DBS

The Development Bank of Samoa (DBS): A Pillar of Samoan Development

The Development Bank of Samoa (DBS) has served as a pivotal institution in the nation's financial landscape since its establishment in 1974. Re-enacted under the Development Bank of Samoa Act 2010, this government-owned corporate body is headquartered in Apia, with a primary mandate to foster sustainable economic and social development across the island nation. Its foundational capital, amounting to ST 50 million (approximately USD 18.7 million), is fully subscribed by the Government of Samoa, underscoring its role as a state-backed development finance institution.

DBS operates with a clear mission: to extend credit to critical sectors that underpin Samoa's economy and community well-being. Its target market predominantly comprises micro, small, and medium enterprises (MSMEs), which account for a remarkable ninety-eight percent of its customer base. Beyond MSMEs, DBS strategically finances agriculture, fishing, tourism, retail, transport, and various community projects. Furthermore, it plays a vital role in addressing housing needs by funding new home construction and renovations for low-income households.

The bank's leadership is a blend of government appointees and experienced financial professionals. Leasiosiofa’asisina Oscar Malielegaoi serves as the Chairperson, a position appointed by the Cabinet, providing strategic oversight. Susana Laulu, as Chief Executive Officer, leads the day-to-day operations, supported by a dedicated management team including Aiufi Kelekolio (Manager, Loans Administration), Goretti Godinet-Fau (Manager, Loans Management), and Migao Tiotio (Manager, Savaii Branch). This structure ensures both governmental alignment with national development goals and professional execution of financial services.

DBS Loan Products and Financial Offerings

DBS offers a comprehensive suite of loan products designed to meet diverse financial needs, from nascent micro-businesses to larger MSME ventures and vital agricultural initiatives. Each product is structured with specific purposes, amounts, and terms to maximize its developmental impact.

Key Loan Categories:

• Micro Loans: Tailored for working capital and petty trade, these loans are available for amounts up to ST 15,000 (approximately USD 5,700). They carry an interest rate of eight percent (normal lending rate) and can be repaid over a term of up to five years. Collateral requirements often include movable assets or a guarantor.
• Small Loans: Geared towards business start-up or expansion, small loans can reach up to ST 50,000 (approximately USD 18,900). The interest rate remains eight percent, with a repayment term extending up to seven years. For these loans, freehold property or vehicles are typically required as collateral.
• Medium Loans: Designed for larger MSME projects, medium loans can provide financing up to ST 250,000 (approximately USD 94,000). These also feature an eight percent interest rate, with a longer repayment period of up to ten years, often secured by property or equipment.
• Agriculture Value Chain Loans: Supporting crucial sectors such as taro and cocoa export supply, these loans have variable amounts but maintain an eight percent interest rate and a term of up to seven years. Collateral typically involves crops or agricultural equipment.
• Inclusive Development Loans: Specifically aimed at empowering women and youth through micro-projects, these loans have variable amounts, an eight percent interest rate, and a term of up to five years. A unique feature is the reliance on a peer group guarantee, fostering community support and shared responsibility.

Government-Backed Facilities:

• Government of Samoa (GOS) COVID Facility: An emergency relief measure, this facility offers variable loan amounts at a significantly reduced interest rate of four percent, repayable over up to three years. It is characterized by minimal or no collateral requirements, reflecting its relief-oriented purpose.
• Government of Samoa (GOS) 5M Facility: A broader government-backed initiative for MSMEs, this facility also offers variable amounts at an even lower interest rate of three percent, with a repayment term of up to five years. Similar to the COVID facility, it features minimal or no collateral.

Beyond interest rates, borrowers should be aware of various fees associated with DBS loans. These include an application fee ranging from ST 50 to ST 200, an approval fee of 1.5 percent of the loan amount, and stamp fees of ST 50 per agreement. Monthly maintenance fees vary from ST 5 to ST 15, and late payment fees are either ST 50 or one percent of the arrears, whichever is greater. Understanding these charges is crucial for a complete picture of borrowing costs.

Applying for a DBS Loan: Process and Requirements

Accessing financial assistance from DBS involves a structured application process designed to ensure due diligence and adherence to regulatory standards. Potential borrowers have multiple convenient channels through which to submit their applications, and a clear understanding of the required documentation is paramount for a smooth experience.

