-says its modernisation will help drive economic growth

WITH Guyana being among the fastest growing economies in the world, President Dr. Irfaan Ali has signalled the need for a “big shift” in the business mindset of bankers and their clients for the modernisation of the sector to propel the nation’s economic advancement.

The Head of State was at the time delivering his featured remarks at this year’s Local Content Summit which was held at the Pegasus Suites and Corporate Centre in Kingston, Georgetown.

President Ali underscored the significance of the summit as a platform for networking and collaboration among key stakeholders, as he highlighted the importance of bringing together capital and human assets to integrate companies and foster the scale necessary for sustainable growth.

With an impressive average economic growth rate of 10 per cent over the past three years, Guyana stands out as one of the fastest-growing economies globally.

The heart of Guyana’s economic success lies in its strategic management of its burgeoning oil industry.

However, President Ali cautioned that realising these opportunities requires a fundamental overhaul of the banking sector. As such, he challenged traditional notions of banking, calling for a paradigm shift towards a more dynamic and investment-oriented approach.

“The banking model needs to change,” asserted President Ali as he urged banks to transcend their role as mere repositories of funds and embrace a proactive stance in wealth creation.

He criticised the prevailing risk-averse culture within the sector, advocating for a more assertive and analytical approach to capital deployment.

“Banks can no longer be a counter that you deposit money, and you get some interest, and you get a business model around that and then you are very risk averse. So, you look at the best opportunity for lending and you’ll lend to that so your returns are very high as can be seen in your balance sheets.

“That is not banking, that is a traditional approach to money management. Banking and Finance is an art. It is an art of utilising liquidity in the system through structure and mechanism to grow wealth and create wealth.” President Ali affirmed.

While outlining his vision for a banking sector that actively identifies and pursues growth opportunities, President Ali explained that banks must evolve from passive custodians of capital to proactive agents of economic development.

He said: “This requires a big shift in the business mindset of the bankers and the client. We need to move up this value scale in the banking sector. To have more investment-type bankers who are on a daily basis, analysing the opportunity in the market. This requires some investment from the banking sector.

“It requires the banking sector to use more analytical tools in defining the opportunities for the country. But importantly, in modelling those opportunities and then going out to their clients.”

With the government’s targeted investment in public capital goods and infrastructure paving the way for sustained growth, he posited that the banking sector in Guyana was poised for expansion, offering significant opportunities for both domestic and international investors.

UNTAPPED OPPORTUNITIES

Drawing attention to untapped opportunities in regional collaboration, President Ali challenged Guyanese businesses to expand their horizons beyond national borders.

He called for a concerted effort to leverage the country’s growing capacity and scale to pursue regional opportunities, thereby unlocking new avenues for economic growth.
“If we are building the capacity of companies here, what is the market we are targeting? Is it only building that capacity and scale and capability for the local market? Or do we now look at this capacity and scale your building locally and find regional opportunities through which we can apply this capacity and expand the economic and financial opportunity for the local businesses. And that is where we have to position ourselves,” President Ali told the summit.

He warned that in building the capacity of local companies, they must not limit themselves to the domestic market but actively seek out regional opportunities.

“Don’t tell me the opportunity is not there! As you build a scale, the government is saying we are going to invest. That is why from the government side, we are developing a model to match the economy of the future,” the Head of State said.

Recently, the Senior Minister in the Office of the President with Responsibility for Finance, Dr. Ashni Singh, highlighted the country’s rapid growth and the substantial impact this has had on the banking and financial sectors.

During his presentation at this year’s Energy Conference and Supply Chain Expo, Minister Singh pointed out that the growth in credit was not just a quantitative leap but also a qualitative one, as the domestic banks, despite being relatively small, have been responding within their capacity.

However, this growth also opens opportunities for international banks in Guyana.

“There’s a limit beyond which the domestic banks have been responding… and so there’s an opportunity even for international banks in Guyana,” Dr. Singh remarked, highlighting the potential for increased international banking presence in response to the country’s economic dynamics.

The finance minister also pointed out the significant role of multilateral and international financial institutions, such as the World Bank and the Inter-American Development Bank (IDB) Bank, which have notably increased their lending to the private sector in Guyana.

This involvement of international players, he said, underscores the country’s growing credibility and attractiveness as an investment destination.

Moreover, the minister elaborated on the private sector’s robust response to the conducive economic environment created by the government.

He noted the remarkable growth in home loans for homeownership, a direct response to the government’s housing programme, signifying the sector’s almost risk-free lending environment.

“Nobody wants to lose their home,” he said, explaining the low default rates on home loans in Guyana, which enhances the attractiveness of the sector for banking investment.

Dr. Singh, in his presentation, explained that the country is on the brink of a financial revolution, buoyed by its strategic economic reforms and burgeoning oil and gas sector.