Dear Editor,
Currently, there are more than 520 development banks and development finance institutions worldwide. These institutions collectively account for approximately 10 per cent of total global investment. These institutions are created to address a persistent market failure: the exclusion of strategically important but higher-risk sectors from traditional financing channels.
Firms operating in these sectors – often critical to national development – face prohibitive borrowing costs, stringent collateral requirements, or outright credit denial from commercial banks. Development banks are therefore established to bridge this gap, enabling investment where private finance is either unwilling or unable to act.
In Guyana, a development bank was created in 1970 to extend credit to businesses, especially cooperatives. However, by the late 1990s, the bank collapsed as a result of poor management and the deterioration of the economy, which saw the demise of all key sectors. Under the Economic Recovery Programme, the Government had no option but to close the bank as part of its effort to divest underperforming state entities and liberalise the financial sector.
The situation today is fundamentally different. Guyana is experiencing rapid economic expansion in every sector. This growth is accompanied by significant bankable investment opportunities in both the oil and non-oil sectors. Small and medium-sized enterprises (SMEs), in particular, are poised to play a pivotal role in broad-based growth, job creation, and economic diversification. Recognising this fact since 2020, the Government is in the process of establishing an SME Development Bank to not only provide financing to these businesses but also to actively support their long-term viability.
This new institution, as conceptualised by the president, will catalyse SMEs in all critical sectors by offering zero-interest loans without collateral for amounts below GY$3 million, directly addressing the most binding constraints faced by small businesses. Beyond financing, the bank will provide technical assistance, training, and other support services to improve business capacity, enhance survival rates, and foster sustainable growth.
Importantly, the SME Development Bank is not intended to compete with commercial financial institutions. Instead, it is designed to complement them. For SMEs requiring larger financing, the bank will play a catalytic role – de-risking enterprises and preparing them to access private capital. In doing so, it will help crowd in investment, strengthen financial intermediation, and expand access to credit across the economy.
By targeting underserved sectors, supporting entrepreneurship, and facilitating private sector participation, the SME Development Bank will serve as a critical instrument for advancing Guyana’s development agenda – driving diversification, creating jobs, and ensuring that economic growth translates into broad-based prosperity. Importantly, it will be part of the financial system that supports sustainable development.
With the tabling of the Bill in the National Assembly yesterday to establish the SME Development Bank, the government will deliver yet another manifesto promise, fulfilling the dream of SMEs to access finance on terms and conditions available only in Guyana.