Twice last week, during the course of interviews relating to stories published in the Stabroek Business raised with interviewees issues pertaining to the relationship between commercial banks and sections of the private sector in relation to the latter’s disposition to commercial bank lending for investment in small business initiatives, particularly in the manufacturing sector. More than any other local news medium the Stabroek Business has been providing sustained coverage of small business pursuits particularly, though not exclusively, in the agro processing sector and one of the recurring themes of that coverage has been the difficulties being faced by emerging entrepreneurs in securing funding from the commercial banks for investment in startups and newly emerging businesses.
Two points should be made at this juncture, the first being that it would be quite wrong to be critical of the policies of commercial banks that have to do with protecting (including prudently investing) the savings of their shareholders since in circumstances where they fail to do so they open themselves to legitimate charges of acting recklessly and without due mindfulness of one of their more important responsibilities. The second point is related to a question as to whether or not commercial banks’ lending policies do have to do with, among other things, playing a meaningful role in supporting the emergence of new businesses and by extension contributing to the creation of a more buoyant economy that strengthens existing sectors and opens up new ones.
The emergence of institutions like the Small Business Bureau (SBB) in recent years is intended to serve as a window of opportunity for the creation of new small and medium-sized enterprises. As it happens the structure of the SBB and the success of its mission depends in large measure on the commercial banks ‘buying into’ the initiative by, among other things, supporting Small Business Bureau-endorsed efforts on the part of those small businesses to secure funding for investment. Six years after its launch and while the Bureau continues to provide other useful business support services to the small business sector, its success in significantly strengthening the sector by facilitating opportunities for access to funding for investment remains strictly limited. In fact, numerous small businesses owners with which this newspaper has spoken have been unequivocal in the view that the advent of the Small Business Bureau has not done nearly enough to alter the historic caution, arguably even suspicion in some instances, to ‘do business’ with emerging enterprises in circumstances where they lack some of the conventional credentials applied by banks in the matter of lending for investment in businesses.
Frankly, while the Small Business Bureau is probably unlikely to say so publicly, its own credentials as a business support agency are largely dependent on the extent to which the banks can and will work with small business owners on the basis of the Bureau’s endorsement of those businesses. We are far from convinced that the Bureau is as pleased as it ought to be with the quality of its own relationship with the commercial banks.
This newspaper’s consistent reporting on the agro processing sector over the past year and more has been intended to provide an indication of what it sees as that sense of diligence and determination on the part of an emerging group of entrepreneurs across the country who are clearly determined to make their mark on the manufacturing sector and the economy as a whole as well as on their personal lives. We have seen evidence that these are serious and determined people who, based on the strides that they have already made, have more than made a case for the support of the banking sector.
We must be clear. Where there is evidence of poorly thought through and manifestly unworkable business initiatives the commercial banking sector cannot be expected to take risks based on the proverbial ‘wing and a prayer.’ That would be to move to another even more counterproductive extreme. It is, however, what, in the opinion of many small business owners, a sort of across-the-board profiling that is disturbing since, where a policy of this sort becomes ingrained, it will, to one extent or another, have a constricting effect on the country’s economy. Certainly, it will have a negative effect on the lives and livelihoods of Guyanese who are entitled to access to opportunities to fulfill their entrepreneurial potential and to better their lives.
It is of course no secret that the efforts of the mainstream business sector, through the major Business Support Organizations – the Private Sector Commission, the Guyana Manufacturing & Services Association and the Georgetown Chamber of Commerce and Industry – have been focusing their attention on supporting the fashioning of a Local Content Regime associated with business opportunities that will arise out of the country’s oil and gas pursuits…and that, frankly, is as it should be. At the same time it is by no means encouraging that these BSO’s have demonstrated a seeming determination not to intervene in the matter of the concerns of small businesses over commercial bank lending policies. A private sector watchdog group that is prepared to be robust in the advocacy across the widest cross section of business issues is clearly what is needed in Guyana’s present circumstances and in this context it is altogether appropriate to require of those private sector bodies that they undertake a serious review of aspects of their advocacy posture. Certainly, in circumstances where there is a considerable body of opinion to the effect that the lending regime in the commercial banking sector has a sort of an ivory tower appearance that is divorced from the business and investment realities of the country, particularly those that have to do with the emergence of new and viable small businesses, is not something that our own high-profile private sector bodies should be ignoring.
Several weeks ago, in an effort to help move our Business Support Organizations even closer to the mainstream in terms of publicly expressing its views and positions on private sector policies and on business as a whole, this newspaper extended an invitation to the PSC, the GCCI and the GMSA to contribute columns to the Stabroek Business on business-related issues of their own choosing. Issues like those that have to do with the lending policies of commercial banks in relation to small business growth are among the sorts of matters that we (and we believe, our readers) would wish to have their views on.
