The chief executive officer of the Fiji Development Bank (FDB), Filimone Waqabaca, has acknowledged the recent calls for an evaluation of the bank’s operations while urging critics to understand the bank’s high cost of borrowing. Waqabaca emphasized that, compared to commercial banks, FDB faces significant challenges due to its high operational costs and funding rates.
In discussions at the Fiji Indigenous Business Council meeting in Suva, Waqabaca pointed out that FDB serves a client base of approximately 9,000 customers, primarily micro, small, and agricultural businesses, where loans are commonly under $150,000. He highlighted the need for guidance and mentoring for these clients, which increases the operational costs.
Waqabaca explained that while there is room for operational reviews, the bank’s branches located across 11 regions are crucial for providing face-to-face customer service that many of its clients prefer, as switching to digital solutions could alienate those who rely on personal interaction.
The bank borrows funds at considerable interest rates, such as 5.3% for long-term bonds, which makes it difficult for FDB to offer competitive rates that appeal to potential borrowers. Waqabaca suggested if a mechanism were established that reduces the cost of funds, it would enable the bank to effectively compete with commercial banks.
Recent discussions have emphasized the importance of modernizing FDB’s operations. Incoming recommendations from the Parliamentary Standing Committee on Economic Affairs echo a pressing need for a thorough review to align the bank’s strategies with national development goals and customer needs, especially as FDB strives for robust economic support amid higher lending costs.
This push for operational enhancement comes on the backdrop of an improving financial performance, with FDB reporting a profit of $5.5 million for 2024, showing resilience despite the market challenges. Engaging with clients to address their feedback may help the bank navigate these issues better, potentially paving the way for a more supportive financial ecosystem that aligns with the needs of local businesses in Fiji.
The ongoing focus on developing accessible financial solutions positions FDB to play a pivotal role in fostering economic growth and stability in the region, reaffirming its commitment to community development.
Leave a comment