President flays private sector for failing to grasp business opportunities; offers to assist in crafting proposals to bank

Last Updated on Saturday, 12 November 2022, 12:19 by Writer

President Irfaan Ali addressing the Georgetown Chamber of Commerce and Industry’s Business Forum.

Even as President Irfaan Ali on Friday bashed the private sector for failing to take advantage of foreign investment opportunities from Saudi Arabia and South Korea, he announced that government was willing to help write business plans and negotiate with commercial banks for low interest loans.

“I am ready, as your President, to help to put together a team to write those business plans and feasibility studies for you and once they have passed their tests to send people with you to the banks to negotiate,” he said. The President said government has decided on a six-member team of professionals, under the leadership of Finance Minister Dr Ashni Singh, to meet with the Georgetown Chamber of Commerce and Industry (GCCI) to formulate proposals to take to the bank.

GCCI President Timothy Tucker later told Demerara Waves that government would take advantage of the offer. “We probably need that support from government and once we have that support, we would be able to work out the details,” he said.

He told the GCCI’s Business Development Forum (BDF) that despite government’s efforts, the private sector did not grab the opportunities. “At pains, we brought a Saudi business investor ready to form partnership. We were not ready with one single feasibility study or business plan to present. The Korean group came—the President of GCCI was part of this—you were not ready with one business plan or feasibility study to present,” the President told business executives.

To hit home his point about the apparent lack of readiness by the private sector, Dr Ali referred to a US$100 million line of credit for agriculture business but none of the proposals came from the private sector. Instead he said, the five that were submitted to the financier, Republic Bank, were crafted by him. “Not one single private sector entity came up with a feasibility study or a proposal ready to present after that announcement of that special window,” he said.

The President castigated the GCCI for also failing to establish a small business development fund with government’s offer one year ago to match that amount. “Today, I stand before you: Not a cent! And we still complain. Is the glass half full or half empty?” he said. Earlier, the GCCI President said a recent survey shows that 450 companies need US$112 million but there was no access to finance, but Dr Ali estimated that a mere 15 to 20 percent has a feasibility study or business plan to take to the bank. “The easiest thing to do is do a survey. That is the laziest part of the work, frankly speaking. What do you do with the data afterwards? How do you implement measures and programmes to help to transform that data into action?” he said. But Mr Tucker said it was impossible for the private sector to pool resources while at the same time experiencing difficulties accessing funds for themselves.

Mr Tucker, who in his opening remarks, lamented that businesses were plagued by a lack of access to finance, later told reporters that the problem was centered on the fact that commercial banks consider sole-traders riskier to lend than corporations which have to show audited financial statements. However, he said the 40 percent corporation tax rate is much higher compared to an estimated 20 percent tax on sole traders.

The GCCI President said Guyana needs capital markets that incorporated entities could get monies rather than racking up debts. He recommended a lower tax rate for companies compared to sole traders “because people are hiding from the task.”

Finance Minister Singh later told the first business session that if the private sector and the bankers association identify and agree on the laws that must be amended to facilitate easier access to finance, government would do so. “In the first instance, an obvious candidate: we are going to change the law… You identify what is the law exactly that is preventing this from, that’s a good start. I’m giving you the undertaking that we’ll be going to Parliament to pass that law, to amend that law to remove the impediment,” he said.

He alluded to the spin-off multi-million dollar investments in telecommunications by Guyana’s three major companies since the liberalisation of the sector in October 2020, the construction of six new hotels in two years and projected employment of more than 6,000 workers in the hospitality sector.