THE Fiji Development Bank’s failure to reach its target of lending 60 per cent of its funds to focused sectors and 40 per cent to the non-focused sectors has been attributed to a number of factors.
The bank’s annual report for the 2011 year stated that one of the reasons was that the loan disbursement target was not matched. In addition, the sale of the bank’s home loan portfolio did not happen. The mid-stream settlement of a few of the bank’s performing clients was also given as a reason.
The bank released its report this week, revealing it made a $2.5m profit. The FDB had aimed achieve its 60:40 focused to non focused sector lending portfolio by June 2012 through the sale of the home loan portfolio, increasing loans to the focused sector and reducing loans to the non-focused sector.
At the end of the 2011 financial year, of the $349.8m worth portfolio, 60.89 per cent was to the non-focused sector and 39.11per cent to the focused sector.
The focused sectors include agriculture, manufacturing, wholesale, retail and hotels and mining and quarrying. The non-focused sectors include building and construction, individuals and real estate.
Explaining the strategy to achieve the business plan, the FDB said one was to acquire the four largest agro processors as well as import substitution and export oriented manufacturing businesses and expand the focused sector. The FDB said it had acquired three of the largest agroprocessors so far.
“Work also progressed on feasibility studies for the creation, expansion, reinstatement of large scale commercial farms for import substitution commodities such as cattle, dairy, sheep and rice farming to name a few possible ventures.
“In comparison to commercial institutions, challenges faced by development banks are always greater because of the inherent risks that accompany the sectors invested in.
“In addition to environmental, climatic, social and economic conditions, doing business at the grassroots level must also be conducted with respect to the prevailing cultural or traditional norms that exist in the community,” the bank said.