Application Channels and Documentation:

DBS facilitates applications through its mobile-responsive website, allowing for online submissions from various devices. Borrowers can also apply directly at any DBS branch or by emailing their applications to loan officers. Regardless of the chosen channel, a comprehensive set of documents is required. This typically includes a formal loan letter, passport, birth certificate, and a recent photograph. Further personal verification comes from a village reference. Financial standing is assessed through financial statements or tax returns, payslips or employer letters, and bank statements. For businesses, a valid business license is essential, along with asset valuations and insurance policies for any proposed collateral. Finally, if a guarantor is involved, their consent is also a mandatory part of the application package.

Know Your Customer (KYC) and Underwriting:

DBS adheres to standard Customer Due Diligence (CDD) practices, with ongoing integration into the National Digital ID system for enhanced verification. The bank's underwriting process relies on a robust credit scoring model that evaluates several factors: the applicant’s cash flow, the inherent risk of their sector, the value and type of collateral offered, and, for micro-projects, the performance of peer groups. This comprehensive approach ensures responsible lending decisions. In instances of non-performing loans, DBS employs a case-by-case restructuring approach, seeking viable solutions for borrowers facing difficulties.

Disbursement, Collections, and Support:

Once a loan is approved, proceeds are typically disbursed via bank transfer to either DBS accounts or partner banks. In a pilot phase, DBS is also exploring mobile money integration with Vodafone, offering a modern alternative for receiving funds. For smaller disbursements, a cash option is available directly at the branch. DBS maintains a proactive approach to loan collections and borrower support. Automated SMS reminders are sent to assist borrowers in managing their repayments. For inclusive loans, weekly group meetings serve as a platform for discussion and collective accountability. In cases of default, legal recovery is pursued through the Personal Property Securities Act registry. Moreover, for loans under the COVID facility, government-supported assisted recovery mechanisms are in place, providing an additional layer of support during challenging times.

DBS in the Digital Age and Market Presence

While DBS maintains a traditional branch network, it has also embraced digital solutions to enhance accessibility and service delivery. Its digital presence is characterized by a mobile-responsive web portal rather than a standalone application. This portal is compatible with both Android and iOS browsers, allowing customers to complete application forms, utilize loan calculators, and track the status of their applications online. However, public customer ratings or app store reviews for these digital features are not widely available, making it difficult to gauge average user satisfaction from external sources.

Physically, DBS operates with a head office located in Apia and one branch in Savaii, ensuring coverage across Samoa's major islands. Beyond its fixed locations, DBS extends its reach through periodic village seminars, engaging directly with communities to promote financial literacy and showcase its product offerings. The bank serves approximately 4,000 active borrowers, with a significant ninety-eight percent being MSMEs. Notably, its inclusive development facility has a strong focus on female entrepreneurs, with sixty percent of its beneficiaries being women.

DBS operates within a well-defined regulatory framework. It is regulated under the Public Bodies and Accountability Act 2001, with oversight from the Ministry of Finance and the Central Bank of Samoa, particularly concerning prudential matters. The bank rigorously adheres to Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) requirements, aligning with the National Digital ID Act 2024. Annual audits conducted by the Controller and Auditor General ensure financial transparency and accountability, and confidentiality is mandated by Section 42 of its governing Act. No major regulatory sanctions have been reported against DBS, which often receives periodic government capital injections to maintain its capital adequacy.

Consumer protection is also a priority for DBS. The bank ensures that its interest rates are transparently published, allowing borrowers to make informed decisions. It also provides referrals for credit counseling services and implements hardship variation policies for SMEs that may be impacted by unforeseen external shocks, reflecting a commitment to supporting its borrowers through difficult periods.

DBS in the Samoan Financial Landscape: Position and Practical Advice

The Development Bank of Samoa occupies a distinct and crucial niche within the nation's financial landscape. With a market share of 3.80 percent of Non-Financial Institution (NFI) lending by Weighted Average Lending (WAL) rate, DBS, while not the largest lender compared to institutions like the Samoa National Provident Fund (SNPF) and Samoa Housing Corporation (SHC), stands as the sole state-development bank. This unique positioning differentiates it significantly from commercial banks such as ANZ, BSP, National Bank of Samoa (NBS), and Samoa Commercial Bank (SCB), which typically focus on higher-value corporate loans and operate with a profit-driven model.

