Floods inflicting heavy losseson clients in rice, poultry
The experience of the Institute of Private Enterprise Development (IPED) suggests that there was no significant growth in the small business sector in 2008.
“What we found was that some people went out of business and that those who are good at business simply stuck it out. Additionally, we have seen no significant increase in the number of new loans,” IPED Finance Controller Ramesh Persaud told Stabroek Business.”
According to Persaud while IPED was not altogether sure of the reasons for the sluggish performance of the small business sector last year, “some of it can be attributed to general conditions within the economy. According to Persaud while there may have been a small measure of growth in the country’s economy in 2008, this may not have been enough to allow small businesses to do well.
IPED’s assessment of its performance last year, however, indicated that there was some level of growth in the agricultural sector. According to Persaud, while that growth was not reflected in the number of businesses that required loans, “Higher loans were required, particularly in the rice sector as more farmers sought to take advantage of the very favourable” rice prices earlier in the year. “
Overall, IPED disbursed 5,768 loans in 2007 compared with 5,092 loans last year and according to Persaud most of the decline occurred in the vending and distribution sectors. “Unfortunately what we found was that the decline occurred mostly among the very small businesses in the economy and we believe that to some extent the bigger businesses are crowding out some of the smaller businesses on the streets.”
During last year the number of borrowers from IPED in the poultry sector fell to 853 from 896 though the value of the loans disbursed to the sector increased marginally from $139.5M in 2007.
“What our numbers are telling us is that there is probably some amount of stagnation in the small business sector. A number of small entrepreneurs are not taking risks. This may not necessarily be due to the prevailing conditions but what they anticipate may affect them”, Persaud added. He said that people have become familiar with the concerns that have been expressed in the international media and it is likely that this too must have had an impact on the outlook here.”
Meanwhile, Persaud told Stabroek Business that the current inclement weather and attendant flooding was impacting significantly on IPED’s loan portfolio, “More than 45 per cent of IPED’s portfolio is within the agricultural sector; more than 40 per cent is in the rice sector and 5 per cent in other crops. As it happens, the areas that are under floodwaters – in all parts of the country including Essequibo, the MMA area and Black Bush, among others – are those areas in which there is a significant penetration of IPED’s loans.
Persaud said that while it was difficult to provide an accurate assessment at this time IPED’s current assessment suggested that as much as 8 per cent of its portfolio could be affected by flooding at this time. “It is our assessment that more than more than 75 of our clients, who produce either rice, poultry or cash crops are affected by the floods. The balance of their outstanding loans is to the tune of around $85M.
That, frankly, is not good news for us.”
Persaud said that IPED was in the process of preparing measures to help its clients recover from their losses but declined to provide details of those measures.
No real growth in small
business sector last year – IPED
Floods inflicting heavy losses
on clients in
rice, poultry
The experience of the Institute of Private Enterprise Development (IPED) suggests that there was no significant growth in the small business sector in 2008.
“What we found was that some people went out of business and that those who are good at business simply stuck it out. Additionally, we have seen no significant increase in the number of new loans,” IPED Finance Controller Ramesh Persaud told Stabroek Business.”
According to Persaud while IPED was not altogether sure of the reasons for the sluggish performance of the small business sector last year, “some of it can be attributed to general conditions within the economy. According to Persaud while there may have been a small measure of growth in the country’s economy in 2008, this may not have been enough to allow small businesses to do well.
IPED’s assessment of its performance last year, however, indicated that there was some level of growth in the agricultural sector. According to Persaud, while that growth was not reflected in the number of businesses that required loans, “Higher loans were required, particularly in the rice sector as more farmers sought to take advantage of the very favourable” rice prices earlier in the year. “
Overall, IPED disbursed 5,768 loans in 2007 compared with 5,092 loans last year and according to Persaud most of the decline occurred in the vending and distribution sectors. “Unfortunately what we found was that the decline occurred mostly among the very small businesses in the economy and we believe that to some extent the bigger businesses are crowding out some of the smaller businesses on the streets.”
During last year the number of borrowers from IPED in the poultry sector fell to 853 from 896 though the value of the loans disbursed to the sector increased marginally from $139.5M in 2007.
“What our numbers are telling us is that there is probably some amount of stagnation in the small business sector. A number of small entrepreneurs are not taking risks. This may not necessarily be due to the prevailing conditions but what they anticipate may affect them”, Persaud added. He said that people have become familiar with the concerns that have been expressed in the international media and it is likely that this too must have had an impact on the outlook here.”
Meanwhile, Persaud told Stabroek Business that the current inclement weather and attendant flooding was impacting significantly on IPED’s loan portfolio, “More than 45 per cent of IPED’s portfolio is within the agricultural sector; more than 40 per cent is in the rice sector and 5 per cent in other crops. As it happens, the areas that are under floodwaters – in all parts of the country including Essequibo, the MMA area and Black Bush, among others – are those areas in which there is a significant penetration of IPED’s loans.
Persaud said that while it was difficult to provide an accurate assessment at this time IPED’s current assessment suggested that as much as 8 per cent of its portfolio could be affected by flooding at this time. “It is our assessment that more than more than 75 of our clients, who produce either rice, poultry or cash crops are affected by the floods. The balance of their outstanding loans is to the tune of around $85M.
That, frankly, is not good news for us.”
Persaud said that IPED was in the process of preparing measures to help its clients recover from their losses but declined to provide details of those measures.
