Executive Chairman advocates local development bank to further encourage entrepreneurship
Executive Chairman of the Institute for Private Enterprise Development (IPED) Dr Leslie Chin has told Stabroek Business that there is need for the creation of a development bank in Guyana to help stimulate entrepreneurial growth here.
Local small and medium-sized business enterprises have expressed frustration over what they say are the stringent conditions attached to borrowing from the commercial banking system. But according to Dr Chin commercial banks are not geared to meet the borrowing needs of emerging entrepreneurial enterprises. “Commercial banks have a responsibility to their savers and the law dictates that they secure the loans that they disburse,” Dr Chin said.
“Typically, lending periods for commercial bank loans extend to about five years. In terms of entrepreneurial pursuits in areas like aquaculture, gold-mining and other enterprises that are dominated by small businesses, we need lending periods closer to ten to fifteen years. A development bank is more suited to offering that kind of service,” Dr. Chin said.
Since its establishment IPED has focused on providing loans primarily to small and micro – enterprises as part the Institute’s poverty reduction strategy. And according to Dr Chin last year the Institute disbursed 5,770 loans valued at more than $1.4 billion with most of its lending targeting clients in the agriculture, vending and poultry rearing sectors. During the previous year the Institute disbursed just over $1 billion dollars in loans to clients.
Last year 4,034 persons made loan enquiries with IPED and according to Dr Chin around 984 of those persons received loans
Dr Chin told Stabroek Business that during last year he was satisfied that IPED was once again able to make important interventions in the country’s small business sector. Chin said that the increase in the volume of lending by IPED last year was due in large measure to the Institute’s focus on building its clientele in rural and hinterland communities. “Last year, we opened an office in Mabaruma and we secured a significant number of loans through that office,” Chin said.
Most of the loans disbursed to clients in Region 1 went to vendors and to small poultry and agricultural projects.
Chin said that IPED now has more loans per 10,000 of population in some hinterland areas than in Region Four. He said that the Institute’s focus on taking its services to hinterland regions is part of its broader mission of ‘reaching out to underserved communities.”
Chin said that IPED was also continuing to focus on helping its clients beyond simply providing them with finance for projects. “One of the ways in which IPED is different from a commercial bank has to do with our focus on a business opportunities programme which helps our clients identify viable business opportunities with great potential. We need to find a few more such areas and focus on them,” Chin said.
Meanwhile, according to Dr. Chin, IPED has been studying the prospects for expanding the range of its loan products. “We have actually been studying the potential of the housing sector based on information which suggests that around 40 per cent of owners of house lots are unable to raise the capital for actual construction.
Unfortunately, we have had to conclude that given the size of the loans and the lending periods associated with supporting the housing sector we are unable to pursue that particular area. Financing housing projects is simply beyond the scope of IPED, ” Chin said.
