History of The Bahamas Development Bank
The evolution of a Development Bank was imminent once the Bahamas matured to the level of independence. It was apparent nationwide that the demands for economic transformation as well as the overall development of the country would be considerably enhanced if a financial institution was created to increase employment opportunities and generate and conserve foreign currency – ultimately producing more Bahamian entrepreneurs.
This financial institution was fated to become a catalyst to expand infrastructural development. This new entity was to invent an environment within which lengthened and relaxed terms and conditions of loans were to be offered. Without a doubt, the formulation of these objectives fell outside the depth and scope of commercial banking operations – thus the birth of The Bahamas Development Bank.
Established by an Act of Parliament in 1974, the Bahamas Development Bank became operational on July 21st, 1978 with a staff of 5. Today, the Bank employs less than 40 persons. The first branch was located on Bay Street at Rawson Square in Nassau. It is the Government’s primary provider for promoting industrial, agriculture and commercial development, facilitating participation in approved enterprises while stimulating and enhancing the economic development of The Bahamas. The Bank serves a wide and diverse population with its clientele being drawn from all levels of the Bahamian society and throughout the archipelago. The Bank is mandated to provide financing for economically viable projects that:
- Create employment
- Utilize Bahamian materials and resources
- Reduce imports and increase exports
- Introduce new technology and skills
- Promote prosperity for all Bahamians
The Bank’s fundamental purpose therefore is to assist with the industrial growth of The Bahamas by providing financial assistance in the areas of agriculture, fisheries, tourism, manufacturing, services and transportation industries.
The Bank started with a government paid in capital of $2 million, which has gradually increased during its more than 35 years of operation. There was so much demand in its early days of operation that the Bank had to secure additional funding from other sources like the Caribbean Development Bank ($6million), the Inter-American Bank ($3 million), the European Economic Community (EEC) ($1 million), the Central Bank of The Bahamas ($2.5 million) and the National Insurance Board ($3.5 million). These amounts, however, were proving inadequate, and by the year 1999, the Bank was experiencing serious liquidity difficulties due to the overwhelming demand for its funds. However, in May 2000, the Bank was able to secure an additional $10 million loan from the Caribbean Development Bank. This amount coupled with a $25 million Government backed bond received from the National Insurance Board in November 2000 has substantially improved the Bank’s liquidity position.
Recognizing a need to provide development financing in the second city – Freeport, Grand Bahama, management opened a branch in Freeport on July 15, 1986. The Branch is presently located in the Jasmine Corporate Centre in Freeport, Grand Bahama. There are four persons employed there. The branch Officers not only prepare loan applications, but are actively engaged in following up on the large number of delinquent customers.
It became apparent to management that an additional office was needed in another northern island. On July 17, 1999, the Bank once again expanded its operation. This time a new branch was opened in Marsh Harbour Abaco. The office was located on Queen Elizabeth Drive and there were two persons employed on the staff at the time. Today, the branch operations in Abaco has been transferred to the Freeport Office of which both together constitute the Northern Bahamas.
Over the years, the Bank has suffered many growing pains, resulting in extraordinary financial haemorrhage and loan portfolio decline. Non-performing loans continue to plague the Bank and the Bank continues to write-off loans that are considered to be totally uncollectible.
The Bank has taken on a very practical and expanded role in endeavouring to diversify the economy of The Bahamas. As we move forward, we will continue to look for new and viable projects while simultaneously combating the delinquency challenge.