Plans for opening a branch of Development Finance Limited (DFL) in Guyana have been scrapped and DFL will instead open offices in Suriname.
President of the Guyana Manufacturers' Association (GMA) Ramesh Dookhoo made the announcement at the association's annual presentation awards dinner held at Le Meridien Pegasus last Friday. He said despite the change in plan the Suriname branch will also serve Guyana and would in no way affect borrowing by GMA members.
He said the plans had been changed "due to pressure [brought] on the DFL by its financiers [European Investment Bank] to start moving." The GMA and DFL had signed a memorandum of understanding for the DFL to open an office in Guyana. In July the DFL had been waiting for certain concessions to be granted by the government.
In an on-line inter-view, DFL Managing Director Gerard Pemberton on Friday confirmed that the DFL South America Ltd, to be based in Suriname, would serve both Guyana and Suriname as originally intended. The services would be dedicated to micro-enterprises as well as to small and medium-sized enterprises (SME).
He said the DFL was fully aware of the difficulties and increased risk facing
the private sector but the financial institution's interest was long term. "That interest will be maintained as long as we are welcome in Guyana," he said, adding that the DFL was an associate member of the GMA. Pemberton said the DFL had assured the GMA of its commitment to providing financing products as well as management consultancy services to enterprises in Guyana.
The DFL was also willing to make equity investments, he said, adding that "our commitment will remain whether we are located in Guyana or in Suriname." Equity investment in Guyanese companies will be based on new projects in manufacturing, hotels and industrial services and not existing projects. Average loan size in the micro-finance unit will be G$100,000 and in the small and medium-size unit US$300,000.
Pemberton noted that the DFL had already made loans in Guyana within the last
six months and was currently considering investment proposals sent last month.
He said the DFL had arranged funding for a new financial institution (he did not name the institution) in Guyana and would be pleased to consider more proposals from enterprises in Guyana.
Initially, there had been plans for a June opening of the branch which in May this year was still awaiting formal approval of the waivers on corporation and withholding taxes from the government.
Stabroek News could not ascertain whether a formal approval for the waivers had been granted but the Office of the President had acknowledged receiving a request for the waivers.
The DFL had wanted a waiver for the first five years of its establishment of a branch in Guyana. The branch would have served as a development bank for the private sector, affording long-term financing. The company has been afforded similar benefits in other countries in which it established a branch.
For the Guyana/Suriname project, the DFL was able to secure approval from the European Investment Bank (EIB) for US$4.5M.
Pemberton in DFL’s annual report for 2001 had said a subsidiary in Guyana would have been operating in a “high-risk business in a high-risk environment” adding that the risk was compounded by the relatively low volume of business anticipated which would have made it difficult to achieve economies of scale.
Pemberton had said that the branch would have been established in Guyana only because of a risk-sharing arrangement with the EIB and a flat rate of interest would have been charged on loans using competitive market rates.
He had also said in the report that loan funding was to be negotiated with the Caribbean Development Bank in 2003 and international development agencies were to be approached to provide technical services since the capital alone would not be sufficient to allow the new venture to succeed.
The private sector in Guyana has for many years been clamouring for a longer-term source of financing via a development bank. (Miranda La Rose)