Barry Whiteside: Overview of the Fijian economy
Address by Mr Barry Whiteside, Governor of the Reserve Bank of Fiji, at the opening of
Credit Corporation (Fiji) Limited's new building, Nadi, 4 October 2013.
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The Chairman of the Credit Corporation Board, Mr Garth McIlwain
Board of Directors
Managing Director, Mr Peter Dixon
Management and Staff
Distinguished Guests
Ladies and Gentlemen
Introductory comments
Good morning and Bula Vinaka.
I thank Peter for the kind invitation to open this new Credit Corporation (Fiji) Limited building,
which I am told will now house the institution's Nadi Branch.
These occasions are exciting for us as they are evidence of the increased confidence and
optimism shown by our business community in the Fijian economy. We are progressing as a
nation, and in this regard are grateful to institutions like Credit Corporation for their
commitment and for building their presence in Fiji.
Please allow me to provide a brief update on how our economy is progressing.
The Fiji economy
We are fortunate that the Fijian economy has not been seriously impacted by the current
global slowdown. Our economy this year is forecast to grow by 3.2 percent, up from the
2.2 percent growth last year.
Consumption activity has been upbeat and is a reflection of a combination of factors
including lower personal income taxes and higher inward remittances. Inflation is expected to
be around 3.0 percent by the year-end and our foreign reserves were recorded at
$1.83 billion as at 03 September 2013, sufficient to pay for 5.2 months of retained imports of
goods and services. Investment is forecast to be around 28 percent of GDP this year, above
the Government target of 25 percent.
We however still need to work on some real challenges and in this regard, the current
accommodative monetary policy stance will be maintained. We are mindful that consumption
and investment led growth cannot be sustained for too long as they have heavy import
content. For this reason, policies aimed at export diversification and promotion, and import
substitution remain paramount.
New lending as an indicator of economic activity, has increased significantly in the last
8 months. Lending institutions like Credit Corporation are experiencing great competition as
they work on retaining customers in a period of high liquidity and falling interest rates, but at
the same time ensuring they meet their growth targets. Financial institutions therefore remain
the backbone of our financial system and their expansion is an indicator of increased
confidence in our economy. This new development by Credit Corporation is definitely an
example of such a vote of confidence in doing business in Fiji.
I feel it would be pertinent at this stage to say a few words about Credit Corporation (Fiji)
Limited or CCFL as we refer to it in the Reserve Bank.
Credit Corporation (Fiji) Limited
CCFL is a subsidiary of Credit Corporation (PNG) Ltd and has been licensed here in Fiji as a
credit institution under supervision of the Reserve Bank, having started its operations in Fiji in
1992, at Gorrie Street in Suva. It has been serving the Fiji market for over 21 years now, with
a network of 4 branches, all located in the popular business centres around the country. The
company now employs 44 staff with a customer base of more than 4000.
CCFL has not only grown in presence, but also in size, from its initial investment of
$1.0 million, to an asset base of just over $101 million as at December 2012. While its asset
size is smaller relative to other licensed credit institutions in the market, its performance has
been remarkable, reporting one of the most favourable returns on assets and efficiency in the
industry, during the 2012 financial year.
The institution has had its share of operational challenges in the past, but somehow
continues to show resilience in ensuring its Fiji operations remain prudent and sound. We
noted that in 2012, CCFL made a strategic decision to have additional provisions, resulting in
a higher than normal provisioning charge against its profit.
There is no better indicator of soundness for financial system supervisors like the Reserve
Bank than seeing our licensed financial institutions taking their own initiative to be adequately
provisioned and having a satisfactory buffer against any deterioration in the quality of their
loan portfolio. Such prudent measures are effective in meeting unexpected losses in times of
crisis, such as in the aftermath of natural disasters, which remain a significant risk for all our
lending institutions.
Fiji had experienced colossal losses of around $146 million attributed to natural disasters in
2012; with $71 million caused by the two major floods and an even greater loss of $75 million
caused by Cyclone Evan. CCFL's own Namaka Branch, along with other financial institutions
in the area, were severely affected by these events.
While all of them have undertaken refurbishment incurring significant costs in the process,
the operational risk of being affected by floods in future remains. I have been told that it was
this that initially prompted CCFL to purchase this piece of land in 2011. The construction of
this completed commercial property, which will now house the Nadi Branch, is indeed a
mission accomplished.
I understand that this is a non-flood prone area, but even so CCFL has taken the necessary
steps to meet challenges faced during times of natural disasters equipping the site with
backup water supply and power generators and improving safety for staff and tenants. The
building has been designed with a modern, functional and efficient concept; and the
significantly larger floor space also intends to provide comfort to both customers and staff.
With these state of the art features, we can definitely expect to see a lift in CCFL's profile and
visibility in the West.
Concluding remarks
Ladies and Gentlemen, the opening of this new building is testament to the commitment of
the institution to its customers and to the country, as it seeks to increase its facilitation of
financial intermediation, and grow its investment in Fiji. My warmest congratulations to the
Credit Corporation Team on the opening of this new building, and I wish you all the very best
in your future endeavours.
Official opening
I thank the Board and Management again for the invitation to be here today, and now have
much pleasure in declaring Credit Corporation (Fiji) Limited's new Namaka Building, open.
Vinaka vakalevu.