Canada backing Credit Bureau initiative

- High Commissioner says service can change fortunes of small business sector

Small, hardworking Guyanese businessmen who have consistently paid their bills on time but have, nonetheless, been largely shut out of the formal credit system are likely to benefit significantly from last week’s launch of the country’s first ever Credit Bureau.

Speaking at last Saturday’s launch of the Bureau newly appointed Canadian High Commissioner to Guyana Dr Nicole Giles said the new Credit Bureau will better position local small businesses “to negotiate a line of credit on favorable terms to expand business and capture new opportunities.”

And according to the Canadian envoy, the advent of the Credit Bureau better positions the country’s business sector to benefit from Canada’s development cooperation programme with the wider Caribbean. “Access to credit is an important priority for Canada’s development cooperation in the Caribbean. It is a key building block to establish more receptive frameworks for entrepreneurship and private sector investments which, in turn, are crucial for sustainable economic growth,” the Canadian envoy told the gathering.

Canadian High Commissioner to Guyana Dr Nicole Giles
Canadian High Commissioner to Guyana Dr Nicole Giles

According to Giles, Canada’s development initiatives for the region are “strategically clustered” around the goal of enhancing sustainable economic growth. And the Canadian envoy restated Canada’s advocacy of “a more integrated Caribbean region” a circumstance which she said would better position the Caribbean to compete in the global economy. She said that Canada has been backing this latest local initiative to make business credit more accessible by drafting the Credit Bureau legislation, training the Credit Bureau operator in technical supervision and in the recruitment of the provider.

Credit Bureaus are internationally recognised institutions, which, among other things, provide lending agencies with borrowing and bill-paying information on potential borrowers which is used in the processing of credit applications. Potential borrowers with poor credit ratings including a history of court-adjudicated debt obligations including bankruptcies may have to pay higher interest rates on loans than those who have no such borrowing impediments.

High Commissioner Giles reiterated the expanded opportunities for access to borrowing now afforded small and medium-sized businesses on account of the advent of the country’s first Credit Bureau. She said the development “heralds a new chapter in the credit appraisal process – one that is responsive to the Small and Medium Enterprises (SMEs) sector.”

Local SMEs have consistently cited access to credit as one of the more formidable barriers to flourishing small businesses.
In her presentation High Commissioner Giles noted that despite the fact that “SMEs are a significant contributor to the global economy, often employing more than 60% of the workforce,” the sector continues to be labeled “high risk and largely underserved by the financial community. A major contributor to this is the lack of information about SMEs credit history. With a credit bureau, SMEs will now be able to use their positive credit history as “collateral” to access loans at better rates and seek more competitive terms from lending institutions,” the High Commissioner said.

The success of the new local Credit Bureau will depend largely on the willingness of financial institutions to share information with them and Stabroek Business has learnt that several key local institutions, including utility companies and commercial banks have agreed to assist the Bureau in determining the creditworthiness of potential borrowers.