Wednesday, Aug 15, 2018
Finance | South America | Guyana

Providing the capital lifeblood for Guyana’s SMEs

3 years ago
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John Tracey

CEO of Guyana Bank for Trade & Industry

With an almost pedantic lending philosophy, Guyana Bank for Trade & Industry has more than doubled its profits over the last five years while providing Guyana’s SMEs with the necessary capital to flourish    

Guyana is truly going through an exciting time at the moment. In a period of global economic recession, it has been one of the top five fastest growing economies in Latin America and is even projected to have an impressive growth of over 5% GDP for 2014. What impact would you say this economic prosperity has had on the financial sector in Guyana?   

Our growth has been parallel to the growth of the economy as a whole, which is rather normal for banks. There have been lending opportunities as a result of the expansion of business in general and so the banks have taken full advantage of that and increased their lending to many of the sectors i.e. the mining sector, the construction sector, agricultural sector – with the exception of sugar, since rice has been doing very well. The financial sector has done rather well over the last few years. All the banks have been solid and have been profitable.

Recently you just started SWIFT services here and the CEO of IBIS Management Associates said upon making the agreement that they would like to work with visionary and progressive banks. How would you describe the corporate culture of GBTI?

GBTI aims to be on the cutting age of technology. We’ve always said that though we are a small bank, we should be as efficient as any other bank in any other part of the world. There is no impediment to this end as technology can be purchased and employed as best as possible. We’ve had a very competent cadre of people here in terms of technology. We have support from one of the leading companies that provide technology – Oracle. Right now, we are completely automated in terms of anti-money laundering and countering the financing of terrorism. Just last week we implemented a FATCA software. We intend to be compliant in all areas of regulatory compliance.

Speaking of money anti-laundering, Guyana has struggled in the past with anti-laundering legislation and this has damaged its reputation internationally and threatened to be blacklisted. What would you say to the potential American investors who are concerned about this?

We have a robust anti-money laundering system. I think all banks have robust systems preventing money laundering and reporting it. Training is critical as we are the gatekeepers in terms of money laundering.  This is a responsibility taken very seriously simply because of our dependence on our correspondent banks for facilitating international payment transactions.  Non-compliance would cause a serious dent on how we do business for our customers.  We the banking sector have urged the government and opposition in Parliament to pass legislation because this is something larger than all of the internal politics of the country.

Considering how dynamic Guyana’s economy is, if you had to pick a certain sector to highlight, where do you see the most opportunity?

The agricultural sector and value added from agriculture has immense potential. Discussion in the Caribbean from moving away from an economy based on primary products is one that is ages old.  There is potential for value added and this is where we should be focusing our investment dollars. If we want to attract foreign companies, we want them to focus on producing value added products for export. What we need to do is to create interest here for companies that can handle raw products and add value to it.

What do you think is missing here for companies to achieve that? Is it the capital or the knowhow?

Both capital and know how.

Are there opportunities for American companies to come here and partner with Guyanese local partners, SMEs, which want to have operations here?

Yes. We have been operating with antiquated technology and equipment, particularly in the foresting industry.  It has been estimated that we waste 40% of a log. In China I understand they don’t waste anything. We’ve got to be able to match that as these resources are only renewable over hundreds of years. It takes a very long time for a tree to grow to that harvestable size. We can’t afford to cut down a tree that is hundreds of years old and waste 40% of it. That is not progress and this is where there is room to learn from technological advancement.

I was reading about an interesting article that you just signed on for an agreement with the IFC and the government for the Rupununi Innovation Fund, where you are trying to integrate SMEs’ into the Low Carbon Development Strategy. Can you tell us about this and what you hope to achieve from this?

That’s really a small part of our portfolio. In general, we have been focusing on SMEs and financing SMEs as an opportunity to grow our bank. To this end we have engaged the IFC as there is an opportunity in the Small and Medium Enterprise sector. However, the right approach must be taken, where a risk management system is essential. The IFC was willing to do a diagnostic and reported that we were not performing very well from a risk point of view. They advised us to engage consultants to improve our system. For the entire year, there have been a number of consultants analyzing the systems and recommending improvements so that we could have an enterprise risk management system. This is an ongoing process and it will be done over a period of 18 – 24 months. 

Furthermore, we offer WOW Loans (Women of Worth) in which we partnered with the government to lend to single mothers. That was more or less experimental. We also promote “Green Loans” and are collaborating with Conservation International on the Rupununi Innovation Fund. We believe this is a great opportunity for us to demonstrate our corporate social responsibility.

Why are these initiatives (the CSR, the micro-loans) so important to your corporate culture? How do you translate them into profits as well?

These initiatives are also a type of marketing. For instance, there is a government initiative promoting the housing sector where the government extended taxation relief to us for financing those housing units being built. We embraced this as it gave us an opportunity to increase our lending portfolio.

President Ramotar just returned from the US, where he addressed the diaspora.  One of his initiatives is to harness the power of the diaspora. How does that line up with GBTI’s strategy?  Are remittances an important market for you?

We do not at the moment offer money transfer services. However, we have been approached by a leading money transfer company out of the United States. This is an opportunity for us to harness more deposits from the diaspora. As far as the diaspora is concerned, we have a substantial amount of deposits from Guyanese from the diaspora.  However, we don’t directly market the bank at the moment but intend to do so when this service comes on stream.

Have you seen an increase in remittances from the Guyanese, especially in America, who want to come back and invest in the country?

I think that remittances from the diaspora have been stable over the years. However, we haven’t seen many persons approaching us directly with an interest to invest in Guyana.   1st and 2nd generation Guyanese in the diaspora are returning to start hotels as the tourism sector is expanding. There is a buzz centered around Guyana’s tourism sector and its potential.  We’ve financed a good number of new hotels. 

Do you think that the Amaila Falls project is going to get off the ground in the next few years providing Guyana with a cheap form of energy that will transform the economy?

We tend to focus on Amaila Falls, yet there are many other areas in Guyana where much can be done. To answer you in a generic way-yes, in the coming years we will see hydro power plant projects such as Amaila Falls. There are also opportunities for many smaller hydro plants. 

In this globalized world, the importance for countries to brand themselves cannot be overstated. How would you like Americans to perceive Guyana and the Guyanese?

We are an educated work force and very trainable. The one thing that we need to do is give more technical and vocational training to support the industries. We need to do more with our university. We have our human capital that is trainable. Investors want political stability. We also have a long history with the United States - our ties are deep rooted. It should be noted that we are the only English speaking country in South America.

The president spoke so passionately about how important it is for Guyana to expedite the process of development. Considering that America is its largest trading partner, how do you think this partnership can be leveraged for economic development?

We understand how much we need partnership to aid us in our development. We need foreign capital. I think that we are, indeed, ready for business. We’ve always been open and hospitable to investors. We also have the advantage of significant natural resources.




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