Assessment of Optimal Structures to Finance the Private Sector by the Caribbean Development Bank

Development Finance Institutions, GBRW Consulting, GBRW Group, Sustainable & Development Finance

GBRW was engaged to assist the Caribbean Development Bank (CDB) in choosing between various structuring options for its private sector activities.

The CDB is a regional multilateral development bank established in 1969 to focus on the Caribbean region. It has 19 borrowing member countries and 94% of its loan portfolio is sovereign lending. Recognising that the main growth opportunities exist in the private sector, CDB intended to significantly increase its presence in this sector and set itself an ambitious target in this regard, with the stipulation that such growth was to be achieved without affecting CDB’s credit rating.

GBRW posed a diagnostic about CDB’s current private sector activity, and reviewed its peers' activity in the Caribbean. GBRW then proposed a high level institutional, operational and financial structure able to support CDB's expansion in the private sector, together with a roadmap for implementation.

Deliverables included:

- Analysis of the existing private sector portfolio and a diagnostic about CDB’s private sector activity today

- Interviews of all Development Finance Institutions active in the Caribbean region, with a focus on their activity in the private sector and the structures they use for that purpose

- Interviews of providers of guarantees and grant finance in the Caribbean region

- Assessment of a number of structuring options for the Private Sector Division of CDB

- Providing a recommendation on the most viable way to achieve a significant development of the private sector activities of CDB without weighing on its credit rating

- The proposal of a high level institutional, operational and financial structure, including a governance definition, credit risk guidelines, operating rules, and recommended credit enhancement measures or instruments, and roadmap for implementation.