The Centre for Local Business Development (CLBD) has been making progress in its talks with banking institutions in Guyana regarding access to financing for businesses operating in the oil and gas industry.
The Centre’s Director Dr. Natasha Gaskin-Peters said this week that local banking institutions are considering two proposals that the Centre made for new financing options. Engagement with the banks is being undertaken by Finance Specialist and Senior Advisor at the Centre, Mr. Anthony Sinclair. In their dialogue with the banks, proposals have been made for ‘purchase order financing’ as well as ‘receivables financing’.
“Access to finance is really crucial as a driver of economic growth given the advent of oil and gas, and the expected transformation of Guyana’s economy, we know that this is going to play a very important role as we move ahead,” Dr. Gaskin-Peters stated. She explained that Mr. Sinclair has engaged with over 80 members of the business community this week on the importance of access to financing.
She said, “We’re continuing to engage the banks on those products so that we can have them launch for the O&G [oil and gas] sector.” Dr. Gaskin-Peters added, “We are seeing that engagement with the banks. We’ve proposed the two products, however, [the] COVID-19 [pandemic] would have really placed a halt with our progress.” She is optimistic of more progress being made this year in this regard.
Meanwhile, the Finance Expert divulged that he has also been in communication with the financial regulators at the Central Bank and the local banks to get a better understanding of their concerns. “As the market is growing, not just in the industry but in the economy overall, with a lot of money being invested in the energy sector but also eventually spilling to other parts of the economy, there is a very crucial need for more access to finance,” he stressed.
He noted that around US$380 million has thus far been invested into the development of the oil and gas sector and that number is going to increase. This means that more financing will be needed for new and growing businesses to finance themselves and access the opportunities that will come. He also pointed out that a common occurrence in Guyana is businesses accessing informal financing from money-lenders and friends and family.
“They’ve done a really good job so far, amazingly, in raising money in order to respond to US$380 million that have already been spent. They’ve managed their businesses, they’ve made investments, but the Centre did a survey and found out that a lot of that finance came from informal sources and also from internal sources where companies have their own retained earnings, they have their own capital that they can redeploy,” he said.
However, he pointed out that the types of businesses in Guyana have evolved with the advent of oil and gas and banks need to adapt their approach to suit.
More than 2700 local businesses are registered on the Centre’s Supplier Registration Portal platform.