Development Banks Face Competition With Commercial Banks

  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
22 Nov 2016 15:14
Development Banks Face Competition With Commercial Banks
Acting Prime Minister and Attorney-General Aiyaz Sayed-Khaiyum (third from left), in discussions with Jean-Philippe de Jong (left), Rajesh Patel and Wella Pillay (right) at the Radisson Blu Resort yesterday. Photo: CHARLES CHAMBERS


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.

edited by: farzana nisha


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