Access to finance has been a major deterrent to local businesses looking to service Guyana’s oil and gas sector. After all, the development cost for just one of ExxonMobil’s offshore projects overshadows Guyana’s annual budgets.
Calls have mounted for the government to devise ways to alleviate this proverbial brick wall. The latest came from the President of the Guyana Manufacturing and Services Association (GMSA) Rafeek Khan, who floated the idea of creating a revolving fund to Vice President Dr. Bharrat Jagdeo.
But even before this can be considered, Dr. Jagdeo outlined that the private sector needs to improve its financial standing.
He highlighted many local companies are unwilling to explore partnerships to take their companies public. This avenue would see the sale of company stock allowing the public to own equity in the company, and it could possibly be the “best vehicle” to get funding outside of debt financing.
The Vice President pointed out that many businesses are unable to access loans from the bank because no transparency exists within the company nor adequate records to support it.
“So, it is not just about the government providing funds to businesses – which could happen in the future once the resources are available, but it is about the private sector also taking steps to improve its own accountability at the company level and opening up its horizon to access financing of a different nature. We are open to the idea, but much more work needs to be done at that level,” he emphasized.
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Notwithstanding this, the Vice President pointed out that the government is actively pursuing avenues to see “a greater flow of financing” in Guyana, especially for local companies that have contracts with oil and gas companies or their contractors.
On this front, he revealed that the government has granted a license to one new merchant bank, with applications in the pipeline for several others.
“[The merchant banks] will specialise in, maybe discounting invoices and even providing some… limited financing based on contracts signed with the multinational companies here,” Dr. Jagdeo said. “We plan to be very liberal in licensing these non-depository taking institutions, so you are going to see several new institutions of that nature opening doors in the next few years.”
