Development Bank must support struggling businesses while enforcing borrower accountability – GAICO CEO

The Guyana Development Bank (GDB) should have systems in place to support businesses that fail or struggle to perform optimally, while ensuring borrowers remain accountable for managing their finances responsibly, said Chief Executive Officer (CEO) of one of the largest private sector organisations in Guyana, Komal Singh. Singh founded GAICO, which has grown from a small local civil works contractor into a major provider supporting Guyana’s infrastructure, marine construction, waste management and oil and gas sectors.
During The Guyana Dialogue programme on Thursday, he noted that while the GDB is expected to address access to capital for small and medium sized enterprises (SMEs), business owners must also develop sound financial management practices.
“Many businesses fail because of poor financial management. Especially, if you get a job and you get an advanced payment. If you don’t understand that that advanced payment does not belongs to you, but it belongs to the project and you start, you know, spending it here and there without proper management, you’re definitely going to run into problems,” Singh, a former chairman of the Private Sector Commission (PSC) highlighted. Nonetheless, he expressed confidence that the bank will have systems in place to support borrowers and help them achieve their business objectives. But the GAICO CEO emphasised the importance of timely interventions. “I’m very, very confident that the Government will have a very robust system in place, first of all, to evaluate those proposals, to have proper follow-up and monitoring systems in place and also to have a feedback session if the business fail for some reason, or they’re not performing as per plan, there must be a mechanism in place that you can review those proposals…to understand where is it you went wrong…,” he said, noting that these sessions must be conducted regularly. With the necessary legislative framework now in place to govern the establishment of the GDB, the Government has begun setting up regional offices and recruiting the technical personnel required to support the operations of the State-backed financial institution.
The Government has made it clear that the goal is to ensure the bank is staffed with technical professionals who can support prospective borrowers at every stage of their entrepreneurial journey, from developing a business idea into a viable proposal to providing guidance that helps ensure the business operates successfully. Minister of Public Service, Government Efficiency and Implementation, Zulfikar Ally, has already assured that systems are in place to ensure principles of accountability and transparency are embedded in the operations of the bank. He noted that the bank’s management information system will be the authoritative system of record for disbursements, repayment schedules, arrears, recoveries, and development impact indicators. Ally further highlighted that the bank will be guided by a clear governance framework, led by a board and CEO, and supported by credit, risk, compliance, finance, treasury, Information Communication Technology (ICT), monitoring, recoveries and regional representatives. It also provides for regional peer review groups in each of Guyana’s 10 Administrative Regions, supported by technical and credit officers. Additionally, he said there will be robust systems for risk management, financial oversight, compliance and monitoring will ensure that every loan is assessed fairly, responsibly and transparently. Moreover, he explained that borrowers will be able to make repayments through authorised channels while the credit record remains centrally controlled. Through the GDB, eligible applicants will be able to access zero-interest, zero-collateral loans of up to $3 million to start or expand their businesses. Additionally, the Government has secured agreements with commercial banks to leverage those funds, allowing small business owners an additional $7 million in financing, at subsidised interest rates as low as 3.5 per cent. Some US$100 million has already been budgeted to kickstart the initiative.

Consortiums
SMEs are already being encouraged to form consortiums to maximise the amount of capital they can access through the bank. The GAICO CEO echoed this call, noting that while $3 million may appear modest, pooling resources can enable businesses to undertake larger and more ambitious projects. In fact, he noted that the agriculture subcommittee of the PSC, is already working with SMEs in helping them form consortiums.
“Under the agriculture subcommittee, it’s open for every single person to join who wants to be part of that, you don’t have to be a member of the private sector to participate in that subcommittee. Under that subcommittee, that subcommittee works very closely with SMEs and small businesses, even individual in guiding them in how they can get inline with businesses…currently the agriculture subcommittee is working with a lot of small businesses to bring them together to form consortiums, they’re creating an environment where they can have meetings with Government, with some of the regulatory agencies also. So, these persons are getting more and more exposed in what they need to do in order to get into business, in order to access loan, in order to access technical expertise to help manage their business that they want to get into,” Singh pointed out.