Review of Caribbean Financial Services Corporation

Special evaluation covers the period 6/83-6/85 and is based on document review and interviews with A.I.D. and CFSC personnel, CFSC shareholders, and members of the Caribbean business community. CFSC has been extremely successful in its first year of operations. The combination of a very small (3 persons) but competent staff and a supportive board of directors has provided the CFSC with effective management; the staff will be expanded by 1-3 persons over the next 3 years. CFSC's marketing strategy, aimed at developing high visibility and consisting of personal and public relations within the financial sector and direct mailings of brochures and annual reports to potential clients, has generated a solid flow of loan projects in a wide range of industrial sectors and countries. A somewhat more aggressive marketing program is needed however, as commercial and development banks have not directed many worthwhile loan projects to CFSC. To date, CFSC has committed $3,400,000 (of which $1,920,000 has been disbursed) in loans to 14 companies distributed among the tourism, manufacturing, and agribusiness sectors in Barbados, Antigua, St. Lucia, St. Kitts, and Guyana (the latter not financed with A.I.D. funds). Most loans have been for plant expansion and/or equipment purchases, but one start-up venture has been financed. Loans for start-up programs have purposely been limited in order to gain lending experience with the minimum amount of risk; new venture financing will be expanded in the future. Credit evaluation and risk control policies have been thorough, but kept simple in order to burden neither bank nor borrowers with unnecessary paperwork. Loan projects are evaluated with respect to their risk and their consistency with CFSC's development objectives. CFSC has also been extremely diligent in complying with its project agreements with A.I.D. Based on conservative estimates, demand for CFSC credit (by firms meeting A.I.D. requirements) will far exceed A.I.D.'s current commitment. Recommendations include specific suggestions for using A.I.D. grant funds in the areas of marketing, training, new business development, and operations management.