Bank chief: BDB can be part of SMEDA
The managing director of the Bahamas Development Bank (BDB) has claimed that proposed amendments to the legislation governing the bank would cut down on “inadequate” competency levels as the bank positions itself with the planned Small and Medium Sized Enterprises Development Agency (SMEDA).
BDB Managing Director Arinthia Komolafe argued that while SMEDA was originally intended to dissolve and consolidate BDB as the government’s primary lender to small and medium-sized enterprises (SMEs), BDB could still function under SMEDA’s “umbrella organization” structure.
“The intent at the time was to eliminate the BDB and replace it with SMEDA. But since then, the discussions have changed, and SMEDA, which is intended to be a one-stop shop for SMEs in The Bahamas, is still going to move forward. But SMEDA is going to have a very small lending window. The BDB will still be relevant because it’s the only institution that provides credit to SMEs outside of the [Bahamas Entrepreneurial Venture Fund].
“We’ve been in discussions with the [Ministry of Finance] as well as the appointed consultants by the Inter-American Development Bank for SMEDA, and other government agencies that are geared towards SMEs,” stated Komolafe.
Aside from BDB’s potential role with SMEDA, Komolafe discussed key legislative amendments in order to crack down on BDB’s non-performing loan ratio.
“The loans that are processed by the bank have to be approved by its board, so there’s a specific provision within the legislation that speaks to a small business advisory committee.
“The provision speaks to the fact that no funds should be advanced unless there has been approval or recommendation by that committee to the board for approval,” said Komolafe.
She additionally addressed public sentiment that political interference had been largely responsible for the BDB’s failures, arguing that inadequate competency levels throughout the BDB was the root cause of the bank’s current problems.
“There are public opinion [claims] that one of the main failures of the institution has been the fact that there has been political interference, but really my assessment has shown that poor credit decisions, or lack of adherence to policies and procedures…from higher levels and obviously trickling down, that those things have been major contributors to the current state of affairs of the bank,” stated Komolafe.
A document provided by Komolafe confirmed that the bank’s non-performing loan ratio had risen from roughly 38 percent in 2005 to a current non-performing ratio of approximately 70 percent. Komolafe also noted that its asset base continues to decline due to loan loss provisioning.
However, she added that proposals to the legislation governing the BDB had not been presented yet, but the goal is to present them to policymakers “soon”.
“It’s more or less about assessing the talent, making the requisite changes and restructuring along those lines, particularly in human resources. We need to bring in the best talent, hopefully with a private sector mentality…to help get the bank in the direction that it needs to go in moving forward,” said Komolafe.