De­vel­op­ment banks face com­pe­ti­tion with com­mer­cial banks

Fiji Sun - - Business - CHARLES CHAM­BERS EDITED BY: FARZANA NISHA

It was be­com­ing in­creas­ingly dif­fi­cult for de­vel­op­ment banks in the Pa­cific re­gion to adapt and to com­pete with com­mer­cial banks. These com­ments were made by Jean-Philippe de Jong, chief ex­ec­u­tive of the As­so­ci­a­tion of De­vel­op­ment Fi­nanc­ing In­sti­tu­tions (ADFIP) in the Pa­cific. He was speak­ing at the open­ing of ADFIP meet­ing at the Radis­son Blu Re­sort on Denarau Is­land yes­ter­day. “This was par­tic­u­larly, when com­mer­cial banks be­longed to large in­ter­na­tional bank­ing groups which could pro­vide their sub­sidiary or branch in the Pa­cific with an abun­dance of fund­ing,” he said. “And as­sis­tance to in­tro­duce new fi­nan­cial or in­sur­ance prod­ucts.” The three day con­fer­ence in­cludes more than 60 del­e­gates and 22 dif­fer­ent speak­ers from the Pa­cific, Aus­tralia, Asia and Europe.

It in­cludes pre­sen­ta­tions and dis­cus­sions, fo­cus­ing on the role that ADFIP and its mem­bers could play in sup­port­ing Pa­cific re­gion­al­ism and cli­mate change. Mr De Jong said the con­fer­ence, would also cover ses­sions on women em­pow­er­ment, com­mer­cial­i­sa­tion and reg­u­la­tory frame­works, sus­tain­able liveli­hoods and im­prov­ing ADFIP mem­ber ca­pac­i­ties.

He said the as­so­ci­a­tions ex­ist be­cause of their mem­bers, and not the other way around. ADFIP was es­tab­lished in 1986 in Papeete, Tahiti by eight na­tional de­vel­op­ment banks. How­ever, of these only Fiji De­vel­op­ment Bank, SOCREDO of French Poly­ne­sia and Tonga De­vel­op­ment Bank are still ac­tive mem­bers. Mr De Jong said from a rel­a­tively small club of na­tional de­vel­op­ment banks, ADFIP now counts 24 mem­bers.

It is a di­ver­si­fied group of na­tional de­vel­op­ment banks, hous­ing cor­po­ra­tions, credit unions and since re­cently, in­creas­ingly also com­mer­cial banks. “With other com­mer­cial banks plan­ning to join ADFIP, and hope­fully also the re­gion’s prov­i­dent funds and mi­cro-fi­nance in­sti­tu­tions, our as­so­ci­a­tion is al­ready to­day the re­gion’s largest fi­nan­cial and bank­ing as­so­ci­a­tion of the Pa­cific.” Since their foun­da­tion, Mr De Jong added, the na­tional de­vel­op­ment banks have played a very im­por­tant so­cial and eco­nomic role in the Pa­cific.

Par­tic­u­larly, he said in outer is­lands and re­mote ar­eas. This is where com­mer­cial banks have not had many ac­tiv­i­ties. “And this in eco­nom­i­cally im­por­tant sec­tors such as agri­cul­ture, small busi­ness and tourism, which sec­tors com­mer­cial banks of­ten con­sider to be too risky.” Mr De Jong high­lighted to a large ex­tent, de­vel­op­ment banks also have tremen­dously fa­cil­i­tated, and were still ac­tively fa­cil­i­tat­ing, the ac­cess to fi­nance for mi­cro and SMEs through­out the re­gion.

“It is also fair to say that de­vel­op­ment banks, while strongly con­tribut­ing to the so­cial and eco­nomic de­vel­op­ment of the Pa­cific so­ci­eties, have not al­ways been the most ef­fi­cient fi­nan­cial in­ter­me­di­aries.” ADFIP wel­comed the fact that com­mer­cial banks of the re­gion were in­creas­ingly join­ing them. He added there is a need for some of the mem­bers to im­prove their ca­pac­ity with a view to be­come stronger and more com­pet­i­tive fi­nan­cial in­ter­me­di­aries in their re­spec­tive coun­tries.

Photo: CHARLES CHAM­BERS

Act­ing Prime Min­is­ter and At­tor­ney-Gen­eral Aiyaz Sayed-Khaiyum (third from left), in dis­cus­sions with JeanPhilippe de Jong (left), Ra­jesh Pa­tel and Wella Pil­lay (right) at the Radis­son Blu Re­sort yes­ter­day.

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