…Guyana courts EU to fund development bank

By Svetlana Marshall
GUYANA has courted the European Investment Bank (EIB) for assistance in setting up a development bank- a campaign promise by the coalition government and a much-touted initiative of President David Granger.Granger floated the idea when he met with a EIB delegation which is being led by the bank’s Vice-President, Pim van Ballekom. The team is here on a two-day visit exploring opportunities for the financing of new projects in Guyana.
On Thursday, the delegation accompanied by the EU Ambassador Jernej Videti?, met with President Granger and Minister within the Ministry of Finance Jaipaul Sharma at the Ministry of the Presidency, where a number of ideas were discussed, chief among which is the establishment of a development bank. “The Government is looking into the possibilities to create a development bank here, and then we could provide the credit line to that development bank in order to enable them to lend them out to the projects in the country,” the EIB Vice-President told reporters shortly after exiting the meeting with President Granger.
He said discussions on financing the proposed development bank will also be the subject of discussion when the delegation meets with Finance Minister Winston Jordan today. Since taking office in May, 2015, the A Partnership for National Unity + Alliance For Change (APNU+AFC) Government has talked much about creating a development bank in Guyana to ensure manufacturers, agro-processors and service providers have access to capital to gain a competitive edge in their businesses. Last November, it issued a request for the Caribbean Development Bank (CDB) to commission a study to examine the demand for and the feasibility of establishing a development bank here. Currently, some funding for small businesses is being provided through the Rural Development Fund and the Small and Micro-Enterprises Development Fund. The Government strongly believes that micro-enterprises can be promoted as a means of establishing economic independence for young people.
Improving infrastructure
Apart from the development bank, Pim van Ballekom said President Granger put forward a number of other interesting ideas. “He was interested in improving infrastructure; he is also interested in improving the accessibility as a means of finance,” he posited. However, Pim van Ballekom said while the banking sector is quite good here, there is often some reluctance on the part of lenders when considering Small and Micro Enterprises (SMEs), but this reluctance he emphasized, is nothing new. “That [reluctance] is not uncommon, that [reluctance] happens everywhere in the world, even in the country I know best – the Netherlands – where access to finance for SMEs is sometimes a hurdle to economic growth and prosperity,” the EIB vice-president said.
However, he said it would be “quite good” if the bank could lend support to Guyana and its commercial banks to make the process easier. Asked whether there is a fixed amount the bank is willing to pump into Guyana, he responded in the negative. “There is no amount fixed for a specific country or a sector. We are looking into the possibilities, and if it is a good-quality project and an interesting investment, then we will go ahead,” he noted.
If following this fact-finding mission, Guyana and the EIB agree on a particular investment, the vice-president said the entire process to commence the financing of that project would take approximately six months. “If it is a new investment, depends on the riskiness and research, normally it is six months,” he said, while noting that the process with recurrent clients is much faster.
In addition to meeting the Finance Minister today, the delegation was also expected to meet with members of the private sector on Thursday evening. In 2013, a team from the EIB had visited Guyana to explore investment opportunities here. At the time, the bank had reportedly identified a number of financing opportunities in the areas of renewable energy, water management and SMEs.
The EIB in the past had invested 63M Euros in Guyana for the execution of nine projects in the areas of forestry, mining, water and sanitation and the financial sector to support micro, small and medium-sized companies development. The last project according to the EIB vice-president ended in 2000.