The Anguilla Development Board (ADB) is a statutory organisation, established under the Anguilla Development Board Ordinance (1978). The legislation was passed in the House of Assembly with Sir Emile Gumbs as the Chief Minister. Actual operations commenced in August 1979, under the Chairmanship of Mr Franklin Connor. Other founding Directors of ADB were Mr. Eric Reid (Deputy Chairperson), Mrs Daisy Richardson, Mr. Ambrose Richardson, Mr. Lindsay Richardson and Mr. James Beard.
During the period 1979 to 1982 ADB operated within the Ministry of Finance and was funded entirely from aid grants provided by the UK Government.
ADB took over responsibility for loans previously granted through the Development Finance Loan Scheme. This scheme started in 1976 with a development aid grant of £50,000 following recommendations in the 1975 Development Division report on the survey of Anguilla, which indicated a need for a local credit institution to provide soft loans to the small productive sector.
With the ADB being wholly government-owned, policy matters are determined by the Board of Directors. The Manager, who reports to the Board, is charged with the responsibility for the day-to-day operations and implementation of the policies set by the Board. ADB has a staff complement of nine persons – with service ranging from 13 years to more than 30 years.
The success of ADB operations over the years is largely attributable to the qualities and attitudes exhibited by the dedicated staff.
The broad aim of ADB is to stimulate and facilitate the economic development of Anguilla through sustainable private sector investment programmes. To accomplish this ADB aims to:
? Finance technically sound as well as financially and economically viable projects in agriculture, industry, tourism and services related to these sectors;
? Enhance the human resource capacity of Anguilla by providing financing for training at the secondary and tertiary levels to upgrade technical, vocational and professional skills;
? Enhance the level and quality of home ownership, particularly among low and middle-income owners;
? Improve the viability of businesses in the micro and small-scale enterprise sector by providing credit, as well as entrepreneurial and technical assistance, for these enterprises.
Generally the lending policy of the ADB gives priority to projects which:
a) help to reduce imports and minimise the outflow of foreign exchange
b) help to increase exports and foreign exchange earnings
c) generate employment and thus help reduce unemployment
d) have a high multiplier effect
e) provide linkages within the domestic economy.
ADB is a specialised institution which engages in the project cycle of preparation, appraisal, financing, implementation, monitoring and evaluation in addition to the provision of technical assistance. ADB, as a Development Finance Institution (DFI), focusses on the social and economic benefits for the wider community. ADB supports the economic development of Anguilla across a range of sectors where commercial banks are quite often reluctant to support such activities which are generally characterised as needing long term financing and to be high risk. ADB provides essential credit support for the sustainable development of Small and Medium Sized Enterprises (SMEs), in an environment where access to credit by SMEs is still a critical financing constraint – as many SMEs lack adequate collateral for accessing credit.
From inception, ADB has played a key role in the provision of financing and technical assistance in the areas of fishing, agriculture, tourism and manufacturing.
In 1979, mindful of the importance of the fishing industry to Anguilla, in terms of contribution to GDP and employment, ADB played a key role in this sector despite the seasonality of the industry, the plague of weather conditions and less than adequate collateral. ADB placed more emphasis on the relevance of the industry to overall national develop and was prepared to take the risk in the provision of loans. Similarly, with the area of agriculture which was reflective of sporadic rainfall, poor soil conditions and such, ADB took into consideration the importance to GDP and foreign exchange earnings. However, the onset of tourism development with the attractiveness of higher wages in the construction lured labour away. This is indicative of the composition of these sectors in the ADB loan portfolio.
In 1984, in an effort to ensure that future human resource needs would be adequately met ADB started the provision of low interest funding for courses of study in technical, vocational and professional areas. Many persons who benefitted from the student loans programme are currently engaged in various fields of work to include engineering, medicine, varying fields of research, information technology, arts, business, tourism, legal, education and construction.
In recognition of the importance of housing as an integral part of social and economic development, in 1988 ADB commenced financing for home construction and expansion primarily for low to middle income nationals. The financing for housing is in keeping with the broad objectives of ADB in achieving:
• Poverty reduction
• Increased worker productivity
• Increased domestic savings
• Linkages within the economy
In 1994, the Small Enterprise Development Unit (SEDU) was established to encourage and promote further development of entrepreneurship within the private sector. The rationale stemmed from a number of inadequacies and shortcomings within the financial sector that significantly affected small businesses which are considered as critical drivers of the economy. The Unit assisted existing and potential entrepreneurs with information, advisory services, training programmes, preparation of business plans and financial proposals – as well as the provision of networking opportunities with local and regional organisations with similar development objectives targeted at micro and small enterprises. The Unit was eventually merged with the projects department.
ADB raises funds for on-lending and traditionally ADB’s main source of funding has been in the form of loans from the Caribbean Development Bank (CDB). In 1982, ADB received the first of five different lines of credit from the CDB which, to date, have amounted to EC $36.8 million.
The most recent line of funding which totalled EC $13.5 million was granted in 2005 and fully disbursed over five years. Two lines of Funding totalling $4.3m were received from the Anguilla Social Security Board (ASSB) which were specifically for housing development loans. Other sources included the Government of Anguilla equity contribution* (EC$9.5 million), the Foreign & Commonwealth Office grant (EC $1.1 million) for small businesses and the European Investment Bank (EIB) loan of EC$4.5m for tourism development project.
NB: The Government of Anguilla – equity contribution* to ADB includes a parcel of land as well as contributions to operations of the SEDU during the period 1994 to 2010.
