Thursday, August 13, 2009

Making LEAP’s successor a government operation is not progress

Making LEAP’s successor a government operation is not progress

Posted By Stabroek staff On August 13, 2009 @ 5:05 am In Letters | No Comments

Dear Editor,
Your article on LEAP in Stabroek Business (‘State-owned corporation to succeed LEAP’ August 7) was poignant and raised several pertinent issues. There were exchanges between the International Project Manager (IPM) and myself on the issues of DEN because I stated clearly that I did not have confidence in the new entity. My reasons are as follows.

1. The community stakeholders have not been included in any meaningful way in the move to form the new entity. Over three years ago, we were urging action after a two-man team from the EU did the second mid-term review and proposed the mechanism for the continuation as a SMEDA type organisation.

The advisory group consented to the report with minor adjustments. LEAP’s management had major concerns about some parts of the report and wanted those parts to be adjusted. This was not forthcoming and the report languished with no work on a successor on the horizon.

Around 2007, I wrote the IPM expressing my reservations about the time for a proper successor to take over LEAP. She responded stating that a retreat would be held to plan the way forward. The retreat was held and a report was submitted by Ms SV Jones and Associates (facilitator) but again we saw little movement on the matter. Mr Thorsten Streipke, the International Business Advice expert left hurriedly (for medical reasons), as he was responsible for the successor organisation and was subsequently replaced by Mr Wolfgang Klesse, who told me one of his main missions was to see the implementation of the successor entity. He spent one year without seeing that happen.

Where the bottleneck was we were not told, but there was little movement at the level of the cabinet. After badgering LEAP for answers, on March 30, 2009 Mr Tarachand Balgobin came with news that the cabinet had agreed on an option put forward by LEAP’s management among three others. That option was that the entity could be government owned with no subvention from the national treasury. So after three years this is what took us so long to decide on.
2. LEAP managed seven components worth $2.2B over seven years with funding mostly from the EU and a small part from GOG. LEAP was expected to raise over 0.8M euros through fees, etc, during the seven years. This was never done and the mid-term review addressed this question.

How do we expect the new entity to sustain itself with a staff complement of at least 10 at former LEAP salary levels on fees, rent, etc?
LEAP should not have had assets at the end of the programme. LEAP should have worked itself into the sustainable outfit benefiting the residents/stakeholders. As it stands the GOG owns the LEAP building, parts of the industrial incubator at Kara Kara, vehicles, LEAF and a building constructed at the demonstration farm. It would be difficult to see these being able to fund the new entity with any degree of certainty. If we look at the fund we will have to set up an organisation to run it and this can be rather complex in the current scenario.

3. According to reports, the local stakeholders have not been taken into officials’ confidence and they are provided with information on a need to know basis. I cannot support something which requires wholehearted support but information about it comes in a piecemeal fashion.

4. One of the components of LEAP which performed dismally was that of inward investment. The new entity needs significant inward investment to make a major impact, but this requires funding. We cannot fight poverty with no money. This has to be one of the major focuses of the new entity for it to stay relevant.

I noted that a statement was made about Go-Invest as an additional feature. This is inaccurate and Mr DaSilva must reject this. Go-Invest have always tried to stay close to LEAP and its work and there has always been an effort to maintain a decent relationship.
I remember Mr Mingo and I having a fight with Mr DaSilva on the selection of the call centre operators. When a team went to Brazil in 2004 an officer from Go-Invest went with the team. I have great admiration for Mr Geoff DaSilva and his team though they do not have the power required to see things through.

5. With no money it is difficult to impact positively on promoting micro-enterprise proliferation. Maintaining a micro-enterprise portfolio is costly per unit in the short term and so the need for significant backing (financially) is imperative.

With the decline of bauxite the micro-enterprises must have linkages to ensure they graduate to cottage and then small industries. This is the most plausible course in light of the history of Linden in recent times.

6. One of the greatest areas for capacity building and ultimate economic liberation was the contractor pool. This stood the greatest chance of stemming the haemorrhaging of money out of the community. Since LEAP was in Linden over $5B in projects have been carried out, but less than 1% went to contractors resident in Linden. This was a major flaw which ran counter to the identification study for the economic liberation of the town.

7. The private sector has been touted as the engine of growth and LEAP’s mandate was the encouragement of private enterprise development. Moving the entity back into a government outfit is not moving forward, and I am quite sure the EU is eyeing this with some alarm. Here we have produced a programme with limited success and the major facilities left have been vested in the beauracracy. Who has gained?

8. There still remains the huge gap between demand for credit and available resources for credit. It has led to disillusionment in the past and may be heightened in the future. It is good to sell the product but it is distasteful when it does not deliver. We have had enough selling of it; it is time to have some goods delivered.

I still am not impressed and have little confidence in the successor company in the current dispensation.
Yours faithfully,
Orrin Gordon
IMC Chairman

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