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 Managing Director, Mervyn Lord 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. Lord 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 risks and living to tell the tale.
The Managing Director says GDB is the only development bank in Grenada and its focus is on providing financing to the critical sectors of the economy particularly for farmers, manufacturing, industry, housing, education 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 programme. 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 risks 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 obtain financing from other financial intuitions, GDB will be the institution that they can go to,” Lord said.
Agriculture, one of Grenada’s most vital industry, is 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 stabilising the triangle of production, sales and payments.
Since its establishment in 1965, Lord estimates that over 10,000 Grenadians have and continue to benefit from the GDB through Business, Education and Personal loans.
In Small and Medium Enterprise (SME) Loans, Lord 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 SMEs,” Lord said.
He noted further that Agriculture and Fisheries, despite being key sectors of the economy, remain the 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 Managing 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,” Lord said.
The average turnaround time from application to approval is a mere 10 days if it does not require the GDB Board’s approval. Should the latter be a factor, then that maximum timeline increases three-fold.
So far, for 2016, Lord 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, Lord said that while the island’s Credit Unions and Commercial Banks are doing considerably well in 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.”
For the next 5 years and beyond, the GDB holds the vision to better connect with the Grenadian people so as to foster economic development.
“We want to have a greater economic impact and we see it is 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 Strategic Plan and one of the things that we did was to have a stakeholders’ consultation where we met with stakeholders from all the critical sectors,” Lord told Business Focus OECS.
The Grenada Development Bank boasts a special program for the island’s youth between the ages of 18-35. This carries a 3 percent interest rate. There is also a small business loan program financing up to EC$25,000 with an interest rate of 6 percent. The Bank has seen “encouraging” interest from the youth population, the rural and vulnerable communities.