Liberia - Second Development Finance Company Project

FILE COPY Report No. 503a-LBR Appraisal of the Liberian Bank for Development and Investrnent October 31, 1974 Development Finance Companies Not for Public Use Document of the International Bank for Reconstruction and Development International Development Association This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  Currency: US Dollar Acronyms LDC: Liberian Development Corporation LBDI: Liberian Bank for Developnent and Investment MCIT: Ministry of Commerce and Industry  APPRAISAL OF THE LIBERIAN BANK FOR DEVELOPMENT AND INVESTMENT TABLE OF CONTENTS Page No. BASIC DATA ......................... i SUMMARY ....................................... iv I. INTRODUCTION ....... ............................ 1 II. ENVIRONMENTAL DEVELOPMENTS ..................... 1 Economic Structure and Growth ........... .. 1 The Industrial Sector ..................... 2 Government Industrial Policies ............ 3 Investment Financing ...................... 5 III. LBDI'S ROLE ..................... 5 Volume and Locus of Financing ............. 6 Quality of Project Work ................... 7 Other Development Efforts ................. 8 IV. ORGANIZATION OF LBDI ...... ..................... 9 Ownership, Board, Management ........... 9 Policies and Lending Conditions ........... 9 Departmental Organization and Staff ........ 10 Procedures ....... ......................... 11 V. LBDI: FINANCIAL CONDITION .12 Portfolio Evaluation ...12 Resources ... 12 Financial Results ...13 Financial Position ...13 VI. PROSPECTS . .14 *i Business Outlook a. . Strategy for LBDI. 15 Forecast Operations for LBDI . .15 This report was prepared by Messrs. W. Whitesell and S. Nkansa-Boadi on the basis of their mission to Liberia in April 1974.  TABLE OF CONTENTS (Cont'd) Resource Requirements . .......... 16 Forecast Financial Results . 17 VII. CONCLUSIONS AND RECOMENDATIONS. ..18 List of Annexes 1. LIBERIA: Selected Import Substitution Industries 2. LIBERIA: Commercial Bank Statistics 3. LBDI: Summary of Loan Operations 4. LBDI: Summary of Outstanding Portfolio as at March 31, 1974 5. LBDI: Operating Policies 6. LBDI: Board of Directors 7. LBDI: Organization Chart 8. LBDI: Audited Income Statements for Years 1969-1973 9. LBDI: Audited Balance Sheets as at December 31, 1969-1973 10. LBDI: Assumptions of Projected Operations and Financial Statements, 1974-1978 11. LBDI: Projected Operations 1974-1978 12. LBDI: Projected Income Statements 1974-1978 13. LBDI: Projected Balance Sheets 1974-1978 14. LBDI: Projected Cash Flow Statements 1974-1978 15. LBDI: Past and Projected Financial Ratios 16. LBDI: Estimated Disbursement Schedule for the ProDosed Bank Loan  BASIC DATA LIBERIAN BANK FOR DEVELOPMEliT AND INVESTMENT Year of Establiahments 1965 Ownership(as of 30th April 1974) Local Investors and IFC U.S. $ Percent Government of Liberia 248,490 24.85% IFC 248,490 24.85% Private Liberian Investors 13.020 1.30% Total 510,000 51.00% Foreign Investors International Trust Company 125,000 12.50% Bank of Monrovia 120,000 12.00% I tituto Mobiliare Italiano 120,000 12.00% Firestone Plantation Company 50,000 5.00% Liberia Mining Company 50,000 5.00% IAMCO Joint Venture Operating Co. 25.000 2.50% 1,000,000490 100.00% Resource Position(a of March 31. 1974) Domestic Funds L.~S.1$o000 Share Capital 1,000.0 Reserves, unappropriated profits & provisions 248.2 Borrowing (Less cancellations & payments) 390.0 Total domestic expenditure resources 1,638.2 Domestic Funds (uses) Net Fixed assets 73.5 Loans & Equity Investments 1,246.0 Undisbursed Commitments 123.5 Total domestic expenditure commitments 1443. 0 Available for new domestic expenditure commitments 195.2 Forei&n Funds (sources) KfW loan (4.5%, amount at exchange rate prevailing at time of disbursement) 709 IBRD Line of Credit (7.25%) 1,000 ADB Line of Credit (7%) 5