President Dr Irfaan Ali on Wednesday reiterated disappointment in the local banking sector’s failure to meet expectations in Guyana’s growing economy and called for a review of its operations in order to exploit opportunities in the country.
The Head of State made these remarks at the Private Sector Commission’s Annual General Meeting (AGM), where he recalled issuing a challenge to the banking industry to be more proactive in seeking out and facilitating investment opportunities locally and abroad to help expand Guyana’s economy.
“I also challenged the banking sector to do much more, to be more innovative, to be more proactive. We can also evaluate how well the banking sector has performed in this challenge. The banking sector has been given one of the most dynamic platforms to support capital formation in this country; yet to date, the banking sector has not responded to the speed, efficiency, reliability and time to exploit the opportunities that are here in Guyana,” he noted.
According to President Ali, in a rapidly growing economy such as Guyana’s, the local banking sector needs to take more risks. He argued that the role of the banks is not just to take deposits and lend in a low-risk environment.
“The role of the bank is also to seek opportunity, to understand where the economy is going, should create an eco-system to support where the economy is going, and to build on what is happening in the country,” the Guyanese leader added.
He pointed out that while some banks have been working with government to roll out some initiatives, the drive to match the accelerated pace of the local business community is not there within the banking sector.
On this note, the Guyanese leader called for a review of the mode of operations within the banking industry.
“The speed at which the bank has been operating and processing does not match the type of dynamism that is in the economy. And I’m not saying this to be critical of the bank but for us all to review our mode of operation and to find, as we confront these challenges… a new sense of purpose in realigning our outlook in the banking sector and our management in the banking sector to match what is required in the economy,” Ali posited.
Only last month, during the second Local Content Summit 2024 held in Georgetown, President Ali spoke of the need for banks in Guyana to evolve their attitudes and way of thinking, noting that many regional opportunities are waiting for not just local businesses, but banks, to tap into.
In fact, he had disclosed that at least one indigenous bank that was expanding its footprint in the Caribbean. It was subsequently reported that the bank in question is Demerara Bank Limited.
According to the bank’s 2023 Annual Report, a subsidiary of the indigenous Guyanese bank will be established in St. Lucia. The report indicated that the Eastern Caribbean Central Bank (ECCB) has already approved the bank’s establishment on the island.
“The board of directors approved the establishment of a subsidiary in St. Lucia as part of the bank’s broader expansion plans. This coincides with the bank’s strategic plan which includes the expansion of our services and diversification of our business,” the report states.
Meanwhile, the Head of State urged members of the PSC at Wednesday’s AGM held at the Marriot Hotel to assess the performance of the local private sector, which he says has “grown tremendously” especially when it comes to the types of services being offered to not just the oil and gas but other industries. “We have to review the scope and scale through which the local private sector is allowed to operate especially in services for the oil and gas sector. I believe that in many areas, we’re training very competent Guyanese in areas of Oil and Gas Management, Environmental Management, Sustainable Management, Oil and Gas Engineering; and we have to ensure that those skills when they come together whether in consultancy or services, are fully deployed and deployed in a way that is fully integrated into the oil and gas sector,” he posited.
In December 2021, the National Assembly passed the historic Local Content Act which outlines 40 different service areas that oil and gas companies and their subcontractors must procure from Guyanese and Guyanese-owned companies.
These include 90 per cent of office space rental and accommodation services; 90 per cent of janitorial services, laundry and catering services; 95 per cent pest control services; 100 per cent local insurance services; 75 per cent local supply of food; and 90 per cent local accounting services.
However, Government has already said it will revise these carved-out areas and expand them to allow for Guyanese to benefit from more opportunities in the petroleum industry.
In fact, during the recently held Local Content Summit at the Pegasus Hotel and Suites, Attorney General and Legal Affairs Minister Anil Nandlall, SC, said this review could happen later this year. He explained that the government is currently waiting on the Local Content Secretariat to complete its review of the sector’s performance, which includes consultations with stakeholders, and produce its report.
Nevertheless, reflecting on the performance of the Private Sector over the past year, President Ali highlighted that Foreign Direct Investment (FDI) grew to more than $7 billion from $4.3 billion; private sector credit went up by 14.4 per cent; real estate loans increased by 22.5 per cent; loans to the construction and engineering sector rose by 21.7 per cent while lending to the mining industry grew by 18.1 per cent, agriculture by 14.7 per cent and manufacturing sector by 5.3 per cent.
