…opposes institution being used for mortgage financing

WHILE recent calls were made by officials at the Linden Enterprise Network (LEN) for the diversification of its funding, a number of Lindeners want the institution to remain that of a lending agency for small businesses and the chamber of commerce of the township said government must significantly increase its $150M contribution if the scheme is to make an impact in the community.

In recent years Guyana Chronicle was told that the agency’s funds were used to finance purchase of cars, renovation of homes among other things, not catered for. Minister of Finance, Winston Jordan last week told residents of the mining town that the funds were abused. The Government of Guyana in 2015, injected $150 M into LEN. Since then, LEN has been issuing small business loans to residents of Region 10 up to $1 M. It was publicly revealed however, that many Lindeners are not accessing loans for the purpose of manufacturing or starting up a new business, but to either expand an existing business or establish a ‘buy and sell’ operation, which is in contrast to the enterprising objective of LEN.

With Linden not as strong, many small business owners are complaining of their products not selling and for those who borrowed loans are having a difficulty repaying in a timely manner, while still making profit. One small business operator who borrowed $500,000 from LEN to start up a salon and a boutique said that while the capital was great, the funds are coming in slowly, since there are many competitors around her. “Sometimes you come out, you do one nail, you sell two things and that is it for the day and at the end of the month, you still have to repay that loan, feed yourself, pay bills and stock up back…it is very hard because sales are very slow,” the nail technician said.

This has placed LEN in a difficult position of being able to sustain itself. Efforts however were made to diversify the funds so as to create more income for LEN. Minister Jordan however deemed this as an abuse of the funds and categorically stated that LEN should not diversify at this point. It was suggested to him that LEN should commence low-income mortgage loans, as well as other means of diversification.

President of the Linden Chamber of Commerce, Victor Fernandes in an interview with Guyana Chronicle stressed that LEN should not be diversified since it will remove empowerment from the people. “It won’t be significant to create growth, having to meet all the borrowers’ needs and all of that, if we go into housing loan and the various types of loans, it means then that you would have to reduce the amount that you give (for small business loans) and that won’t stimulate any kind of development…It will result in a lack of empowerment for persons who want to invest in industries, they won’t be empowered because you won’t have adequate sums that can be the catalyst for growth; that can create growth and development,” Fernandes said. He explained that diversification will only allow for LEN’s survival and sustenance, rather than to create growth. “I think small businesses have a better formula of lending and that is one of the areas that is available to everyone in Linden including manufacturers.”

Similar sentiments were echoed by one of Linden’s established and respected entrepreneur, Norvell Fredericks, who said that the business community is still quite starved for capital investment. “There is much scope for Linden because manufacturing in Linden is not only to meet the Linden market but we must be able to manufacture on a scale for export,” Fredericks posited.

Inject more to gain more
Fernandes explained that the solution to the problem is that the Government should inject more into LEN so that LEN can provide more for business people. This he said will be an incentive since persons are demotivated to commence manufacturing. The loans, he suggested, should be easily accessible so as not to frustrate people. “Government should place a significant input into LEN because LEN cannot sustain itself with the affordability of loans.” “People’s confidence need to be renewed because they are people with potential, with dreams and aspirations, but it is untapped because they look with fear and they are intimidated by the fact that they have to take a loan and make an investment with the study of how to repay.” Fernandes urged Lindeners to get into manufacturing, to take risk since the money is there and the support from the Chamber is there.

Fredericks said that government’s injection of $150M into LEN and to spread that across the entire Linden with an entrepreneur being able to access $1M maximum is like setting people up for failure. “When you look at LEN getting $150M, I beg to differ, because for me I could invest $150 M as one person but to try to spread that up so thinly around Linden is like setting people up for failure.” What the government should do, he said, is to do a study of Linden and its economy, which will help them to see how the situation can be bettered.

“I think Government should invest into a study of Linden and how the economy runs…yes lot of people are getting into buying and selling because it is the only option they have, government should invest in a more comprehensive study and to put better facilities and incentives in place to enhance business.” Fernandes revealed that the Chamber will be embarking on several training programmes for potential manufacturers and seminars, as well as engaging the powers that be in an effort to create growth for the economy of Linden.