ADB has been able to service all debt obligations as agreed. The three lines of credit from CDB, and the two lines of credit from ASSB, have been fully repaid as scheduled, whilst the funding from EIB was repaid prior to the scheduled date. The two lines of credit from CDB, which are currently being serviced, have balances of EC$559.284.11 and EC$4,068,891.75 with maturity dates in 2025 and 2029 respectively. Therefore of the EC$45,663,996.00 borrowed, EC$41,034,820.14 has been repaid. The current outstanding loan balances total EC$4,629,175.86 of which 25% is considered as part of the Government of Anguilla’s Contingent Liabilities. During the past decade ADB has been constrained from further borrowing despite the fact that CDB and ASSB in particular were willing to provide funding.
ADB is not a recipient of government subventions and as such has maintained the operations from internally generated funds.
The lending rate of the ADB is determined by the overall cost of the funds to ADB as well as the level of operational and administrative expenses.
Since its inception, ADB has financed over 3,050 projects in excess of EC$175 million. Several projects which benefited from ADB financing have graduated to become leaders in their respective sectors – and at the same time significantly impacting the national economy.
Of the EC$175 million provided in loan financing by ADB since 1979, it is noteworthy that over 70% of the funds for on lending have been derived from internal operations.
Housing and Education loans account for approximately 72% of the current loan portfolio. The level of non-performing loans is increasing. The fact that in recent years a significant number of loans have been repaid as per schedule, and the fact that ADB, through lack of funding has been unable to meet the demand for new loans, the portfolio quality has been affected as reflected in the level of non-performing to performing loans. A strident delinquency plan is in place for monitoring and addressing the arrears within the portfolio – in areas such as rescheduling of loans, adjustments with interest repayments for an agreed period etc. The resultant damage inflicted by the passage of Hurricane Irma impacted all sectors of the loan portfolio. Coupled with the recent and ongoing effects of COVID-19, loan repayments have been significantly and adversely affected which is and will continue to be reflected in the ratios for some time. The Board of Directors has recommended continued monitoring and assistance to borrowers in terms of moratoriums and rescheduling of loans. In addition, the Board of Directors has recommended a hold on new loans to non-existing borrowers due to lack of funds to on-lend. This will continue to impact the loan portfolio growth and composition.
In addition to the loan and technical assistance, ADB currently manages the disbursement and collections aspects of the young entrepreneurs’ loan facility for the GET SET programme, through special arrangements with the Anguilla Youth Business Foundation which is operational within the Department of Youth and Culture.
In terms of the technical assistance operations, CDB has made available, and ADB has benefitted from, valuable technical assistance to facilitate institutional strengthening including training at the managerial and operational levels.
The technical assistance service has been provided in part with significant assistance from the Caribbean Technological Consultancy Services – a division of CDB. The primary activities have been Workshops and Attachments (locally and regionally). However, in recent years, the emphasis has increasingly been focused on having local facilitators to conduct the workshops – hence the use of Training of the Trainers workshops with persons being certified as CTCS trained consultants.
Recent workshops organised by ADB, and conducted by regional and local facilitators including in ADB staff, are as follows:
• Computer Job Estimation Tools
• Small Engine Repair for Fisher Folk and Mechanics
• Marketing Techniques for Small Hotels
• Management for Development Results
• Enhancing Customer Service delivery for MSMEs
• ServSafe Training and Certification for Food Handlers
• Computerised Management Accounting Systems for MSMEs
Some of the workshops stemmed from needs assessments and community requests.
ADB engages in significant and focussed community outreach activities. ADB continues to partner with a number of entities in the community in terms of sponsorships and assistance. These include and are not limited to:
The Anguilla National Crafts Association – having sponsored the summer sewing workshops which have been the starting point for many prominent young Anguillian designers;
The Albena Lake Hodge Comprehensive School (ALHCS) Music Department. This included the purchase of musical instruments and sponsorships of young musicians for band camps locally and regionally;
ADB has also been engaged with several educational programmes at the ALHCS and Her Majesty’s Prison.
Additionally ADB regularly sponsors various sporting and school activities.
Whilst undertaking its role of facilitating national economic development, the operations of ADB are guided by prudent financial policies and procedures designed to ensure its own sustainability as well as to safeguard its credibility and integrity. In this regard, the underlying philosophy is to provide as much development assistance as possible, while at the same time guaranteeing the sustained viability of the institution.
With more than 40 years of service one of the major challenges facing ADB is the lack of funding to on-lend as the traditional sources of funds for the DFIs are becoming less accessible. This is in part because of the redirection of developmental assistance and the significant increase in the cost of funds. Less concessionary funds are available. The cost of funds can attract an average of four and six percent which narrows the interest spread and, as a consequence, the potential profitability of the institution. The options available to ADB to borrow funds are limited given the additional constraint as it relates to the Contingent Liability associated with the Government of Anguilla’s debt.
Mr. Peter Blackman, Director of the Private Sector Division of CDB, recently reiterated: “ADB’s debt and NPLs are not dissimilar to other DFIs in the region and even globally, as these are inextricably linked to the underlying economic environment”.
Whilst ADB has made significant contributions to the economic and social wellbeing of Anguilla, and recognising the recent constraints in executing its mandate, Anguilla is challenged by size and lack of economic growth, as it continues to slowly recover from major hurricane devastation and, more recently, the ongoing COVID pandemic. The culmination of these factors have not only impacted ADB but other public and private entities.
The reality for ADB remains such that to adequately meet the development mandate for the present and future generations of Anguilla, and mindful of the changing economic environment, the ADB and stakeholders will need to continue to engage in long-term planning to include consideration for expansion of the existing mandate – and scope of operations of the institution as it continues to perform a key role within the economy.
