After a long period of civil crisis that devastated the Liberian economy, hope is gradually returning as the Government and leading financial and humanitarian organizations including banks amalgamate reasonable ideas and strategies to restore the post-war economy of the country. A major gain in this direction that is recorded is the confidence being built in local business operators by commercial banks operating in the country. As a result, many young Liberian businesses have emerged and begun to grow showing strong signals of competition with their foreign counterparts who have long experience and reasonable working capitals in the industry. The Business and Economy desk now takes a look at how these commercial banks are disbursing loans to emerging businesses beginning with the Liberian Bank for Development and Investment (LBDI).

The Credit Department of the LBDI has made substantial disbursement in credit this year to new businesses to the tune of more than US$5 million.

The LBDI has a unique credit scheme especially under the Bank's Young Entrepreneur Program (YEP). YEP is a lending program that the Bank started in 2003. It targets young entrepreneurs or new start-up business people who are not very experienced and mature in the business field. The LBDI offers them working capitals to start their businesses and then pay back in six months with a fixed interest rate of 11 percent. The percentage rate also depends on time duration. The Bank gives six months credit but with one year approval. Access to credit is one of the areas Liberia got poor marks when it was measured on the ease of doing business during the World Group's annual survey report. The country is ranked 135th place on the ease of getting credit in the world.

Mr. James Aaron Boker II is the vice-president of the Credit Department of LBDI. He told this columnist that the LBDI's YEP program is mainly for new business people who do not have access to bank money. “We make bank money available to them easily through the YEP,” he said. But what are the criteria for people to benefit from the YEP program? In his response, Mr. Boker said the Bank encourages borrowers to have a relationship with it. “You must have had an account with the Bank for at least six months. This will enable us to evaluate your business(es),” he disclosed.

The credit facility goes with three major criteria business persons must meet before they can qualify to benefit from the YEP. They include having a six-month account with LBDI, having an existing business with a point of sale, the business must be registered with the Ministry of Commerce and the borrower(s) must have been recommended by any two or three members of the YEP.

YEP membership is divided into two groups but working together as a unit to recommend others and to access credits from the bank. The two groups are the Concern Liberian International Business Corporation (COLINBO) and the Young Liberian Business Entrepreneurs (YLBE). Members of these groups run businesses across the country and the Bank finances their businesses to go to China, buy goods and return to Liberia for sale. The maximum loan size the LBDI gives under the YEP program is US$50,000 and the minimum is US$10,000.

According to Mr. Boker, the Bank also conducts and assesses the credit records of would-be borrowers from their communities to their friends before lending the money.

Touching on the number of creditors that apply to his Bank for loans, Mr. Boker stated with confidence: “The borrowers are overwhelming. They come in large numbers to the Bank.”

He disclosed that as at July, the Bank has processed nearly 126 Liberian-owned businesses that applied for loans. Mr. Boker indicated that contrary to conventional views that Liberians do not like to pay debt, the situation is far different. “Liberians are paying their debts under the YEP program and this is highly remarkable,” he noted. He said although the Bank's loan size has increased, the payment rate remains 90 percent this even though it was 100 percent last year when the loan size was much smaller. Mr. Boker emphasized that risk management is his primary concerns as the creditors increased.

“The bank,” he said, “has done up to US$21 million since it started its YEP loan program.” He revealed that the Bank's portfolio or outstanding position under its loan program is about US$24 million.

Mr. Boker, however, appealed to borrowers to handle borrowed money with care. “The only thing we need from our many borrowers is that they must handle borrowed money with care. It's not free money. It's the depositors' money and so we expect creditors to pay back,” he warned.

After the conversation with Mr. Boker, this columnist managed to catch up with one of the beneficiaries of the LBDI's YEP program, Mr. Peter Kolo, Jr. He praised the Bank for raising the standard of his business. Mr. Kolo said he was rescued by LBDI at the time when other commercial banks were not giving loans to Liberian-owned businesses. He disclosed that he was surprised in 2004 when the LBDI gave an overdraft of US$5,000 to him and two of his colleagues to travel to China to import their goods.

“Our number grew up to 21 persons and we wrote LBDI requesting for loans and the Bank gave us the money,” he stressed.

Mr. Kolo noted that he now receives US$50,000 from LBDI because his purchasing power has increased. As the founder and president of the Young Liberian Business Enterprise (YLBE), he said, his store has grown and that he was coming to own tangible assets. He described the YEP program as the best, saying “while money changers were giving money to people at the rate of 25 percent, LBDI took the risk at that time giving them loans for 12 percent'.

Mr. Kolo thanked the Bank for reducing the rate to 11 percent and hoped that it would see reason to further reduce it in the future. The young Liberian entrepreneur, who deals in cosmetics, clothing, footwear and other auction goods, said many Liberian businesses were gradually taking over the auction market from their foreign counterparts. “The prices of original jeans are now cheaper as compared to the time when they were being sold only by foreign business people,” he observed.

“Auction jeans were sold for US$10 per pair in the past but it is now sold for US$5 on the local market,” Mr. Kolo stated.

He pointed out that that had enabled Liberians who could not afford the price of jeans to buy and wear jeans today.

A 1999 graduate of the University of Liberia (UL), Mr. Kolo called on his fellow countrymen and women to take advantage of the LBDI loans program and the improved security in the country to invest.

“The time Liberian people were not in business has passed. We are now ready for business and we will take loans and pay back with interest to prove that we are credit-worthy. We are tired seeing foreigners coming here and carrying away all of the money to build their homes while we have nothing,” he added.