The US$5 million Micro and Small Enterprise Development project, another project to be funded through the Guyana-Norway forests partnership, has been approved, clearing the way for implementation by the Inter-American Development Bank (IDB).
The Steering Committee of the Guyana REDD+ Investment Fund (GRIF) approved the project on November 30 and last Tuesday, Maria Dolores Rodriguez on behalf of the Interim Secretariat here requested that the World Bank issue a Letter of Commitment to the IDB for project implementation. The World Bank is the trustee for the GRIF and the IDB, as partner entity, is now able to request up to US$5 million to implement the project.
According to the project proposal document, the goal of this programme is to support the government’s strategy to reduce carbon emissions by re-orienting the economy onto a low carbon path, through the creation of the necessary incentives for the beneficiaries to invest in the Low Carbon Sectors (LCS). Specifically, the programme will facilitate the creation of employment via Micro and Small Enterprises (MSE) in the identified sectors of the Low Carbon Development Strategy (LCDS). MSEs will be targeted by enhancing access to credit and to business development training.
The programme will consist of two components. The first component will address the “core issue” of access to finance, specifically through the development of instruments that will help harmonize the current capacities of the beneficiaries of the LCS with the basic requirements of the financial sector.
The second component will address the issue of lack of access to proper training, by providing resources for technical and business development training activities for the beneficiaries of the programme, the proposal says.
It notes that there is a higher propensity for labour market entrants to be driven to the informal, low capitalization sectors such as forestry and mining (Carbon Emitting Sectors-CES) because of low barriers in these sectors and the attractiveness of returns. In order to reverse this trend, the programme will promote the creation of employment opportunities in the LCS that are attractive enough so that potential entrants into CES will switch to LCS, it says.
“In order to accomplish this, the program will facilitate access to credit for productive investments in capital in the LCS. If the program is successful and these capital investments are made, it is envisaged that the demand for labor will increase in the LCS…” it says. It noted that by promoting investment in LCS, people will be incentivized to stay out of sectors such as mining; thus, every job created in the LCS would mean one less job in CES and this, in turn, will contribute to the overall major goal of reducing carbon emissions in Guyana.
In a letter published in last Wednesday’s edition of the Stabroek News, forestry expert, Janette Bulkan had said that in relation to mining, the IDB proposal contradicts the LCDS. She noted that the May 2010 version of the LCDS says that “Grants will be available for small and medium businesses who have viable business propositions for generating new low carbon employment and economic value. This will include the provision of grant support for small sustainable mining operators, to assist in the development of commercially viable businesses. The grants will be administered through existing programmes for SMEs”; and six such programmes were then listed.
Bulkan said that the IDB proposal, like others prepared by IDB or UNDP for the LCDS, fails to address stakeholder concerns about relevance and appropriate institutional placing; concerns which were raised at the concept note stage in September 2011. “So IDB has had a year and US$127,476 of GRIF money for project preparation, to improve its thinking but has failed to do so,” she said.
With regard to access to finance, the document says that the objective of this component is to mitigate the structural problems faced by the beneficiaries in the LCS, with regard to their limitations on access to credit. Resources from this component will be used to finance the implementation of three sub-components: a Credit Guarantee Fund; an Interest Payment Support Facility (IPSF); and a Low Carbon Grant Scheme (LCGS) to assist potential beneficiaries with seed capital to start up or expand their businesses.
Guyana and Norway in November 2009 inked a Memorandum of Understanding (MOU) and a Joint Concept Note in which Norway committed to providing financial support of up to US$250 million by 2015, for results achieved by Guyana in limiting emissions from deforestation and forest degradation. Under the MOU, contributions from Norway are channeled through the GRIF which was established in October 2010, towards priority projects identified in the LCDS.
