Whalen: Results of credit programme excellent
A proposal for a post-LEAP programme in Linden is currently before Cabinet but the government is also seeking an extension from the European Commission (EC) to go beyond the June 30 deadline to allow for a “defects period” and to implement the smaller post-LEAP programme.
If no extension is given current projects will have until June to be completed and paid for and this can pose a problem since under LEAP, infrastructure projects are completely paid for after their defects liability period is completed.
In early 2002, the 12 million euros or $2.2B Linden Economic Advancement Programme (LEAP) at the time (the exchange rate has inflated the sum) came into operation to stimulate economic growth in Linden and in Region 10.
Over the years the programme has seen the establishment of infrastructure and services that LEAP covers such as the 1.9 million euros Linden Economic Advancement Fund (LEAF), the multi-million dollar Business Incubator that houses LEAP’s office and paid tenants, the Demonstration Farm at Moblissa, and the establishment of the soon to open industrial incubator in Kara Kara, Mackenzie, among others, like road works.
So as the programme wraps up questions have been raised about the continuation of these services and the various associations and groups that continue to receive support from LEAP.
In an interview recently the International Programme Manager Kathleen Whalen confirmed that, “Yes, we come to an end this year after completing seven years.”
However, she stated that although June 30 is the close off date for the entire programme, the government has requested an extension from the European Union and a response is expected shortly. Stabroek News understands that the government is seeking to have an extension that runs to 2010. She further stated that Cabinet has the proposal for a post-LEAP programme and a response is expected “shortly”.
Since September 2007, word was expected about the proposal according to an earlier interview with Whalen, but she noted in the interview that the document had been refined several times.
Optimistic
It is very critical that the government makes a timely decision on the post-LEAP programme proposal, and the EC on the government’s extension request, since the Financing Agreement for the whole programme stipulates that funding for some aspects of LEAP comes to an end on March 31, 2009. For example, LEAF cannot give out any loans after March 31 but Whalen said she is “optimistic” about an extension.
The LEAF Fund Manager Valerie Sharpe told this newspaper that she does not know what will happen after March in terms of loans distribution. Already, she noted, it is perceived by clients that they do not have to repay their loans and there is an increase in defaulters. Sharpe is “appealing to them (clients) to continue paying their loans.” The Fund is also awaiting outstanding sums from the EC to disburse loans before March 31. In addition to this, without an extension, current projects cannot go beyond June 30, and all outstanding work must be completed and paid for. Until the EC approves the extension, Whalen said, all books will have to be closed and ready for the auditors by June 30.
Meanwhile, LEAP’s policy is to pay only for finished work so unfinished projects will pose a problem. In addition, a portion of monies would be withheld until a “defects period” is completed and then paid, providing there is no work to be re-done.
Whalen said that the extension sought will allow for a ‘defects period’ as well as to implement the post-programme. This newspaper understands that the defects period for small projects is for three months, buildings, six months and roads, one year.
Currently, LEAP is funding an over $100M project – building a boardwalk on the Mackenzie shore and a multi-million dollar exhibition hall at the Band Stand on Mackenzie which is expected to be completed soon.
Speaking about the post-programme Whalen said that it will be ‘a much smaller and differently focused’ programme.
Funding post-
programme
As to the funding for this post-programme, she explained that based on their analysis, they have sufficient funds from fees garnered from services rendered for business plan preparation and other fees to “sustain our operation for a proposed one year,” that is the new programme.
In addition she pointed out that fees will continue to come from these services, albeit the rates will be more in keeping with the actual cost of having it done. However, initially it will not be at the commercial rate, and continued rental from incubator space is expected to contribute further.
Apart from this, the large upper offices now occupied by LEAP will be rented and the new programme will take up a smaller space in the Business Incubator, probably on the ground floor and this income will be used to pay for part of the programme. Fees are also expected to come from the continued rental of conference facilities. Whalen noted as well that there will be discussions on the best management model for the Business Incubator.
For example, she remarked that there will be no need for engineers or infrastructure staff under the post- programme. Currently there are some four engineers. Even though the number of staff has not yet been determined under this post-programme, Whalen believes that it may be in the vicinity of 4 to 5 employees. There are over 15 staffers at LEAP. The services that would be required under this new programme would include staffers providing business counselling and advisory services and rendering investor support.
Lead entity
Critics have said that the government should not be the lead entity in the post-programme, but Whalen noted that “in reality the government has to carry it.”
According to the proposal before Cabinet, the 1.9 million euros LEAF is expected to continue, but the international manager noted that, “the government has expressed the view that they will like to see some private sector involvement in growing …enlarging the credit fund.” Whalen noted that, ”the results of the credit programme are excellent.” According information from LEAP, so far 1.6 million euros of the total 1.9 million euros was received from the EC, while a sum of $465M and $73.2M is outstanding due to the higher exchange rates for the euro over the years.
The full 1.9 million euros will have to be submitted to the government after the programme ends and the government will determine the next phase of the credit facility.
And regarding the management of the post-LEAP programme, Whalen said, “I will not be staying on,” adding that the “local staff (is) more than capable to continue the programme.” She said about LEAP’s set indicators, “we would have met most of them,” adding that new jobs were created and investors were attracted to the community. But she did acknowledge that their efforts at attracting international investment were frustrated by the prevailing financial climate.
Changing attitudes
In addition, there was an admission that some things if done again would have been done differently in the programme.
As it relates to changing the entrepreneurial attitudes of Lindeners, Whalen posited that, “Linden has made amazing gains on that,” adding that, “you don’t turn around a company town in seven years.” LEAP had set a target of creating 1,700 jobs and attracting new investment to revive the ailing Linden economy. By mid- 2007 over half of the 12 million euros had already been disbursed.
Critics of the programme have said over the years that it had not done enough in creating jobs or attracting investment. In statements from LEAP in mid-2007, it was noted that investment to the tune of millions of US dollars was attracted to the community and several hundred jobs were created.
