John B. S. Davies is the President and Chief Executive Officer of the Liberia Bank for Development and Investment, President of the Liberia Bankers Association and the current President of the West Africa Bankers Association.

He is a business professional with over twenty years of professional experience spanning areas in executive management, accounting, treasury management, information technology, and enterprise resource & planning systems, internal auditing and customer service in the banking industry. Other areas include public financial management, lecturing positions in advance Accounting, Financial Accounting, Systems, and Control and Auditing, business process consulting and non-for-profit accounting for churches, schools, and charities.

In this interview with the African Leadership Magazine, he discusses the structure and operation of the Liberian Bank for Development and Investment.

As Liberia’s leading bank, in the areas of consumerism and development, what’s the level of commitment to the development of the Liberian economy and your milestones so far?

The Liberian Bank for Development and Investment has consistently been a strategic partner in the development of our country. The bank continues to demonstrate this commitment in the major sectors of the economy whether in infrastructure, manufacturing, agriculture, service, and trading. We have established a vibrant mortgage program that continues to be the vehicle for housing financing for the public sector and private sector employees. A good number of roads are being constructed thanks to fixed and working capital financing provided to contractors. We have also provided financing to tree crop farmers and continuously remain the go-to bank for lending to the rubber sector.

In terms of milestones, we can say that Liberians are now owning commercial real estate in the commercial districts of Monrovia thanks to support from the bank. We led the domestic effort by the banking sector of Liberia in supporting the AGENDA for TRANSFORMATION and continue to do the same under the current Economic Policy Program commonly called the Pro-Poor Agenda for Progress and Development. We can point to the fact that several factories in the Liberia Manufacturing Sector are existing thanks to financing from LBDI.  

In Africa and Asia particularly, the MSMEs contribute largely to the economic growth and strength of the regions. Credit management and risk assessment in lending is one discussion that comes to the fore regularly. How has LBDI managed this effectively with respect to the volatile Liberian business environment?

We have managed this process by first recognizing that we must work with smaller entities and organization which are more capable in providing the collaboration that makes MSME lending impactful. We have identified a number of MSME organizations that we work within the urban and rural areas. We are looking to expand that collaboration to include more robustly the marketing associations and the rural community financial institutions, of course, subject to the applicable risk assessments. We try as much as possible not to do it all by ourselves. We also recognize that the use of digital financial tools is a critical success factor in deepening financial intermediation, especially at this level. That why we are significantly upgrading our banking and customer service systems to give us the added capacity to do more for MSMEs.  

Liberia’s inflation is in double digits with a complimentary interest rate this poses a challenge to the businesses on the lower rung of the ladder. What are measures to stimulate lending by ensuring the availability of credit to small-scale businesses?

Firstly, we must recognize that inflation is an implied tax on our citizenry especially those at the lower echelon of the economic ladder and all must be done by monetary policy actors, banks included to find a remedy to this situation. However, we believe that some of the short-term measures which can be taken to stimulate lending by ensuring the availability of credit in the midst of this situation may include the following;

  1. Banks should avoid liquidity mismatches in the lending process. In essence, lend to borrowers in the currency you are most assured of receiving payments.
  2. We should also focus more on the usage of credit guarantees to suppliers and where arbitrage may be an issue work with the central bank to put in place appropriate hedge instruments to protect all businesses including the small-scale ones
  3. Small businesses, as well as large ones, need the support of a proper structure and well-regulated financial market that provides mitigating options to market participants. This was identified as a constraint during the crafting of the financial sector development implementation plan. We can make good progress by increasing our collective focus on concluding core aspects of this plan which will help small businesses deal with this challenge more confidently.

Still on credit extension to farmers and those in the informal sector, in August 2018, you spoke about the need for value addition to the rubber industry, calling for a robust and innovative rubber sector in Liberia. How much has changed since then and how has rubbed off on others?

So, in 2018 we hosted the rubber sector consultative forum bringing together processors and farmers. In partnership with the agriculture, Non-Governmental Agency GROW we have taken two strategic actions. Firstly, the research in rubber yields and applicable clones have been significantly enhanced. Secondly, some of the farmers in the strategic rubber regions of the country have been identified for value addition interventions. We now have additional Rubber Smoked Sheets (RSS) facilities being constructed and more are being contemplated. This is stage one value addition. We have additional Technically Specified Rubber (TSR) Facilities being constructed with bank support.

In economic policy terms, the Government of Liberia has also made available additional support through the establishment of a rubber stimulus fund that is helping to support rubber farmers in boosting productivity. So yes, there is some change that is helping to improve the outlook for rubber farmers in Liberia but we all can agree that that is not enough to shift the paradigm.

Currently, we are placing emphasis on small rubber holder and the big issue that keeps impeding that progress is the fact that title ownership for land being cultivated has still not passed the litmus test for acceptance by financial institutions. The Rubber Planters Association and the Land Authority are making efforts to conclude the resolution of this issue and we are monitoring it robustly. We can also say with some confidence that we are not very far from concluding stage one value addition effort and moving to stage two which is finished products.

Liberia is one of the few African countries that have quite a long-dated trade relationship with the US government. With the ratification of the AfCFTA by member countries, what’s Liberia’s outlook on intra-African trade?

We are a member of the Mano River Union, ECOWAS and the African Union. Our membership imposes on us an important responsibility to explore avenues for fostering intra-African trade whether in the Mano River Union Basin, the West African Sub-region or the continent. As a country, we will continue to work with the framework provided under these organizations to not only source imports but also expand and boost exports. The agencies facilitating trade dialogues among member nations such as for example as in the case of ECOWAS the West African Monetary Zone (WAMZ), West Africa Bankers Association (WABA) and the Chambers of Commerce have all identified regional trade as a value proposition option which must be pursued. At WABA we undertake to ensure that we elevate this collective concern to the top of our priorities. We must, however, underscore the fact that as a country with very strong ties to the United States of America, these initiatives will not mean that we will ignore the historic and active economic relationship we currently have and have been mutually satisfactory. We have to find a balance in making sure we work well with all stakeholders.

The Invest in Africa Summit is a symposium with a laser focus on critical issues affecting Africa. As Africa’s Industry Person of the year, how do you feel receiving this award and leading this discussion? 

I am honored and humbled by my recognition for such an important award. My deepest appreciation goes to the African Leadership Magazine for the honor, our bank is truly grateful to have been placed on such a high pedestal and my family is filled with immeasurable gratitude.

Quote: We must recognize that inflation is an implied tax on our citizenry especially those at the lower echelon of the economic ladder and all must be done by monetary policy actors, banks included to find a remedy to this situation.