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Grenada Development Bank Filling the Gaps of Economic Growth

No level of economic development will completely cater for every individual and scenario, but that is an accepted fact with the creative leadership of institutions like the Grenada Development Bank (GDB) – an institution that Director Mervyn Lorde says truly fills the island’s economic gaps.

Grenada’s economy sits as the fastest growing economy in the Caribbean. However, with the tremendous investments in tourism, to include Sandals Resorts and Silver Sands – arguably the two largest investment projects on the island in the last decade, there is still quite a bit to be done to tighten the economic gaps across the sectors.

This is where the role of the GDB is vital. Mr Lorde says one of the most crucial strengths of the bank is its ability to identify those who typically fall through the lending cracks of commercial banks. This is particularly interesting as it relates to small business startups and personal loans for often life-changing situations.

With over 50 years in existence, the GDB has mastered the art of taking risk and living to tell the tale.

The Director says GDB is the only development bank in Grenada and its focus is on providing financing particularly for farmers, manufacturing and even tourism. Education, previously commanded the largest part of the bank’s portfolio, being the only financial institution at one point with an established student loan program. Today education stands at 29 percent of the GDB’s loan portfolio, but business and mortgage financing are fast becoming the most significant sectors of its portfolio.

“Basically we finance greater risk than a commercial bank and that is one of the fundamental differences. We finance the gap in the economy. So, for many persons who cannot get financing from other financial intuitions, GDB will be the institution that they can go to,” Lorde said.

Agriculture is Grenada’s largest industry filled with both established and up and coming farmers. To maintain the industry and provide support where necessary, the GDB recently joined hands with the Marketing and National Importing Board (MNIB). This partnership is just over one year old and sees the bank and the MNIB tightening and stabilizing the triangle of production, sale and payment.

Since its establishment in 1965, Lorde estimates that over 10,000 Grenadians have and continue to benefit from the GDB through business, education and personal loans.

In Small Business Loans, Lorde admits the GDB has had mixed results, particularly in the tourism industry several years ago with defaulting loans for small hotels. This has since changed.

“However, in recent times we have seen an improvement with the business loans including the tourism sector. We are performing pretty well with these small businesses,” Lorde said.

He noted further that agriculture and fisheries, despite being the island’s largest, remain its most challenging to finance. Financial management training, he believes, is one of the most critical needs of both sectors. For agriculture, he adds the need for insurance to guard against prevalent crop diseases and natural disasters like hurricanes and flooding, will follow closely.

Applying for a loan with the Grenada Development Bank is easier than most might imagine. The bank’s Director said individuals interested in a business loan, for example, need only gather and submit a few documents. These include a business plan, financials (if an existing business) and the relevant identification and general banking information.

“We require equity contribution of between 10 and 30 percent for the general business. It does not mean that it must be cash,” Lorde said.

The average turnaround time from application to approval is a mere 10-days if it does not require GDB Board approval. Should the latter be a factor then that maximum timeline increases three-folds.

So far for 2016, Lorde boasts that the GBD has maintained its turnaround time for some 90 percent of loan applications. “We are big on ensuring that we meet that timeframe.”

Speaking about mortgages, Lorde said while the island’s Credit Unions and Commercial Banks are doing considerably well with meeting the demands of this sector, there are several potential home owners who are left by the wayside due simply to their inability to meet the standard requirement of a 10 percent deposit. Often, he pointed out, these same individuals would have no trouble making the actual monthly required mortgage repayments.

“What we have done, particularly for the public servants who have more security and stability, is to provide 100 percent financing to them. We found many people who could make the monthly payments but simply could not come up with whatever that 10% deposit would be. By focusing on those gaps, we have been able to tap into these important areas. Our intention is to coin products that better meet the needs of the Grenadian people.”

With another 50-years ahead, the GDB holds the vision to better connect with the Grenadian people so as to foster economic development.

“We want to have greater economic impact and we see it possible if we connect, so we understand the needs of the people and we meet those needs. In fact, we are now in the process of compiling our next 5-year plan and one of the things that we did was to have a stakeholder consultation where we met with stakeholders from all the critical sectors,” Lorde told Business Focus OECS.

The Grenada Development Bank boasts a special program for the island’s youth between 18-35. This carries a 3 percent interest rate. There is also a small business loan program up to EC$25,000 with an interest rate of 6 percent. The bank has seen “encouraging” interest from the youth population.

(First Published HERE)