LCDS US$10M project to support micro-enterprise development

The government of Guyana has identified the development of micro and small enterprises (MSEs) and the provision of alternative livelihoods to vulnerable groups as a key component of the Low Carbon Development Strategy (LCDS). On October 14, the Guyana REDD+ Investment Fund (GRIF) Steering Committee approved the start of work for the Micro and Small Enterprise Development and Building Alternative Livelihoods for Vulnerable Groups Project, the Office of Climate Change said in a release.

The project aims to address two of the major bottlenecks that constrain the development of MSEs and the ability of vulnerable groups to build alternative livelihood in Guyana. These bottlenecks include: limited access to finance and limited technical and business skills. It will also strengthen the Small Business Bureau, which will administer the business components of the project.

The approval clears the way for mechanisms to be established that will benefit start-ups, micro and small enterprises and vulnerable groups, who often find it difficult to access loans because of the high degree of lending risk they carry and deficiencies in the requisite skills and training that are necessary to successfully develop and implement their business ideas.

The first is a mutual Guarantee Fund, that is, a pool of money that is used to secure part of the collateral requirement of the lending institution to allow a promising business loan proposal of a MSE or vulnerable group to be accepted; thereby enabling an MSE to obtain a loan at an affordable rate. The second mechanism is a Low Carbon Grant Scheme, which is another pool of money set aside to assist vulnerable persons to access financing for their existing or potential business ventures. Eligible persons will be those who are already operating a business and require additional financing.

The mutual Guarantee Fund will be accessed through two separate facilities – a Collateral Guarantee Facility that will secure a certain percentage of the debt for loans across all sectors of the economy; and an Interest Payment Support Facility that will help the MSE to pay off a percentage of the interest obligations on the loans.

In both cases, benefiting sectors must be key low carbon generators.

Lack of skills

Additionally, lack of skills will be addressed through a Training Voucher Scheme, which will enable MSEs to obtain the skills they require at existing training institutions such as IPED, EMPRETEC, business schools or the University of Guyana.

Training will be targeted towards strategic skills such as business management and marketing skills, financial management, and technical skills in low carbon sectors or key transition sectors such as sustainable mining and sustainable forestry.

Further, under project management support, financing will be provided for administration costs for all areas and includes hardware, software, salaries for additional staff, training, knowledge exchange trips and consultancy services.