Entrepreneurship lacking in local private sector – IPED Finance Controller

Training can help small businesses attract investment capital
Finance Controller of the Institute of Private Enterprise Development (IPED) Ramesh Persaud has told Stabroek Business that the level of entrepreneurship in Guyana “needs to be raised appreciably” if there is to be any significant growth in the local private sector.

“While I am by no means seeking to put down the local private sector I believe that it has to be said that there are relatively few really good entrepreneurs in Guyana. The level of entrepreneurship needs to be raised but I am not too sure who is to make that critical intervention,” Persaud added.

Finance Controller of IPED,  Ramesh Persaud
Finance Controller of IPED, Ramesh Persaud

According to Persaud IPED was seeking to play its own role in seeking to enhance entrepreneurial awareness through its own training sessions. “Unfortunately, we do not get the level of response that we are seeking. If we get more people into our training sessions we believe that it will make a difference. On the other hand we believe that it is the desire on the part of the entrepreneurs themselves that will take us to that level of greater entrepreneurial awareness,” Persaud added.

Meanwhile, Persaud told Stabroek Business that he believed that the challenges facing small and micro enterprises in their quest to access investment capital was due in larger measure to deficiencies in entrepreneurial skills among potential investors than to problems associated with a scarcity of funds for investment.  “IPED will continue to provide financial support for projects in the small business sector that are supported by sound business plans and which its clients demonstrate a capacity to manage effectively,” Persaud told Stabroek Business.

While local small and micro enterprise sectors have raised concerns over the limited availability of investment capital through the commercial banking sector Persaud told Stabroek that he does not believe that “the real problem” has to do with a scarcity of capital. “It is true that the people to whom we extend loans may not, in some cases, be able to access funding through commercial banks. However, we do not believe that the real problem has to do with access to loans because we too have money to lend for small business ventures,” Persaud.

The IPED Finance Controller told Stabroek Business that lending policies of financial institutions had to be based on “the soundness of projects” and that this principle was applicable, whatever the size of the venture for which funds were being sought or the institution that was being approached for financing. “Lending can only be considered based on the soundness of the project,” he added.

Asked to explain the criteria used by IPED for determining whether or not projects met its requirements for lending Persaud said that apart from the viability of the project for which lending was being sought IPED is also concerned about the ability of the potential borrower to manage the project. “People sometimes come to us with what appears to be sound project proposals and when we make an overall assessment of their background and their ability we find that they lack that entrepreneurial zest and ability to manage that project. We have to try to marry what is put before us as a project with what we believe is the ability of the person seeking the loan to carry through with that project. We just cannot simply lend money to anyone who comes through our doors because the ability to repay loans depends, in the final analysis, on the successful actualization of the project,” Persaud said.

And according to Persaud part of the challenge facing the small business sector in seeking to create an enhanced eligibility for access to loans was a lack of attention to training in entrepreneurship. He said that IPED had found that its own clients had been paying insufficient attention to the training being provided by the Institute. “Part of the reason for our emphasis on training is our belief that a highly trained client is more likely to have a successful business. Unfortunately, many of our clients are too busy with their regular routines to take our training seriously.”

Persaud said that IPED’s internal studies of its clients had revealed that there was a higher level of failure among those clients who neglected to take advantage of the training opportunities being offered by IPED. “The success rate of our trained clients is far greater than the success rate of our untrained clients,” Persaud added,

Meanwhile, according to Persaud there are still far too many persons in the local business sector who lack any real entrepreneurial orientation. “In Guyana, when people think about starting a business the easiest thing to do, invariably, is to start a vending venture of one size or another.

Probably more than half of our own clients tend to have that approach to what they call business.” Persaud said that while IPED was seeking to give more support to the country’s agricultural sector the Institute had found that too few farmers possessed the desired entrepreneurial spirit. “There is a difference between a farmer who is simply self-employed and one who is an entrepreneur. The self-employed farmer simply grows his crops, markets much of it and feeds himself. We have not really come across that farmer who pays attention to improving their operation to a level where they can access overseas markets by themselves.” The fact is that we do not have a great many entrepreneurs who are export-oriented, he added.

The IPED Finance Controller said that significant growth in the local private sector can only be realized if more businesses begin to think beyond providing goods and services to the local economy. Our population is simply not large enough for us to grow significantly based on a dependence solely on a local market. What we need is a complete change in mindset among our local entrepreneurs that would enable them to seek out opportunities for export and for the running of their businesses at an international level. That, frankly, can only come from a personal desire on the part of every entrepreneur,” he added,

And according to Persaud the ability of the local business sector to raise the level of its entrepreneurial acumen and to orient its operations towards export markets will have implications for the extent to which Guyana benefits from the CARICOM Single Market and Economy (CSME). “If there are entrepreneurs within other member countries of the Single Market who are thinking more progressively than we are, then we are definitely going to be affected.

While it is true that a country like Trinidad and Tobago with its oil base would have a comparative advantage insofar as its manufacturing sector is concerned, our private sector still needs to demonstrate that keenness for entrepreneurship if we are to do well within the Single Market.”

And alluding to the efforts of the Government of Guyana to support the local agricultural sector in its quest to serve as the region’s major food supplier Persaud said that the efforts of the government had to be supported by a responsiveness on the part of the local farming community. “It is beyond just providing support at the level of government. It is very difficult to change attitudes that have been handed down through generations. Our farmers tend to show more concern about simply getting their crops grown and dispatching them from the farm gate to the market rather than with creating those linkages that will realize external markets. There is that missing link that has to do with the processes involved in securing overseas markets. While there has been some level of intervention by the New Guyana Marketing Corporation my own honest feeling is that we need for larger, more structured private sector involvement in seeking to get our agricultural products into the international market,” Persaud said.

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