The Liberia Bank for Development and Investment (LBDI) has acceded to the peer review of the Prudential Standard Guidelines and Rating System (PSGRS) of the Association of African Development Finance Institutions (AADFI). This makes the Bank the first financial institution in Liberia preparing to be rated by the Association.
The AADFI-PSGRS mechanism was co-initiated by the African Development Bank with the aim of assessing Development Finance Institutions (DFIs) in the key areas of Governance Standards, Financial & Prudential Standards and Operational Standards.
The PSGRS and the peer review exercise are intended to assist member institutions to identify their strengths and weaknesses with a view to applying remedial measures to ensure that African DFIs reflected international best practices in their operations.
LBDI made a statement of intent on becoming a PSGRS compliant development finance institution last week when it hosted a two-day training session on PSGRS compliance for senior and middle-level managers at its 9th Street Corporate office on July 3 and 4.
The seminar was facilitated by seasoned AADFI experts, who were led by Mr. Attiogbe Koku Akogoni and his colleagues, Mr. Konate Yacouba and AADFI peer review consultant, Mr. Paul Yuma Morisho.
Speaking at the closing ceremony of the seminar, LBDI Chief Executive Officer, Mr. John B. S. Davies, III assured the public that LBDI will be the first bank to successfully pass the litmus PSGRS evaluation test for AADFI rating.
“We have no doubt that LBDI will be the first bank in Liberia to achieve this feat,” he said noting, however, that Management will not rest on its laurels, but will work with all stakeholders across the banking industry to ensure that no effort is spared in providing access to finance to the Liberian populace.
According to Mr. Davies, LBDI had to first meet the Central Bank of Liberia’s (CBL) requirement on international financial reporting standards (IFRS) before venturing into acceding to PSGRS peer review.
“We [LBDI] led the way in meeting the IFRS requirement by the CBL and our report has already been published,” he said.
Mr. Davies thanked AADFI for sending the ‘brilliant’ facilitators and said the move to accede to the PSGRS of AADFI is intended to take LBDI to another level and enhance the Bank’s credit rating system in line with international best practices.
He noted that it is the responsibility of LBDI to lead by example because the Bank is the premiere development finance institution in the country.
The LBDI CEO described his bank’s accession to the PSGRS as another milestone in ensuring that LBDI adapts best practices and sound banking procedures, actions and endeavors in the interest of advancing its strategic plan.
“I am aware of the fact that the first attempt by many of our colleague development finance institutions, who are members of AADFI, did not do quite as well as we’ve done in our first revision. That progress is an attestation that Liberia’s banking sector is vibrant and that our regulatory framework is strong,” he said.
For his part, the Deputy Director for Regulation and Supervision at the CBL Mr. Michael B. Ogun described as a milestone, the decision by LBDI Management to accede to AADFI’s PSGRS.
According to Mr. Ogun, LBDI has crossed the bridge and open the way for other banks to follow suit in order to improve their credit rating.
“This landmark gain by LBDI is welcoming because Liberia is not rated. Sierra Leone, Ghana, Nigeria and most of the other countries are rated, but Liberia is not rated,” the CBL Deputy Director declared.
He stressed the importance of the country’s banks being rated and said it attracts potential investors. Mr. Ogun challenged AADFI and other credit rating agencies to ensure that LBDI succeeds so that country’s financial institutions will be listed.
The Association of African Development Finance Institutions has, since its creation in 1975, continued to promote activities that support African national and sub-regional DFIs in achieving their mandates.
Since the adoption of the PSGRS in 2008, it has been used for peer review and rating of DFIs every two years, with the first exercise being conducted during the 2009 CEOs Forum held in Ezulwini, Kingdom of Swaziland in November 2009.