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Jul 16, 2009

Development Finance Corporation revived by C.D.B.

Story PictureThe Development Finance Corporation was a major government lending institution that went belly up when it lent less to the poor and more to big interests. When it folded, a commission of inquiry revealed that by the end of December 2004, the total book value of non-performing loans had increased one hundred and twenty million dollars. According to the accountant who was hired to carry out a forensic audit of the D.F.C. “The total injection of capital by G.O.B. between the years 2002 to 2004 by just booking a receivable from G.O.B. and reducing interest and other related cost was one hundred and fifteen point six million dollars. In 2005, G.O.B. provided further support of one hundred and one million dollars.” That was when the cow was fat but by the end of 2005, all that cash had burnt out and D.F.C. quietly folded. But the Caribbean Development Bank has now come to the rescue and the D.F.C. is up again running. News Five’s Jose Sanchez reports from the Capital.

Jose Sanchez, Reporting
The Development Finance Corporation has been in existence since the sixty’s but it went into liquidation four years ago in large part due to mismanagement. But today at all offices countrywide, it is releasing hope into the air as it makes its return as a premier lending institution.

Franklin Megloire, Assistant Gen. Man., Operations, D.F.C.
“In 2005 we went into a liquidation process because of the problems at that time. We’ve since cleaned up and we have a very strong portfolio and through the office of the current administration we have been able to secure line of credit of twenty million dollars from the Caribbean Development Bank for financing development projects in the education sector, residential sector and also in the productive sector. Today we’re having this open day and it marks the resumption of lending but we are launching our student loan program, which is timely because we have a lot of students who are making arrangements to return to school. We’ve been here from morning nine o’clock and there is a constant stream of students, particularly those people who are interested in getting monies to go to school.”

Prime Minister Dean Barrow
“There was this whole sale determination to make off with assets of the D.F.C., to lend the monies that ought to be reserved for poor people. That’s the mission of the D.F.C.; to help those who would not be able to gain access to credit. The previous government just totally violated and upended what was the mandate of the D.F.C. and started, as you know, giving monies by way of unsecured huge loans to the tune of thirty million dollars and twenty million dollars to friends and cronies and that’s what caused the corporation to collapse.”

Despite the recent past, the twenty million dollar disbursement from C.D.B. is transforming the lending institution into one of opportunity for students and homeowners. But more importantly, the PM says the changes in the D.F.C. ACT makes it transparent and free from political and governmental control.

Prime Minister Dean Barrow
“Government, although it is responsible for the loan, agreed to appoint a board of directors that is in the majority control of the private sector. There is a representative of the Bar Association; a representative of ATLIB; a representative of the Credit Union League; a representative of I believe the Association of Accountants; and they make up—they constitute the majority of the board of directors. So I say this in order to make clear, that we’re serious about non-political interference. And to underline the fact that this is an end that’s good in itself we have to from the start—those of us who are politicians—say to our people that you can’t come to the minister. I am still nominally the minister responsible for the D.F.C. So let me speak first for myself. You can’t come to me and ask me to secure you a loan from the D.F.C. or a refinancing. I do not have will. But more important, I do not have the legal capacity to do that now.”

Natalie Goff, Gen Manager, D.F.C.
“If you feel you qualify, come to D.F.C. we’re here to serve you.”

Reporting for News Five, Jose Sanchez.

Prime Minister Barrow says that the government is continuing to look for sources of funding for the D.F.C. He said that the Central Bank has identified an additional one point four million dollars, an old account with USAID that had been earmarked for agricultural lending. That fund will be transferred to the D.F.C. CABEI, the Central Bank, is also on the list as a potential source for funding.

Viewers please note: This Internet newscast is a verbatim transcript of our evening television newscast. Where speakers use Kriol, we attempt to faithfully reproduce the quotes using a standard spelling system.

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