Banks find forestry sector too ‘high risk’ – loggers say

Players in Guyana’s forestry sector find it difficult to access bank loans, seemingly because it’s a high-risk industry and on Monday government brought the two sides together, as a means of paving the way to a mutually beneficial agreement.

“There is money to be made in the forestry sector and it is a great initiative to come up with attractive instruments,” so investors can have access to capital and expand, said Minister of Natural Resources, Robert Persaud.

Stakeholders and representatives of the timber and banking industries met at the Sleep Inn Hotel Boardroom, Brickdam, to discuss financing for the  industry.

Some of the timber stakeholders at a meeting held on Monday to discuss financing for the forestry sector.

Loggers complained that often when they approach banks for loans to develop their businesses they are not approved but are told “it’s a high risk industry”. One logger from Berbice said that when compared to gold mining the timber industry receives only a small percentage of loans. “It has gotten rougher over the years because people can go to the bank and say they want money to buy an excavator and they would more quick get a loan than if I  say I want to buy a single chainsaw,” the logger lamented.

Persaud opined that often bankers and investors were influenced by negative reporting, about the forestry industry in the local news, but they should not be swayed into thinking that it is not feasible to invest here, since evidence obtained by his ministry proves the contrary. “Many times our investors and banking community second guess… reading the newspapers every day about lumber export or not complying with something… However these reports are not on a factual basis, but persons getting caught up in another agenda,” Persaud.

He said research has shown that, although there are negative reports that there is a shortage of lumber or that logging is stifling the local housing and construction boom, this was not true since if measured by its capacity Guyana would be left straddled with surplus timber. “We are able to fulfil our commitment without having to sacrifice growth within the forestry sector …Our value demand cannot take off all the logs we fell and that is the reality. So those who try to give the impression that we are starving are misinformed,” he said.

He then told the bankers, while he understood that their industry was a profit making one they should look at lending measures from a holistic point of view since lending to persons in the timber industry aids in the economic development of the country as it creates jobs for persons and adds to this country’s Gross Domestic Product. “Our international commitment in terms of no deforestation should not in any way impinge on your decision to lend or not to lend or to increase the cost of borrowing,” he said.

Reference was also made to Guyana’s deforestation report for the year ending 2011 which illustrated that it was some 10 hectares lower than the previous year.

To boost the forestry sector his government was currently formulating ways to make investing in the timber industry feasible for investors. “We are currently in the process of reviewing and updating that log and export policy and  manufacturers and producers are yet to come to a consensus… a recommendation was sent to me but I asked that it be sent back to the producers and manufacturers so we can come to a solution” he said .

Other speakers at the meeting included Clinton Williams, Chairman of the Guyana Forestry Commis-sion and who is also the Guyana Manufacturing and Services Association Chair-man, Forestry Products Association Chairman Hilbertus Cort and FPDMC chairman Raj Singh.