By Tiffny Rhodius
The Small Business Development Finance Trust (SBDFT) has reported an increase in lending for 2009 by 51.2% with the majority of the loans being granted in the agriculture, fisheries and manufacturing sectors.
Reading the report on behalf of Chairman Sattaur Gafoor at the SBDFT’s seventh annual general meeting in the conference room, Hotel Tower on Wednesday, Director Mohamed Ali said that for last year, 652 micro and small loans were disbursed compared to 540 in 2008.
The value of the loans for 2009 amounted to $214.1 million, an increase from the $147.2 million in 2008. Of that, the agriculture, fishing and manufacturing sectors received $155 million last year, which was an increase of 49% compared to 2008.
Micro loans, which were given out to fund tourism-related activities such as handicraft, opening of travel agencies and food services saw a 13.25% decrease last year.
But in the housing sector, the report said, an increase of 141% was recorded last year compared to 2008. Micro housing loans were given to families who had a house lot and very little money and could not qualify for a mortgage. In 2009, $17.6 million was loaned in this sector, which enabled 39 families to put roofs over their heads, the report added.
Further, the report stated that of the many loans distributed last year the majority — 251 — went to females, while 239 loans went to males.
There was also an increase in the number of jobs created. In 2009, 1,660 jobs were created as against 1,300 in 2008.
“Since the organisation’s birth in 2002, 4,901 loans were provided to individuals who through their own enterprises have created 8,819 jobs,” the report said.
Meanwhile, the SBDFT recorded total revenue of $38.9 million, a 65% increase from $23.6 million in 2008. The increase, the report said, was mainly from the heightened loan activity, growth in loan portfolios and the value of loans.
Expenditure also increased over the last year by 25% from $16 million in 2008 to $20 million in 2009. Employment costs and legal consultation fees to International Finance Corporation (IFC) contributed to this, the report said. However the SBDFT did gain a net surplus of $15.7 million over expenditure.
The future
The SBDFT is optimistic about 2010. To position itself as a major micro financing institution, the SBDFT has successfully negotiated a loan agreement with the IFC, which is the financial arm of the World Bank. The first tranche of the loan was drawn in 2009 with the balance being made available this year.
The loan will go a long way in increasing the capital base of the organisation whose goal is to have 900 loans by the end of this year. Institutional building will continue with the IFC to allow for improving the delivery of a wider range of micro financial products, the report added.
Another major action by the SBDFT is a strategic five-year plan which will focus on delivery of integrated business in the agriculture sector, light manufacturing industry with export basis, institutional reorganisation of the SBDF and the financial growth and sustainability of the organisation.
Meanwhile for 2010, the SBDFT plans to open branches to better serve regions three, five and six. It also plans to expand its Learning Centre to educate entrepreneurs in areas of financial management, organisational management, planning and other areas pertinent to their business.
Managing Director of SBDFT Manjula Brijmohan in her report stated, “SBDF believes that to make Guyana a poverty-free country, the first step is to make sure that financial services are offered even to the poorest enterprising persons.”
However, she cautioned that micro finance is not a gift and borrowers must have determination and ability to use it effectively to generate money to pay their loans and live comfortably.
While Brijmohan noted the development of micro finance, she pointed out that a development strategy cannot work meaningfully without synergy between “small and big, poor and rich, commodity producers and processors, production and market linkages, etc.”
Brijmohan stated that while growth was not as fast as expected, SBDFT continued to provide micro and small loans to clients in 2009 with emphasis placed on rural outreach areas.
Praises for SBDF
Attending the general meeting were clients of SBDFT, officials of the organisations and government officials including Prime Minister Sam Hinds and Agriculture Minister, Robert Persaud who in their addresses commended the SBDFT for its initiative.
Agriculture Minister, Robert Persaud in his address stated that the SBDFT has grown from a “visionary idea” into “a serious partner providing finance to small businesses and helping them improve their assets”.
Persaud speaking with regard to lending in the agriculture sector said there has not been much activity in relation to commercial credit to small agricultural businesses adding that only 8.8% of total lending was made by the commercial banks last year.
The minister added that the number of loans that were not honoured in the 1990s had created a bad reputation for the agriculture sector along with institutional constraints and weak credit information systems in banks also played a role in the underfunding of the sector among other reasons.
“In Guyana small rural businesses are the backbone of our growing economy and are crucial to the alleviation of poverty in Guyana. However, without access to affordable credit, these businesses will continue to be locked in low-level equilibrium,” Persaud said.
Micro finance institutions such as SBDFT, Persaud said, play a key role in supporting agricultural development and other initiatives the government is undertaking to ease constraints related to access and affordability of credit and support the private sector in getting back into agricultural lending.
“The government will not just sit idle, but is looking at ways to make credit available to farmers especially small farmers,” Persaud said. Efforts by the government include US$2 million being set aside for the preparation of agribusiness plans to support the development of value chains in the fruits and vegetables, aquaculture and livestock sector.
However the minister cautioned farmers not to be solely reliant on private institutions but to explore community-based informal credit possibilities. He then challenged the SBDFT to be a source of innovation and information for schemes to support the government’s thirst to expand.
Prime Minister Samuel Hinds commended the SBDFT and encouraged the clients of the organisation to be better at what they do adding that they must think of how to improve their productivity. He pointed out that finance is many times an issue and called for more assistance to small businesses.
Minister within the Ministry of Finance Jennifer Webster pointed out the many initiatives by the government to sustain efforts to advance the initiatives of small and micro financing. These many initiatives which include the income tax act, National Security Livelihood Programme and others demonstrate the government’s commitment to support micro enterprises.
She too applauded the efforts of the SBDFT stating that it fills a critical need in the support of new financial products.
Clients honoured
The SBDFT honoured several of its clients. Kussilla Jugdeo, who was presented a trophy for best managed agricultural project, owns a rice farm and “manages her finances in a unique way”.
Jugdeo said she has been with SBDFT for four years and so far her business is doing well. “I’m happy to get this award from SBDFT and I will continue to do business with them,” Jugdeo said.
Another awardee, Lynette Nurse who received a trophy for best innovative entrepreneur said she has been with SBDFT since it opened its doors. While she admits that her business is not doing so well right now she said she always repays her loan on time and sometimes before time and that is how she earned the award. Her relationship with the SBDFT she says “is wonderful” and being awarded “means a lot to me”.
Awards were also given out for the best young entrepreneur, most progressive entrepreneur, best managed project, best potential growth and gift hampers and certificates were handed out to other clients.
