The National Entrepreneurship Development Company Limited (NEDCO) on Wednesday extended an offered of voluntary separation to its employees as part of the process in the rebranding and restructuring of the company.
The offer was presented to employees by chairman Clarry Benn during a special staff assembly at the Atrium, El Socorro, to update staff on the decisions taken by the Board regarding the restructuring of the company.
Benn said it had become necessary to take these steps to ensure that NEDCO remains strategically poised to discharge its mandate in an environment that called for acute sensitivity and responsiveness to prevailing social and economic conditions, while steadfastly adhering to international industry benchmarks, and added that the Board was also very mindful of the comments and recommendations made by the Public Accounts (Enterprises) Committee, whose members expressed grave concerns over NEDCO's level of efficiency, productivity and overall viability.
”The transformation is in keeping with the critical mission of NEDCO to promote and support the development of new and existing Small and Medium sized Enterprises (“SME”), whose needs could not be met by traditional lending agencies."
The decision to restructure and rebrand came as a result of a comprehensive financial and operational assessment by audit firm PricewaterhouseCoopers (PWC) following the appointment of the current board in 2015.
PWC highlighted the fact that NEDCO's income from its core business; loans and training, was insufficient to cover its operating costs, making the business, in its current dispensation, largely dependent on government disbursements to meet operating costs. It was indicated further, that the current financial state of NEDCO is not sustainable and rapid action must be taken to transform the business model. A situation Benn emphasized was not only unacceptable, but was a reflection of inappropriate business practice, especially by an organization like NEDCO, which preaches the gospel of financial viability and sustainability.
Thus, employees were apprised of the rationale for the restructuring and the process to be followed in the submission of applications for voluntary separations, which is aimed at permanent employees in two categories:
a) Those younger than, or older than 55, but holding less than 10 years' service and,
b) Those who are 55 years and over with more than 10 years of service as at April 30th, 2018.
The period for submitting applications runs from February 1 to February 28, with approvals to exit the company to be processed by May 1.
Employees have also been assured of emotional and financial counselling, outplacement services, grant of their vacation leave, together with final benefits and pension benefits available under the existing pension arrangements.
Benn called upon the staff to accept the realities of the times and reaffirm their commitment to discharge the new SME mandate, since the PWC report showed that NEDCO's active client base and loan portfolio per employee were not aligned with international industry benchmarks, making it uncompetitive in its present operational framework.
He said based on PWC's assessment, NEDCO could not meet its operating costs, which represent 113% of the total active loan portfolio, while the typical percentage of operating costs to loan portfolio for the Micro Finance Sector in Latin America and the Caribbean is 45 per cent.
Added to this, Benn said, was the fact that the delinquency rate in the loan portfolio exceeded industry benchmarks.
Given the need for NEDCO to develop a new business model and transform the organization into one that was both viable and independent of government funding, the Board has a revised mandate, which lists as its main objectives:
i. Provision of financing to small businesses;
ii. Provision of training and business advisory services to small business clients;
iii. Creation of policies and strategies that aid in the development of small enterprises;
iv. Coordination of all entrepreneurship development programmes receiving Government support;
v. Establishment of partnerships with public sector, private sector and other non-governmental organizations;
vi. Development and implementation of market networks to support small enterprise development;
vii. Access to public procurement opportunities and;
viii. Establishment of an advocacy system to address the legitimate concerns of the small enterprise sector.
In the restructuring process, the Board will look at reducing the number of satellite offices while at the same time continuing to grow and serve its nation-wide customer base; adoption of a cost effective approach to outsourcing non-core aspects of its business operations; establishing new business systems for increased efficiency; identifying core competencies and training and developing staff to maximise these competencies; and aligning staffing levels with the realities of the new NEDCO.
The Board believes that these initiative will result in reduced costs and complexity; enhanced customer service delivery; enhanced performance standards; increased employee satisfaction; and improved financial sustainability, which are benefits expected to accrue to NEDCO's stakeholders.