Local commercial banks have restated their preparedness to help finance the growth of the small business sector in Guyana, but maintain that lending decisions will continue to be based on judgements that are rooted in the soundness of such entities.
Commercial banks have had to face criticism from some small business operators who frequently complain that the banks’ lending conditionalities are beyond their means. However, Bankers Association official Shaleeza Shaw told the forum that while commercial banks were not disinclined to embrace a measure of flexibility in engaging potential small business borrowers, the banks’ research had found that some small business initiatives were rooted in shortcomings that pointed in the direction of failure.
Shaw listed over-optimism, the improper utilization of funds, insufficient market research, lack of managerial skill, absence of support services and theft of business stock as being among the reasons why some small businesses fail. Shaw cited the Government of Guyana/Guyana Bank for Trade and Industry (GBTI) collaborative small business lending programme ‘Women of Worth’ (WOW) as an example of a commercial bank small business lending initiative that had worked on account of close collaboration between the banking sector and small entrepreneurs. She disclosed that around 1,200 single mothers including a number of repeat borrowers had already benefited from the WOW programme.
In an earlier address to the forum, Governor of the Bank of Guyana Lawrence Williams had outlined the strong liquidity position of the commercial banking sector, pointing to significant increases in both overall bank assets and commercial bank deposits. According to Williams, only 49 per cent of commercial bank deposits was dispersed in the form of lending and that while considerable sums were being held in overseas deposits and treasury bills, it was still much more profitable for commercial banks to lend to the local private sector.
According to Williams, commercial bank lending to the various sub-sectors in the private sector had increased considerably with credit growth in the agriculture sector increasing by 189 per cent, while credit growth in the construction sector had reached 202 per cent. Williams said that the distribution and real estate sectors had experienced credit growth totalling 185 per cent and 351 per cent, respectively. “The liquidity profile of the commercial banking sector suggests that there is scope for lending for well-collateralized, bankable projects from the private sector,” Williams said.
