Mixed reviews for LEAP - next two years seen as crucial for Linden scheme

http://www.stabroeknews.com/index.pl/article?id=56522744

Mixed reviews for LEAP
-next two years seen as crucial for Linden scheme
By Nicosia Smith
Stabroek News
Monday, June 18th 2007

Kathleen Whalen

In the five years since its implementation, the Linden Economic
Advancement Programme (LEAP) says it has contributed US$3 million to
the economy of Region Ten but some critics say it hasn't been enough
and the next two years will be crucial.

Critics of LEAP have argued that sufficient jobs have not been created
and its mandate to date has not been fulfilled.

LEAP ends in June 2009; its original mandate included the creation of
1,700 jobs and the promotion of investment in the region. Already, over
half of LEAP's 12 million euros funding has been disbursed.

Private investment in the region was put at US$18.6 million ($3.7
billion) as of May, inclusive of LEAP's US$3 million figure, LEAP
statistics show.

Investment through its Linden Economic Advancement Fund (LEAF) loan
programme amounted to US$2.5 million ($517.6 million) in the areas of
agriculture, forestry, manufacturing and services, while infrastructure
and tourism development under LEAP totalled US$738,213 ($147.6
million).

Samuel Wright

Private sector investment listed by LEAP included Bai Shan Lin
International's sawmilling venture in Coomaka of US$10 million (this
operation was scaled back) and at least three other sawmilling
operations whose investment was put at US$3.6 million. Bai Shan Lin was
also recently banned by the Guyana Forestry Commission from exporting
logs.

Other investments include the Toucan Connections call centre in Kara
Kara valued at US$500,000 (this call centre has changed hands at least
once); a livestock farm valued at US$75,000 and an entertainment
facility valued at US$125,000. A bakery valued at US$500,000 (still to
be opened) and a fast food outlet valued at US$250,000 were also
listed.

Other forms of investments came under the separate Guyana Micro Project
Programme (GMPP) a government of Guyana and European Union project,
where 70% plus funding is given to bankable projects geared toward job
creation. Funding under the GMPP to Linden projects amounted to
US$196,938 in the areas of tourism and forestry.

Project Manager Kathleen Whalen told Stabroek News during an interview
in her office that there is now "a sense of entrepreneurship… in the
community."

LEAP, she noted, had over 500 registered clients and its business
advisory services are highly utilized.

In terms of job creation, it is her view that the target of 1,700 jobs
was met 16 months ago. However, it is now 65% of the target as a result
of the on-and-off operation of the call centre, which recently changed
hands and the scaling back of operations at Bai Shan Lin, which took
over Karlam South America Timbers Ltd.

The types of requests have changed, the project manager said and they
are "now much more precise." For example, Linden handicraft
businesswoman Irene Bacchus is receiving help to expand her line of
designs, she said, adding that assistance is also being given in the
area of marketing, labels and branding. And meetings are taking place
with the farmers, so that they can take advantage of export market
opportunities to the Caribbean. "It's looking very good for the next
year," Whalen said.

Asked to respond to those who would say LEAP has not done enough over
the past five years, she in turn asked: "What were they expecting?"

Among the infrastructure works under LEAP are a farm-to-market road in
Moblissa (there is a planned extension beyond its two-plus miles); the
approach to Speightland bridge and lodge and construction of other
facilities at Rockstone. Rehabilitation work is also planned for the
Haimara road at the old Alumina plant and a section of the Ituni/Linden
road at a cost of $150 million. While a farm-to-market road was built
at West Watooka, there have been criticisms that the dams to this road
need repairs. Whalen said the dams were not LEAP's responsibility, but
it hoped to extend assistance toward the dams if possible.

Exploring possibilities

In exploring agricultural opportunities, Whalen said, in terms of
expanding cash crop farming in the region, "these two things (the heavy
rainfall and hot temperature) have to be controlled." To this end, LEAP
plans to invest in a sheltered farm. There is also a plan to invest in
a 'demonstration farm', Stabroek News understands, where farmers will
go to see good farm practices and the sheltered farm technology. The
sheltered farm will probably be attached to this.

This technology is expected to be transferred to other farms in Region
Ten. Sheltered farming is already ongoing in Linden at the old alumina
plant area.

LEAP Agricultural Economics Expert Oswald Quamina said LEAP has "done
three phases of land clearing" for farmers; some 20 acres were cleared
and cultivation has already begun, with additional land clearing
planned. Quamina said apart from this, farmers in the region have
benefited from several training exercises over the years. In 2002, the
expert said 70%-80% of the vegetables consumed in Region Ten, came from
Georgetown but now this has reduced to 30%-40%.

There are also plans for an industrial incubator in Kara Kara in the
same compound as the Toucan Call Centre. Six businesses have shown
interest, Whalen said, and 60 new jobs are expected to be created
through this initiative.

Inward Investment Manager Neil Fraser mentioned that the Lethem/Linden
bus service Intraserv is exploring the possibility of starting its
service at Linden in the Washer Pond Road area at Mackenzie. Fraser
expressed the desire to see customs and immigration posts, restaurant,
gas station and a bus-park in that location to facilitate local and
foreign passengers.

There are also plans as well for a container yard and wharf at
Christianburg, along with an Industrial Site at Coomaka, he said.