DBS distinguishes itself through several key factors: its concessional interest rates, which are often lower than those offered by commercial lenders; the inherent government guarantee backing its operations; and its explicit mandate for development rather than purely commercial returns. This focus allows DBS to support sectors and projects that commercial banks might deem too risky or not sufficiently profitable. The bank’s loan portfolio grew to ST 147 million in the fiscal year 2021, despite external pressures. Future growth plans include pending Green Climate Fund accreditation and an expansion of its digital channels, including the introduction of a dedicated mobile application. DBS also fosters strategic partnerships with entities such as the Central Bank, Samoa Land Authority Corporation (SLAC), Ministry of Women, Community and Social Development (MWCSD), and Vodafone, particularly for fintech integration and exploring mobile money disbursements.

Customer feedback, primarily gathered through annual surveys rather than public app store ratings, indicates general satisfaction with the support provided by loan officers and the flexibility of loan terms. Common issues, such as application delays and the extensive documentation requirements, are being addressed through streamlined online forms. DBS prides itself on its service quality, characterized by dedicated loan officers and monthly performance reviews. Success stories highlight the bank's impact, including women’s weaving cooperatives scaling their exports and cocoa farmer groups tripling their output with the aid of value-chain loans.

Financially, DBS reported a loss before tax of ST 3.3 million in FY 2021, largely attributable to the adverse impact of COVID-19 on the tourism sector, which represented sixty-nine percent of its portfolio. Loan approvals in the same year totaled 412, valued at ST 5.3 million, marking a twenty-two percent decrease in value compared to FY 2020. The bank’s funding history includes capital injections of ST 2.5 million in both FY 2020 and FY 2021, alongside a ST 1 million COVID facility and government debt guarantee facilities. Its total loan portfolio reached ST 140 million, with corporate loan exposure representing eighty-one percent by value. The overall Non-Performing Loan (NPL) ratio stood at approximately fifteen percent, mainly due to the tourism sector. MSME default rates are between five and eight percent, while the inclusive facility boasts a lower NPL rate of less than two percent. Risk management involves restructuring NPLs, government-funded relief, and tightening underwriting for sectoral concentration.

Practical Advice for Potential Borrowers:

For those considering a loan from DBS, several practical points are crucial for a successful application and repayment journey:

• Understand Your Purpose: Clearly define the purpose of your loan. DBS’s development mandate means it prioritizes projects aligned with national growth, such as agriculture, MSME development, or community initiatives.
• Prepare Thoroughly: Gather all required documentation in advance, including personal identification, financial statements, and business licenses. Delays often stem from incomplete submissions. Utilizing the mobile-responsive website for understanding requirements can save time.
• Leverage Digital Tools: While there is no dedicated mobile app yet, use the web portal for applications and status tracking. This can offer convenience over in-branch visits.
• Engage with Loan Officers: DBS prides itself on loan officer support. Make use of their expertise to clarify terms, discuss your business plan, and navigate the application process.
• Scrutinize Terms and Fees: Pay close attention to the interest rates, which are transparently published, and understand all associated fees—application, approval, stamp, maintenance, and potential late charges.
• Plan for Repayment: Develop a robust repayment plan, accounting for your projected cash flow. Utilize the bank's automated SMS reminders and, for inclusive loans, actively participate in group meetings.
• Consider Collective Guarantees: If you are part of a women or youth micro-project, explore the peer group guarantee option for inclusive development loans, as it can lower individual collateral burdens.
• Inquire About GOS Facilities: If your business has been impacted by external shocks or falls under specific government initiatives, explore the GOS COVID and 5M facilities for their lower interest rates and minimal collateral.
• Assess Sectoral Risks: Be mindful of the higher NPL rates in sectors like tourism. If your business operates in such areas, ensure your financial projections are conservative and you have contingency plans.

By understanding DBS's unique mission, its product offerings, and its processes, Samoan entrepreneurs and individuals can effectively utilize this vital institution to foster their growth and contribute to the nation's sustainable development.