BRINGING the audited financials of the National Entrepreneurship Development Company (Nedco) from 2018-2021 up to date is of paramount importance for the company’s chief executive officer Calvin Maurice.
The State enterprise, which was established in 2002, is tasked with developing the micro and small enterprise sector through the provision of loans, business training and entrepreneurial support services. It provides loans of up to $500,000 to start-ups and companies looking to expand their business.
Nedco was chided last Wednesday by Public Accounts (Enterprises) Committee (PAEC) chairman Senator Wade Mark, for the “state enterprise’s snail’s pace approach” in submitting its audited accounts to Parliament.
In an interview with the Express Business last Friday, Maurice explained that the company’s last audit, which was for its 2017 financial year, was completed in 2019.
He said that audit was late because of the mass restructuring exercise that Nedco began in 2018, which impacted the auditing process, along with Covid-19.
He also noted that another setback was the change of auditing firms to Grant Thorton Orbit Solutions Ltd.
“This meant the new auditors now had to get familiar with the files and request all the financial documents in order to start the auditing process. As explained in the PAEC meeting, the auditors only came on site in December 2021, as a result of the pandemic. The actual on-site audit, in terms of reviewing files, would have begun in January 2022. Also covering three years of audit was significant work and a significant number of files,” Maurice said.
He noted that by January 2023, the state enterprise will have its accounts up to date.
“I want to be very honest, the process must finish in terms of the outstanding accounts for 2018 to 2020. That has to finish first and then we will engage the 2021 financial year. The 2020 audit is imminent because we have done the major review and are just tidying off in terms of whatever the auditor may need. And just last Thursday we had that conversation with the auditor,” Maurice said.
He added the more current the company’s account becomes, the easier it will be to put the information together for the auditor.
“There’s a draft managing accounts to move forward to the external auditor to be prepared, because all information is in the process of transferring to the external auditor and it is simply just to finish this before we move on to the other 2021.”
This was not the first time that Nedco’s audited financials were being brought under a microscope, as back in 2018 the company appeared before the PAEC when the chairman Senator Wade Mark raised issues of the untimely submission of the company’s audited financial statements to Parliament for the fiscal years 2015 and 2016.
Another issue that was brought to the forefront was Nedco’s high non-performing loan portfolio, along with the absence of a risk management plan and policies.
Maurice said Nedco has learnt from its experiences, adding that the ability of entrepreneurs to repay their loans is being more closely assessed now.
He said this approach has significantly reduced the amount of debt that is at risk.
“One example, for 2018, we would have transferred just about 120 persons to the bad debt ledger.”
Nedco is trying to recover its loans from deliquent clients by trying to negotiate with them to work out payment plans. The company is also using debt collectors. If all else fails, the last option is to seek legal redress through the courts.
“The perception by some persons is that because Nedco is a state-run agency, they believe that the loan can be paid back at any time. That is a scenario we run quite often. That is why our risk and recovery arrangement has changed,” Maurice said.
Entrepreneurial relief grants
Giving an insight as to how the Entrepreneurial Relief Grants (ERG) were dealt with in the pandemic, Maurice said the state enterprise received 5,000 applications. It had to request $20 million more from the Ministry of Finance after exhausting the $30 million revolving fund from the ministry.
He outlined that this was the mandate given to them by the ministry to assist Small and Medium Enterprises (SMEs) during the pandemic and therefore a survey is being done to see how applicants progressed after the grant.
Maurice highlighted that the programme gave Nedco an opportunity to interface with new SME clients.
“One good thing coming out Covid is the increase in the number of persons wanting to get involved in businesses. We have seen a growth in our portfolio by 25 per cent from December to the first week in June. We currently have 2,000 active business accounts,’’ the business executive said.
Speaking about the Business Accelerator loan, he said the company’s intervention in assisting youths in challenged areas attracted 4,000 applications, 700 of which were not registered businesses.
“Nedco’s bid to make youths more risk-averse also includes an upcoming effort to seek connections with appropriate ministries to support ease of doing business for youths, getting advice and registering businesses,” he added.