GEORGETOWN: Government has requested that the Caribbean Development Bank (CDB) commission a study to examine the demand for and the feasibility of establishing a development bank here.The President David Granger administration has been discussing the idea of a Development Bank to ensure manufacturers, agro-processors and service providers have access to capital to gain a competitive edge in their businesses.
Currently, some funding for small businesses is being provided through the Rural Development Fund and the Small and Micro-Enterprises Development Fund.
Finance Minister Winston Jordan said government recognises that micro-enterprises can be promoted as a means of establishing economic independence for young people. A recent CDB study estimates youth unemployment at 40 per cent, which indicates an urgent need to address this problem, Mr Jordan told mostly representatives of the corporate community at the Guyana Manufacturing and Services Association (GMSA) Dinner and Awards presentation Wednesday evening.
“Our President is keenly interested in tackling youth unemployment, and one way of doing so is to encourage entrepreneurship among our young people,” he said. Minister of Business Dominic Gaskin in a recent interview had told the Guyana Chronicle that the administration is open to the idea of establishing a development bank here.
Access to financing by small business has been a major challenge, with many, including some players in the agriculture sector calling for the establishment of such a facility to give them much-needed support to develop and generally to shore up the business environment.
Mr Gaskin had acknowledged that while access to financing for small businesses has been a problem, he said sometimes the problem has to do with the kind of small business that seeks financing. Banks examine the feasibility of proposals that are put to them and would offer financing if proposed projects are viable.
“Yes, there is room for a development bank in a developing country; there are however a number of factors that need to be considered as well as business models before such a facility is established here,” he said. Small business operators at a forum hosted by Go-Invest in July at the Arthur Chung Convention Centre made a pitch for the establishment of such a bank.
Concessionary rates
They said it would support their operations, but more importantly, offer financing at concessionary rates. A development bank need not be a physical bank, since the work can be executed through a policy arrangement with an existing bank.
A private bank can carry out the mandate of the development bank and by doing so it would save the government millions in dollars in building a facility and then having to employ scores of persons to manage it.
Aside from the development bank, attention is also being placed on tax reform. A Tax Reform Committee has been established to examine all aspects of the tax system. This committee has engaged and received inputs from many stakeholders, inclusive of the private sector.
“The report of the committee will be critical to informing tax reforms, going forward. In a recent meeting with the Private Sector Commission (PSC), we committed to meeting quarterly, instead of the annual pilgrimage for budget consultations,” Minister Jordan said.
The PSC and the Guyana Revenue Authority (GRA) have also established a mechanism for meeting on a regular basis to address issues affecting the business community. Mr Jordan Wednesday evening urged the private sector to take full advantage of this avenue to significantly improve processes, timeframes and build on their competitive edge.
He said the Ministry of Business was created to address the ease of doing business in Guyana. The new ministry has identified five goals, the achievement of which will ultimately lead to a more prosperous business community.
These goals are improving the ease of doing business in Guyana; attracting increased foreign investments; supporting the development and exports of value-added industries; increasing the economic opportunities and capabilities of vulnerable groups; and expanding capacity to develop and promote sustainable business-friendly policies.
Go-Invest is being streamlined and strengthened to accelerate investment.
Recently, a new board of directors was appointed and a new head of the agency is being sought. “International funding is being sought for a private sector development project that would include components dealing with the SWAPS and a ‘one-click’ button linking GRA, Deeds Registry, Lands and Surveys, etc – all with the aim of cutting red tape and freeing the system that is stifling private-sector growth,” Mr Jordan said.
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