The Guyana government says it is reviewing applications from several merchant banks amidst concerns expressed by the Guyana Manufacturing and Services Association (GMSA) for the authorities to “help businesses not to be beggars at international and local banks.”
Addressing a GMSA dinner recently, Guyana’s Vice President Bharrat Jagdeo confirmed that several merchant banks are stepping up to seek approval for their applications, considering the aggressive need for financing.
“How do we get a greater flow of financing to people who already have contracts to the oil and gas companies or the first-tier contracts? We’re looking at (meeting) with the bankers. We may need to even change the bank supervision rules. But if the current commercial banks are not fit for purpose or are not aggressive enough.
“We’ve already licensed one new commercial bank. And we have applications for several merchant banks now, that will specialize in discounted invoices and even providing some limited financing based on contracts signed with the multilateral companies here,” Jagdeo told the event.
He said the Irfaan Ali administration intends to be very liberal with financing non-depository institutions and as a result, Guyana will see several new institutions of that nature in the next few years.
GMSA President, Rafeek Khan, said access to capital has long been a hindrance to the formation and expansion of local businesses noting that a revolving fund would be appropriate to address the issue.
He told the dinner that such a fund could “help businesses not to be beggars at international and local banks”
Khan said lending by local banks has increased by almost ten percent, noting that it is a “good sign that the economy is doing well, and banks are lending more.”
But Jagdeo said businesses cannot want greater access to financing while being unwilling to explore partnerships or go public.
He said local businesses must look for ways to raise money outside of debt financing.
“Many (businesses) can’t go to the bank because there is transparency in record keeping…it should not be only about government providing the funds to businesses…the private sector also must take steps to improve its own accountability,” Jagdeo added.
Khan said with the oil boom and unprecedented economic growth to take place in the next few years, the situation presents a golden opportunity for the many businesses that have been holding out for the last decade.
He noted that with competitiveness across sectors, local manufacturers must also look to grow into secondary and tertiary manufacturing.
“This is where you see real growth in the economy and value added. Every sector is preparing to grow,” Khan said, adding that he believes agriculture and construction, apart from oil and gas, will drive this economic growth.
According to the government’s revised projections, the economy is expected to grow by an average of 59 percent this year.