A Development

W. Samoa To Open

Bank

From FELISE VA’A in Apia As in many underdeveloped countries, development capital is very jhard to come by in Western Samoa. [This is not surprising as the Bank of Western Samoa, the only bank in the country, normally gives loans on the basis of security, which means that only the rich and the fairly well-to-do are able to meet this con dition. But what about the masses of the Samoan people, or the able Samoan who would like to start some development but lacks the necessary capital?

The government had an answer, of course, but one which profited, mostly, only a segment of the people.

For shortly after the 1966 hurricane, a development loan fund section was added to the Bank of Western Samoa.

The name is a little misleading since the main function of the section is to give loans to farmers for agri cultural development purposes. But for other development purposes, one had to borrow through the normal lending facilities of the bank under the usual conditions and at the same interest. ■ Under subtle public pressure, the government has come to realise this and the idea of the establishment of a separate development bank was born. Initially, there was much op position to the idea of such an institu tion competing with the Bank of Western Samoa which is now owned 50-50 by the Bank of New Zealand and Western Samoa. One government group argued that the Bank of West ern Samoa was doing the best job it feould, that rather than take some of its functions away, it should be given extra powers. The opposing view however, that there should be a leparate development bank, prevailed.

Public pressure on this point was jusf too much. \ It was recently proposed, therefore, fcat a development bank would be established with the present develop ment loan fund section of the bank being expanded into a separate leyelopment bank. Already, steps are jeing taken to achieve this transition, ihis is not all. The government has >een negotiating with the Asian Development Bank for financial as ptance to help set up this bank.

Recently, the ADB announced that I had donated 5U5217,000 for this pirpose. But this will go mainly pwards paying experts to set it up ind train bank staff.

I Key experts to be hired will be a

senior development bank expert to act as team leader and executive manager of the new bank in its initial stage; a loan operations, project appraisal, technique and procedures expert and an expert on industrial promotion activities.

Over the past two years, the development loan fund had been expanded from SWS2O,OOO to $370,000.

When the development bank is set up, it will borrow amounts of SUSI million from organisations such as the Asian Development Bank and re-lend in smaller amounts in Western Samoa.

The bank, to be known as the Development Finance Corporation, would be empowered to make loans

for all development purposes, both agricultural and industrial, and for service industries, provided the industries so financed would enhance local employment opportunities, ex port potential (or import substitution) and the national income.

Ownership of the bank has not yet been established. Should the govern ment own it, or should private enter prise? A local finance expert has said the government should own the majority shares. “Such a bank should be owned by the government, for the simple reason it should not be a moneymaking business, but one that is devoted to the interests of the public,” he said.