For decades, the most familiar story in Guyanese small business has not been one of failure but of frustration. A seamstress in Sophia with three steady clients and a waiting list cannot expand because she has no land title to pledge. A young agro-processor in Region Two has the recipes, the labels, and the buyers – but no bank willing to lend GY$2 million without a cousin’s house as security. A wheelchair-using software developer in Linden builds apps from her bedroom because the cost of a small office is locked behind an interest rate she cannot service.
These are real examples. They are the everyday architecture of exclusion in our financial system, and this is precisely what President Ali’s vision of a development bank is designed to dismantle. The new bank will be capitalised at US$200 million, and its core offering will be loans of up to GY$3 million at zero interest with reduced collateral requirements.
This initiative deserves the full support of the Guyanese public – not as a handout, but as one of the most strategically timed economic interventions of the post-oil era.
The timing could not be better
Guyana is in the midst of the fastest economic transformation in the Western Hemisphere. Our GDP grew by more than 43 per cent in 2024 and continues to expand at double-digit rates. Roads are being built, ports are being expanded, hotels are rising, and demand for goods and services – from catering to construction supplies to creative content – is multiplying faster than local suppliers can meet it.
The danger in a boom of this size is not that there is too little opportunity. It is that the opportunity flows almost entirely to those already capitalised: large firms, foreign contractors, and established importers. Without deliberate intervention, the small Guyanese entrepreneur becomes a spectator in his or her own country’s prosperity. The SME Development Bank is that deliberate intervention.
What the bank actually changes
Three features make this institution different from anything we have tried before.
First, zero interest. Commercial bank lending rates for small businesses in Guyana have historically sat between 10 and 14 per cent. On a GY$3 million loan, that is roughly GY$300,000 to GY$420,000 a year in interest alone – often more than a micro-enterprise’s annual profit. Removing interest does not just lower costs; it changes which businesses are mathematically viable and sustainable.
Second, reduced collateral. The collateral requirement is the single greatest barrier to credit for women, young people, and persons with disabilities – groups statistically less likely to hold titled property in their own names. By relaxing this requirement, the bank effectively unlocks the productive capacity of demographics that the formal financial sector has too often excluded.
Third, targeted inclusion. The explicit emphasis on youth, women, and persons with disabilities is not a symbolic gesture. These three groups together represent the majority of Guyana’s working-age population, and they are over-represented in the informal economy, where productivity gains are hardest to capture. This strategy moves them out of the informal economy and into the formal economy. Bringing them into the formal credit system is how an economy converts demographic potential into measurable growth.
The wider economic case
There is a temptation, in a country with our oil revenues, to assume that direct cash transfers or large infrastructure projects are sufficient; however, on closer observation, the evidence suggests that while these initiatives are necessary, they are far from sufficient. Oil revenue is finite, volatile, and concentrated. A diversified small business sector is the only durable insurance policy against the day when oil production slows down.
Every GY$3 million loan that capitalises an agro-processor in Berbice, a tour operator in Region Nine, or a tailoring shop in Linden does three things simultaneously: it creates jobs that do not depend on the oil sector, it adds to the existing tax base, and it keeps money circulating in Guyanese communities rather than leaking offshore through imports. A US$200 million capitalisation, lent and recycled prudently, can finance tens of thousands of such loans over the life of the institution.
The priority sectors the government has identified – agriculture and agro-processing, tourism and hospitality, services, and creative industries – are also the sectors where Guyana has a genuine comparative advantage and where small firms, not multinationals, are the natural unit of production.
The legitimate concerns and how to address them
No serious supporter of this bank should pretend the risks are zero. Zero-interest lending, if poorly administered, can create dependency or encourage poor lending decisions, or the institution can simply lose money. Reduced collateral, if combined with weak underwriting, can produce default rates that erode the capital base. In addition, the combination of zero interest and reduced collateral can lead to perverse incentives or what is referred to as the “cobra effect”. This is where a well-intentioned reward structure inadvertently motivates people to act against the system’s actual goals.
The answer is not to abandon the idea. It is to build the bank correctly from day one. That means a governance structure with a clear framework that defines authority, responsibilities, and decision-making processes. It must ensure organisational activities align with objectives while managing risks. It must incorporate the following core pillars:
· Transparency: Open, clear, and accurate communication with stakeholders
· Accountability: Answerability at all leadership and operational levels.
· Responsibility: Ethical decision-making aligned with the organisation›s goals
· Fairness: Equitable treatment of all stakeholders without bias or conflicts of interest
The bank should also have independent and professional credit assessment; transparent, published criteria; strict separation between political officeholders and lending decisions; mandatory business training for first-time borrowers; and public quarterly reporting on disbursement, repayment, and sector outcomes. Done well, the Development Bank could be one of the most impactful institutions in the country.
A bank for the Guyana we are becoming
For too long, the question facing the small Guyanese entrepreneur has been, “How do I prove I deserve credit?” The right question, for a country at this moment in its history, is the reverse: how does the financial system prove it deserves the entrepreneur?
The SME Development Bank is the first serious answer this country has given to that question. It is not a perfect institution, and it will not single-handedly solve poverty or inequality. But it does something rare in public policy – it directs real money, at a meaningful scale, at the precise people whose exclusion has held back our economy the longest.
If we get this right, a decade from now we will look back on the establishment of this bank as the moment Guyana decided that prosperity would be built from the bottom up, not handed down from the top.
It deserves our support. More importantly, it deserves our vigilance – so that it lives up to its promise.