A pending insurance licence for the LEAF manager appears to be the reason behind the delay of a final tranche from the EU and as a result the loans committee has not met since October, disappointing a number of Lindeners who were hoping to tap new financing.
The lack of funding at the Linden Economic Advance-ment Fund (LEAF) hampered clients seeking to expand during the Christmas holidays and they are hoping that monies will be available soon so they can benefit from spending during Valentine, Mashramani, Easter and Linden Town Week.
LEAF is a component of the Linden Economic Advancement Programme (LEAP), an over $2B Government of Guyana and European Union project to boost economic activity in the mining town.
LEAF, worth 1.9 million euros, was expecting its final tranche of some $284M, from the European Commission in October 2007 following the disbursement in August 2005.
One of LEAF’s clients who asked not to be named told Stabroek News that she had plans to borrow over $4M to extend her business and buy additional stock but was unable to gain a LEAF loan. She was expecting to have the monies at least by the first week in December. This client is among the first set that LEAF disbursed loans to since opening operations in 2005.
“It was rough,” said the boutique owner, describing how she was able to manage without the additional funds to invest.
“It definitely could have been better,” she added.
Nevertheless, this client is hoping to have the loan by this month end to complete the planned expansion and to stock up for the upcoming Valentine, Mashramani and Easter seasons as well as for the highly anticipated Linden Town Week.
This client reiterated that although January is a slow month if the funds were received she would have invested in adult/work clothing as persons would normally shop for the new work year. This client is depending on the LEAF loan since a loan from a commercial bank is not as attractive to her.
Another client who also asked not to be named told Stabroek News that she wanted a one million dollar loan to buy additional stock for the Christmas season. This vendor had plans to improve her inventory of gift sets, clothing and shoes.
She said that after visiting the LEAF office in November to inquire about a loan she was told that monies were not available.
But as to how she managed to keep the customers interested in what stock she had on hand the vendor remarked that, “God just really work out.” In explaining, she told this newspaper that she was able to sell her old stock and turn over the money to boost her inventory.
Speaking of her previous loans she explained that the loans assisted her a lot, and if she had secured one for the holidays, she would have done even more business. She too will still apply for the loan once the monies become available. “I will still go for it,” she emphasized.
The upcoming Linden Town Week held annually in April/May was also mentioned by this vendor, who said that she is hoping to secure a loan in time for this event.
“So long as you get the item you get the people,” she remarked. Even though, this client can obtain items on credit from outlets in the city, she told this newspaper that she does not prefer that option.
After the manager of LEAF, GuyFlag, which now goes by the name Caricom General Insurance Company Inc. was implicated in an insurance scam, the European Commission (EC) had called for it to be replaced as the Fund managers. But after several extensions of the insurer’s contract by the government to facilitate a tendering process for someone new, in August 2007 the government took the decision to have Caricom Insurance continue as the Fund manager. This decision also followed a special audit by the EC early last year which found that there was no misuse of funds in relation to LEAF. This audit was said to have paved the way for the remaining sums from LEAF to be disbursed but to date this is still to be done.
Limited funds
LEAF Manager Valerie Sharpe told Stabroek News on Wednesday that due to limited funds they are not able to give out new loans and as such the Credit Committee which approves loans has not met since October. Sharpe acknowledged that a number of clients who have a long history with the loan facility wanted loans to invest in their business for the Christmas holiday.
In addition, she said some persons with approved loans have not yet received their full disbursal. Sharpe noted that approved monies outstanding are $26M. Loan applications that are pending are also worth some $255M. To date, the EC has released $213.7M from the Fund, but as of December 31 last year, the Fund had disbursed $440.8M in loans, as a result of monies repaid and according to the Fund Manager, “that we actually recycled.”
She said that based on previous information the perception was that the monies (the final tranche) would have been received in October. She also noted that the $284M to be received is an increased amount since they have benefited from the favourable exchange rate. The original figure was around $250M. The EC also requested in September, according to Sharpe, LEAF’s business plan for 2008-2009 and the first draft of this plan will be submitted this month. It is not clear when a final draft will be submitted.
As a result of the monies not being received, LEAF’s client appreciation day was also postponed until further notice. Some of the clients to be honoured were Veresford Harry; Kenrick Gibbons; Violet DeAbreu; Wilfred Nurse; Gail and Randolph Richards; Clarence Mitchell; Renison Rawlins; Norville Frederick; Dereck Rawlins; Gladston Clarke; Fern Chapman; May Anthony; Valerie Clark and Shawn Naughton.
Licensing
Caricom Insurance, under its previous name GuyFlag had applied for an insurance license but this was denied by the Office of the Commis-sioner of Insurance (OCI) in October 2005, following which a legal battle began between the OCI and the insurer, as the insurer challenged the refusal. The court case ended after the insurer withdrew the matter and re-applied for a licence under its new name. This application is still pending.
The EC has written to the OCI on the status of the licence application for Caricom Insurance, to which the Commissioner of In-surance Maria van Beek told Stabroek News she has sent a response.
Van Beek said in an interview on January 3 that the OCI has just concluded an inspection and special audit of Caricom Insurance but the auditors’ final report has not yet been submitted. Van Beek explained that it is expected “shortly”.
“Certainly by the end of this month,” she affirmed. She remarked that the OCI “is not happy about (the) delay,” since they were hoping to make a decision on the licence application of Caricom Insurance before the end of last year. Based on the findings of this report a decision will be made on the licence application of Caricom Insurance.
Sharpe believes that the application of Caricom Insurance for a licence will have some bearing on the release of the remaining funds.
