IFC, a member of the World Bank Group, has signed a two-year cooperation agreement with the Guyana Bank for Trade and Industry (GBTI) to establish solid risk management practices and build a strong foundation for its small and medium enterprise (SME) lending.
According to a press release the agreement was signed on Wednesday and the International Finance Corporation (IFC) will implement it with support from the Canadian International Development Agency. GBTI said currently an estimated 65 per cent of Guyana’s SMEs are un-served or under-served by the country’s financial system, which limits their ability to grow and create jobs.
“Our collaboration with IFC will help support GBTI’s future expansion and financial sustainability by harmonizing our risk management policies to increase efficiency and take advantage of new market opportunities,” said John Tracey, CEO of GBTI. “GBTI will work with IFC to develop a more client-focused, performance-guided approach that better serves the needs of our population.”
GBTI said risk management practices need to be strengthened in Guyana to ensure the long-term growth of financial institutions and improve the country’s credit penetration rate, which is currently only 30 per cent of GDP. It also said that many financial institutions are reluctant to enter into and/or expand SME lending because of the need to first implement the internal structures and procedures to identify and manage risks related to these transactions.
“IFC is committed to helping Guyana support a more inclusive financial marketplace,” said Ghada Teima, IFC Access to Finance Manager for Latin America and the Caribbean. “We engage with financial institutions, like GBTI, to develop strong risk management practices that help promote financial stability and increase access to finance for SMEs.”
According to the release, since Guyana became a member of IFC in 1967, the entity has invested $31.4 million in the country’s private sector. IFC also implements advisory programmes to improve the business climate, build the skills of local entrepreneurs, and promote access to finance and markets for small businesses.
IFC is the largest global development institution focused exclusively on the private sector. “We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments,” the release said.