Sluggish growth

Wismar businessman and former president of the Linden Chambers of
Commerce Industry and Development Basil Jaipaul feels that LEAP has
failed in its mandate.

He said that if the community were "doing well" there would be more
money circulating in it and he was "not feeling this kind of vibe."

Using his business as an example, he complained that his Western Union
outlet saw more business activity than the other section of the store.
This, he said, was a "clear indication that nothing ain't happening in
Linden in terms of job creation."

He noted that two project managers were changed before Whalen took over
and this was a setback.

"Inward Investment - for me that is a total failure," the businessman
said, though admitting that there was investment in sawmilling
operations in Coomaka, the call centre which operated sporadically, and
the manufacturing business Arawak Leather Company, which makes leather
sandals.

With regard to infrastructure, he admitted that some work was done in
the form of the rehabilitation of the Linden/Georgetown bus park,
culverts at Millies' Hide Out, road works at Moblissa and the farm to
market roads at West Watooka.

Jaipaul also recognized under institutional strengthening that
assistance was given to the Mayor and Town Council, the Regional
Democratic Council, Linden Technical Institute and the chamber.

"It's a mixed review," Linden Chamber President Samuel Wright said of
LEAP.

Wright said LEAP would admit that the first two years it did not "get
off the ground".

"Essentially, not as productive as you want it to be," he said, but the
next two years of LEAP would be critical years.

"The goal with respect to job creation has not been met," Wright said,
"what is really important is the creation of new businesses… and that
would bring in the jobs."

Wright is already looking ahead and says he would like to see the
business incubator continue after LEAP ends.

"We cannot wait until LEAP has left," to make a decision, he said. He
would like to see an institution, preferably not the government, or a
combination of institutions preferably from Linden, maintain and
operate the incubator.

"We are very optimistic about the future of Linden," Wright said.
Noting that the community needs another commercial bank, he called on
banking institutions to be more aggressive and help to create
opportunities in Linden rather than waiting for the perfect time to
come in.

Business Incubator Manager Ray Charles described the almost two years
of the incubator's existence as "a challenge". But he noted that
success was being achieved in the implementation concept of the
incubator. There are seven businesses in the centre with six small
businesses outside in small structures built by LEAP. He said most of
the resident businesses are service oriented and in times of limited
funds, were the first to be affected. Charles said the incubator hoped
to graduate its first tenant later this year, to enable another to be
incubated. Finding alternative viable locations for tenants, he said,
has posed a challenge, since tenants are usually concerned about the
profitability of the location and its affordability.

LEAF

Whalen said there has been "a strong audit report" on the operations of
LEAF. She said the draft report has not only revealed no irregularities
or misuse, but said that the operations meet "best banking practices."
In March, the first draft of a European Union special audit on LEAF was
presented and was released on May 28, Whalen said.

In October 2005, funding was withheld by the EU from LEAF manager, the
Guyana Fire Life and General Insurance (GuyFlag) now named Caricom
General Insurance Company Incorporated. This decision came after the
company was implicated in an insurance fraud. The sum already released
to LEAF by the EU is $213 million from an estimated $450 million. LEAF
continues to survive on loan and interest payments. As at April this
year, since opening in January 2005 LEAF loans to Region Ten were 459
worth $370 million.

Whalen said she hoped the farmers would be able to obtain loans from
LEAF to invest in the sheltered farm technology, once the project gets
on the way.

The withholding of funding from LEAF was unfortunate, Wright said,
since a lot of projects are reviewed but are unable to get funding. "It
is really unfortunate; one would have thought more effort would have
been made to solve that issue."

He argued that although he approves of the business advisory services
offered at the Business Incubator established in 2005, because of
limited access to the loan facility at LEAF, not as many businesses
utilize the service.

Jaipaul said, "If [the] LEAF component was running…you would have
seen big changes," adding that LEAF is a key component of LEAP and the
lack of activity of this component was affecting the entire project.

Businessman Carl Bryan told Stabroek News that in 2005 he applied for a
loan from LEAF to invest in a garment manufacturing business and was
told that the loan was approved, but funding was not immediately
available. Bryan said at the time, the EC had already withdrawn funding
from LEAF.

He later withdrew his application, but is seeking to apply to the fund
again. The funding he is seeking is $1.5 million, he said, but LEAF had
told him at the time that only $500,000 funding would have been
allotted.

He was unable to get funding from the commercial bank in Linden which
he said labelled the project "as not showing much cash banking
transactions".

Now this entrepreneur is selling clothing at Parika "to get something
going" as he puts it.

Beyond LEAP

In January, a consultant examined the next step for the infrastructure
that LEAP will leave behind, Whalen said. Among some of the proposals
is for an enterprise inclusive of the private sector and government to
carry on the investment promotion exercises, business advisory
services, the incubation centre and for some training. Efforts are also
being made to put a cost to the continuity of these exercises, she
said.

A decision is expected to be made by September on the continuity of
services under LEAP, which is scheduled to end by June 2009.

Noting that LEAP is a grant to Guyana, Whalen said that under LEAF the
principal sum is to be handed back to the government by the fund
manager. LEAF is worth 1.9 million euros. And the "government will make
a decision as to how that money will be continued to be used," she
said, adding that its use must have the same objective as LEAF.