IDB seeking private financing opportunities
Admitting that it may need to do more to raise awareness of its opportunities in this area, the Inter-American Development Bank’s (IDB) vice president said the institution is “actively seeking opportunities” to provide financing directly to the private sector in The Bahamas.
Roberto Vellutini, who led the IDB’s delegation to The Bahamas to participate in the International Monetary Fund’s (IMF) Caribbean Growth Forum this week, told Guardian Business that many are unaware that they can access financing from the IDB for private investments of all sizes.
“It’s interesting. A lot of private actors don’t know we can do that. We have several windows depending on the size of the project so we cover the entire spectrum basically. It’s amazing how many people do not know. They think the IDB provides financing for governments, so we have to go out and do promotions, scoping, business development trips,” said Vellutini during an interview with Guardian Business on Thursday.
The IDB has traditionally funded public sector investment projects in The Bahamas. Recent projects have included the New Providence Road Improvement Project, and a Social Safety Net Reform Program, which aims to increase the effectiveness and targeting of the Bahamian Government’s social spending.
Astrid Wynter, IDB country representative for The Bahamas, noted that the IDB has funded non-governmental projects – a $150,000 grant being given through the IDB’s Multilateral Investment Fund’s Small Enterprise Development Facility to Transfer Solutions Providers Ltd., to undertake research into how to credit rate the low income segment of the population, being one such project.
Another grant was provided for the set-up of a fly-fishing association and certification program, she added.
However, Vellutini admitted that these projects are “really tiny” and more financing could be provided.
“So I think we’re actively seeking opportunities to provide financing, not through the government, but directly to the private sector borrower/investor. We have a window in the IDB that is dedicated just to that,” he said.
Wynter noted that the IDB is planning two missions to The Bahamas in October to scope out potential financing opportunities.
Meanwhile, although recognizing the IDB could be doing more private sector financing, Vellutini added that the relatively “thriving” nature of the Bahamian financial sector means the IDB has competition in The Bahamas.
Acknowledging that the private sector has experienced finance access constraints notwithstanding the depth of the financial sector, Vellutini remarked that this does create “opportunities” for the IDB to step in. “But we have to compete,” he added.
With respect to the IDB’s traditional funding of public sector investment in The Bahamas, Vellutini said that he believes the IDB’s relevance in today’s environment, in which China is providing increasing amounts of financing in areas once dominated by the IDB, revolves around its capacity to assist with more “technical” and “complex” investment projects.
“There are what I would call the ‘plain vanilla’ investment projects, and then there are the complex projects. The IDB’s comparative advantage are on those projects which are complex because we bring experience from other countries on what works, what doesn’t. That’s what we told the prime minister – that would define our relevance for their investment projects.
“We build roads very well, because our technical requirements, environmental, social requirements are more strict – but for the ‘plain vanilla’, it maybe makes sense to call the Chinese. But if you want to do a project on citizen security which is controversial, sensitive, dealing with communities, and so on, maybe you need some technical input that not many people have.
“For that type of project, maybe makes sense (to choose) the IDB,” said Vellutini.
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