Norway’s forest-saving payments to fund small business projects

Last Updated on Saturday, 26 December 2015, 21:02 by GxMedia

Small and very small businesses among vulnerable groups will soon be better equipped to access loans and run their businesses in a manner than reduces fossil fuel emissions. The deal comes in the form of a US$5 million project titled Micro and Small Enterprise Development- Building alternative livelihoods for vulnerable groups.

The agreement was signed by Country Representative of the Inter American Development Bank (IDB) Sophie Makonnen and Guyana’s Finance Minister, Dr. Ashni Singh.

“There are two things that we mainly hope to see achieved by the end of this programme is really an upscale in productive activity with the financial instruments and also more persons gravitating towards the low carbon sectors thereby we have less carbon emitting sectors in the country,” said Makonnen.

This non-reimbursable investment grant program is being financed with resources from the Guyana REDD+ Investment Fund (GRIF) Trust Fund and will be executed from 2013 to 2015 by Guyana’s Small Business Bureau (SBB), in coordination with the IDB, the Royal Norwegian Ministry of Foreign Affairs, and the International Development Association of the World Bank.

Funds are coming from Norway’s payments to Guyana under the US$250 million forest protection agreement with that European country. A series of projects have been identified by Guyana under the Low Carbon Development Strategy (LCDS).

Three types of financial products will be supported by the program: (i) a credit guarantee fund; (ii) an interest payment support facility; and (iii) a low carbon grant scheme to assist potential beneficiaries with seed capital to start up or expand their businesses. The second component will address the issue of lack of access to proper training, by providing resources for technical and business development training activities for the beneficiaries of the program.

“They don’t necessarily have the technical skills to be able to go and face the financial institutions so they will be provided with the technical knowledge that they need,”  said Makonnen at the signing ceremony held in the board room of the Ministry of Finance.

The target beneficiaries of the project are micro and small enterprises, which include individuals and groups without access to credit as well as those lacking appropriate business and technical training who have been affected by the restructuring of sectors such as mining and forestry. During the three year life of the program, it is estimated that 2,200 jobs will be created or sustained in the low carbon sectors with funds from this program.

This project will contribute to the reduction of economic activity in Carbon Emitting Sectors by facilitating the creation of employment via micro and small enterprises in low carbon emitting sectors as identified in the country’s Low Carbon Development Strategy. This will be done by creating incentives in accessing finance and business development training in order to set up and or expand a low carbon business. In his 2012 National Budget speech, Guyana’s Finance Minister Ashni Singh noted this importance of this project to the development of Guyana’s private sector: ‘The micro and small enterprise project will address the major bottlenecks in the development of a strengthened entrepreneurial and small business sector.’