Although the Small Business Development Finance Trust Inc. (SBDF) disbursed fewer loans last year, it facilitated the creation of more jobs than in the previous year, according to Director Mohamed Ali.
Ali made the pronouncements at the SBDF Annual General Meeting (AGM) at the Regency Hotel yesterday morning.
Ali said that during 2018, the SBDF disbursed a total of 400 loans at a value of $275.3 million and, a decrease when compared to figures from the previous year when it had granted a total of 439 loans at a value of $279.3 million.
However, last year it facilitated 3,200 jobs in the local economy, while in 2017 it facilitated 2,869 jobs.
The value of loans for 2018 was recorded as the lowest since 2011.
Out of the 400 loans that were granted last year, 116 were given to women, 189 to men and the remaining 95 were granted to joint ventures of both men and women.
For this year, the average loan size also decreased from $700,042 in 2017 to $695,012, while the administrative cost per loan increased from $33,917 to $42,135 in 2018.
The SBDF was also able to generate a net surplus of $24.4 million, which was reinvested into the Fund, Ali said.
He further noted that while the micro-business sector continues to decline, the development, consumer and housing sectors showed an average increase of 14.7% over 2017, even though the average loan size decreased.
“Borrowers were very cautious about increasing their debt levels, particularly those in the agriculture sector, which was impacted by unseasonable weather, diseases and delays in payment for their paddy from some rice millers,” Ali noted.
As it relates to micro-businesses, he explained that they continue to be affected by the influx of Chinese businesses and the closure of the sugar estates, with most of the clients affected being women and single mothers.
In 2017, there were 169 borrowers for micro businesses, while that number significantly dropped to 89 for last year.
For developmental loans, an increase of 15.6% was noted from 2017, despite the average loan size decreasing from $1.18 million to $1.12 million in 2018.
Ali pointed out that farmers returned to their fields but planted smaller acreages as the value invested in the sector stood at $225 million.
The Fund also serviced 85 clients in the housing sector to a tune of $34.7 million, compared with 81 loans in 2017. However, Ali said, the average loan size again was reduced to $409,000 from $430,000 in 2017.
“SBDF continues to service these clients who do not have regular income streams, thus enabling them to build and refurbish their homes in stages to match their income,” he said.
As it relates to commercial loans, which represent light manufacturing, fishing and livestock, in 2018 a total of 21 loans were granted, an increase from 17 in 2017. However, again, even though the number of clients increased, the average loan size decreased from $366,000 in 2017 to $348,000 last year.
The total value of loans to the commercial sector amounted to $7.3 million.
In concluding, Ali noted that there is a need for collaboration among government institutions to address the challenges facing the micro and small business sector, where the average borrowing is less than $100,000 and where the most vulnerable are impacted.
“Delays (in) payments to farmers continues to plague this industry where as the SBDF in many occasions had to extend further credit to assist the farmer to continue planting into the next crop. For those who have lost partial or entire crops, the SBDF had to reschedule their loans grant debt relief and provide further (aid) to alleviate the farmers’ financial woes,” Ali added.
Managing Director of the Fund Manjula Brijmohan along with Major General (Retired) Joseph Singh, who was the guest speaker, also made brief remarks to the gathering of clients.
Brijmohan encouraged the clients to be drivers for their business development as well as to utilise technology whenever they encounter obstacles, while Singh implored the clients to start thinking outside of the box and to satisfy demands in the market.
Johann David, agriculture business and value chain specialist at the Inter-American Institute for Cooperation on Agriculture (IICA), who delivered the feature address, spoke about the competitive limitations that micro, small and medium scale businesses face in the country, as well as simple solutions.
David highlighted that micro, small and medium scale business owners should recognise the benefits of working with organisations such as the IICA, the Small Business Bureau (SBB) and the Guyana Marketing Corporation (GMC).
“For growth of business, knowledge is very important and understanding where the opportunities lie, your partners in development. Those are really critical to moving your business forward,” she said.
David also emphasized the importance of having a proper business plan and said that if it doesn’t work on paper then it’s not going work in reality.
“If you are going to start a business and haven’t assessed what your investment is going to be and where and at what point your profit is going to be then your business is not going to be successful,” she said, while noting that financial literacy is also a serious constraint to businesses in the country as well as understanding the cost of production and value chain.
