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OP: ED -My preferred development bank
By Rawle Lucas
The government has decided to establish a development bank. A Bill has already been proposed and has been rightly criticised for all its flaws. According to the published bill, the bank will be focused on supporting private investment.
The proponents do not seem to care if the bank itself could be viable with how it plans to treat its customers and how much it disregards the recovery and longevity of its own assets. Support for a development bank should be a no-brainer, but only if the bank is made to do what development banks around the world are set up to do. Development banks such as the African Development Bank and the Inter-American Development Bank are set up to lend money to low-income and middle-income countries, often on concessionary terms. Countries then use that money to invest in infrastructure that can support important social and economic projects. Money goes to agricultural, manufacturing and other projects that facilitate investments by private and public sector institutions.
Development banks are institutions that are owned by governments around the world. The contributing governments are the shareholders.
It seems to me therefore that the bank being proposed by the government should mirror multilateral development banks in ownership and operation. In addition to the central government, the owners of the development bank should be the municipalities, large NDCs and the Indigenous settlements. The bank can have two windows and a special fund. One window can be for municipalities and NDCs while the other window can be for small- and medium-scale private enterprises. The special fund could be for the microbusinesses and Indigenous settlements which do not meet the criteria to borrow as per the rules. It is the way poor, low- and middle-income countries are accommodated by development banks around the world. If the government is serious about development and is not seeking to create a slush fund, it should rethink its proposal, especially the ownership and management structures.
It should be kept in mind that the businesses the government plans to lend money to must operate in municipalities. These municipalities must be able to provide the businesses with the structural support that they will need to do well in their communities. Shacks along the side of the road as evidence of a business place are not good enough. Vendors operating next to canals with pungent odors is not good for health or business. The existing proposal for the bank ignores that the success of those businesses will depend on how well they can be supported by their local governments. Municipalities must be able to partner with all who want to live and dwell in their jurisdiction. Waste management must be strengthened. A municipality with access to development funds would be a great benefit to the overall development of the country.
The development bank that makes sense for Guyana currently is one that also gives municipalities access to development funds.
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