time had lost its eligibility for developmental assistance from the CDB but resumed this in the mid 1990's is eligible for more funding from the bank. Sir Neville indicated that because of difficulties with the implementation of projects because of the lack of institutional capacity, no new projects were financed by the CDB to Guyana since 1997. Rather, the government has been working to execute those projects in the pipeline including the Linden/Soesdyke Highway, the savings from which is now being used to rehabilitate Burnham Drive in Linden. A rural communities' project is also being undertaken and the CDB has a presence in the water sector as well. Sir Neville said that the implementation rate had improved and the CDB had recognised the need to provide a grant to fund implementation capacity, accompanying certain loans to Guyana. The bank recently granted a US$7 million line of credit to a Trinidadian Bank of which US$2 million was earmarked for projects in specified sectors in Guyana and Sir Neville indicated that there was nothing stopping any commercial bank in Guyana from approaching it. He said that there were CDB resources currently available, which Guyana could tap into, once projects were identified. He also indicated that another means the CDB was hoping to use to finance the private sector in the region was by investment funds. He said the CDB has committed US$3 million to an investment fund of the Commonwealth Development Corporation and has promised US$10 million in equity financing for the proposed Caribbean Equity Fund. The International Finance Corporation, the private sector arm of the World Bank and the Multilateral Investment Fund of the Inter American Development Bank have also promised resources for the Caribbean Equity Fund, which is expected to yield between US$50 million to US$70 million for equity investment across the region.
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