Don’t be left behind, IDB is helping to build small businesses’ capacity

Jul 24, 2022 News

The Creators’ Coven

By Zena Henry

Kaieteur News – We are back with more discussions on how we are beating this tough economic period that has been brought on by the pandemic and the Russian/Ukraine war which have facilitated interruptions in the global conduct of business. At home, it is no secret that poor, marginalised groups with limited access and ownership to resources are the ones feeling the brunt of this fallout. These are the people most affected and have to find ways to cope with the negative changes.

I understand the difficulty that currently exists, and I’m happy to provide all the information available to you. I have shared on a number of matters. In fact, for a few weeks I’ve shared tips on how to beat the hard economic times, and last week in particular, I provided you with avenues to access information and resources after enlightening you about the development and expansion of small businesses as a means to diversifying and increasing revenue.

One of the things I highlighted was the notion of business potential. Our country is heading deeper into a ‘big business’ frame and the entire landscape is changing. But don’t be mistaken, if one fails to properly position themselves toward what is happening, then certainly, the transformation will take place without you. As such I underscored the importance of registering your small business with the commercial registry as well as being Guyana Revenue Authority (GRA) and National Insurance Scheme (NIS) compliant, since these are the very basic requirements that any business owner must have to conduct business.

The SBB provides assistance to all small business operators

I then looked at various agencies where different types of assistance could be found; for example Small Business Bureau (SBB) for business help including financing, IPED for financing and other state agencies like National Agricultural Research and Extension Institute (NARIE) that for instance, offers help in agriculture/farming free of cost.

Today, I reiterate, “Do not get left behind”. The good news today is that you can position yourselves to access support from an extremely beneficial $126M Inter-American Development Bank loan that will cater directly to empowering micro-business owners. So yes, all you roadside vendors, small eatery operators, juice vendors, craft, small agro-processors, small farmers, cosmetology operators and other such workers can aim to be one of the lucky beneficiaries. The IDB is offering this to specifically support the micro operators as they recognise the difficulty these types of business people face in particular, when garnering capital investment. There is just one catch, you must position yourself to be eligible, that means you need to register with the country’s SBB which is located at Lot 1 Penitence Street, Georgetown. SBB is the state agency dealing specifically with the development of micro and small businesses so the IDB will be identifying 120 small businesses registered with SBB to benefit from the programme.

A small craft vendor

It is free to register with the SBB and the benefits are clear. Since the SBB holds that particular register, most state projects or any such as the IDB loan for small businesses often turn to SBB for selecting small operators. So, if you are not registered with the SBB, I recommend you do so as soon as possible. Yes, there are hundreds of registered small businesses but again, the SBB is the state agency dealing with small operators so it remains a plus for any business owner trying to position themselves for growth. And guess what, where this loan is concerned, this $126M is said to be the first phase of a two-phase distribution to offer the necessary help. And what is even more exciting about this loan, is that the bank is offering free training, business insights and tips through its partners that I guarantee will encourage you in your operation because that is the aim of proper advice and support.

The IDB funding will nonetheless address the stagnation of microenterprises in the country due to the challenges that exist in accessing financing for growth. This stagnation strangles micro businesses’ contribution to wealth and job creation, as well as economic development in the country. As such, the support toward your business is not just to benefit you, but fellow citizens and the country, especially if you are keen on your development, then growth becomes eventual, and you then need to hire help; thus providing jobs for your fellow countrymen.

This ‘Rastaman’ is a well-known small operator that sells out of his vehicle on Vlissengen Road

The IDB has nonetheless outlined that the challenges in accessing finance include business owners’ gaps in business knowledge and limited use of technology, which generate inefficiencies, drive up operating costs and constrains profits available for re-investment; as well as the lack of access to affordable growth capital, which puts pressure on profits and growth. This means a definite problem for small operators who want to grow but are stagnated by the challenges mentioned.

The Economic Development Fund Inc (EDF) that will be working in partnership with the IDB has thus proposed addressing business and financial knowledge gaps of micro businesses in its nine-month Economic Development Accelerator (EDA), that is currently funded for a limited number of participants by the USAID Eastern and Southern Caribbean Mission. The EDF is a Guyana-based business accelerator that, since 2019, has provided training, technical support, and coaching from international experts, as well as capital to support the scaling of targeted startups and micro enterprises (MEs) in Guyana. EDF is also a Guyana-registered private corporation and an awardee of a USAID grant. It is also sponsored by GTT, the country’s largest telecommunications provider.

As part of the loan, EDA clients will participate in practical business management and business leadership development training that includes technical support and coaching from international experts. The EDA also provides capacity building for MEs involved in agro-processing and, ideally, with additional support, the skilled trades, and programmes for other small manufacturers. Furthermore, EDF’s EDA programme is expected to offer a differentiated financing option: a mixed instrument that is not traditional debt, but a recoverable grant in the form of a “note” that provides a legal framework for recovery of the funds. It was explained that the innovation behind the proposed funding component is that MEs’ revenue streams provide the basis for repayment of the grant awarded. Through the revenue-based grant repayments, the EDA grant will meet the working capital needs required to encourage growth of small businesses like yours.

Additionally, the beneficiaries EDF’s solution is intended for growing MEs in industries that possess strong, predictable monthly revenue. The programme, inclusive of the recoverable grant, would serve an initial 120 MEs across all 10 regions of Guyana. It is anticipated that, demographically, programme awardees will be approximately 50 percent male and 50 percent female, so no one feels left out. It is expected that awardees will be from most of Guyana’s more populated regions.

The IDB noted that its contribution of US$200,000 will be structured as a Non-Reimbursable Technical Corporation instrument to support training, coaching of MEs as well as development of the ecosystem to support MEs’ growth in Guyana. An additional US$600,000 will be structured as a Contingency Recovery Investment Grant (CRIG) instrument that will be used to finance the growth of an initial 120 micro enterprises.