Bank loans to agriculture sector grew by 34.9% since PPP’s return to office – Pres Ali

The content originally appeared on: INews Guyana
President Dr Irfaan Ali

Capital investments are the lifeblood of private sector expansion and as such, the banking industry plays an important role in this.

On Friday, Demerara Bank Limited (DBL) came in for high praise from the Government for its role in pioneering loans to agriculture and other, non-oil productive sectors.

At the time, Demerara Bank was opening its ninth location, a $485 million branch at Leonora on the West Coast of Demerara (WCD). With over 60 per cent of the bank loans going to the agriculture sector, President Dr Irfaan Ali lauded the bank for pushing crucial capital towards important economic sectors.

“Since we came into Government what took place? The credit to the rice milling sector rose by 59.2 per cent. From an industry that went dead, the banking sector now has confidence in the sector to increase credit by 59.2 per cent. And Demerara Bank is a big part of this,” the President pointed out.

“Credit to the agricultural sector, when you want to see the results of policy, we talk about 25 by 2025… grew by 34.9 per cent. If you take that from a base of 2020 it would be over 70 per cent. Credit to mining, a sector that went dead, many mining areas in the interior were graveyards three years ago, grew by 25.1 per cent. Credit to the construction and engineering sector, grew by 23.4 per cent. And lending for real estate grew by 21.8 per cent.”

President Ali noted that the enabling environment to allow banks like Demerara Bank to increase lending to these sectors was no accident but rather, came about due to careful planning by the People’s Progressive Party/Civic (PPP/C) Government. He recalled the philosophy of the former A Partnership for National Unity/Alliance For Change (APNU/AFC) Government that rice was “private business” rather than the business of the State.

“As of November 2023, private sector credit grew by 13.7 per cent. And that is year upon year increase. So, it’s not 13 per cent from the base year of 2020. It’s the increase from 2020 to 2021, 2021 to 2022, that created a new base in 2022. So, it’s a year upon year increase. And that sometimes we miss.”

“And listen to this. I told you about policymaking earlier. There was one Government that said rice is a private business. Well, I could tell Komal (Samaroo) that dairy is a private business and don’t put the infrastructure in place and see who would invest. Because the reality is different,” the President also said.

Meanwhile, Demerara Bank’s Chief Executive Officer, Pravinchandra Dave, who also announced that he is retiring at the end of this month, revealed how much the bank has contributed to the economic sectors. In particular, he noted that 61 per cent of the bank’s lending has gone towards the agriculture sector.

“Some people think and write in the newspapers that banks are only here to make money. It is not so. We want to work as a catalyst for the development of the country, people and entrepreneurs. And if we don’t do it, the country won’t develop. It is our prime duty as a bank.”

“And not only that, we have to help the productive sector of the economy. Like rice, forestry, agriculture, telecommunication. I can say that 61 per cent of our total banking lending (is) in agriculture… our share of agriculture is 61 per cent. Our share of forestry lending is 27 per cent,” Dave said.

Back in 2022, Demerara Bank Limited collaborated with the Guyana Government to set up a $900 million revolving fund that was aimed at boosting the forestry sector to meet market demands by providing capital to those involved in the sector.

According to the details of the arrangement, some $300 million from the State’s coffers was to go towards this revolving fund. This sum was to be further supplemented by $600 million more provided by Demerara Bank Limited. It had been explained that this $900 million revolving fund would carry a low interest rate of four per cent.

President Ali had also announced, through a partnership with the Guyana Forestry Commission under the Ministry of Natural Resources, that a committee would be established to ensure that persons are adhering to and abiding by what is expected of them, that is, the sector itself and its various associations.

Another Demerara Bank initiative is the Farmers Credit Line programme, which the bank also launched in 2022 to provide much-needed financing to farmers, mostly those along the coast. The loan ranged from $1 million to $1.5 million with a low-interest rate and did not require any collateral from applicants.