Jamaica’s Development Bank Spent $18 Billion Without Knowing If It Created a Single Job, Auditor General Finds

The Development Bank of Jamaica channelled billions of taxpayer-backed dollars into loans meant to grow the economy and create thousands of jobs — yet the Auditor General found the bank had no reliable system to determine whether any of it worked. For farmers in St. Elizabeth, small business owners in Kingston, and communities counting on economic development to improve their lives, the revelation raises a troubling question: was the money spent in their name actually spent for their benefit?

When the Development Bank of Jamaica was created in April 2000 through the merger of the Agricultural Credit Bank and the National Development Bank, the ambition was clear: a single, purpose-built institution that would channel financing to the sectors Jamaica most needed to grow — agriculture, manufacturing, tourism, energy, information technology, and services. By 2006, the National Investment Bank had been folded in as well. The DBJ, wholly owned by the Government of Jamaica, became the country’s primary development finance institution, the engine meant to translate state capital into real economic opportunity for ordinary Jamaicans.

Between April 2009 and March 2015 — a six-year window that covered both the global economic fallout from the 2008 financial crisis and Jamaica’s painful IMF adjustment programme — the DBJ disbursed JMD $17.96 billion and USD $79 million in loans. That money flowed through Approved Financial Institutions, Micro-Financing Institutions, cooperatives, and through direct lending to enterprises the bank considered viable. On paper, it represented a significant national investment in economic recovery and growth. In practice, according to a performance audit completed by the Auditor General’s Department in December 2015, the DBJ could not tell you what it bought.

The audit is a careful, methodical document. It does not accuse anyone of corruption or malfeasance. What it describes is something arguably more corrosive to public confidence: institutional indifference to results. The DBJ projected that its loan disbursements over the audit period would generate 20,134 jobs across the Jamaican economy. It had no systematic mechanism to verify whether those jobs were ever created. It could not point to a monitoring framework that tracked loan funds from disbursement to stated purpose to measurable outcome. In the one sector where verification data existed — the ICT and business process outsourcing industry — the gap between projection and reality was stark. Of a projected 10,324 jobs, only 1,950 were confirmed to have been created. That is a realisation rate of 19 percent. For every five jobs the DBJ said its ICT lending would produce, four simply did not materialise in any documented way.

For the farmers in Westmoreland or Manchester who applied for agricultural credit, for the small manufacturers in Spanish Town trying to expand, for the hotel operators along the north coast borrowing to upgrade facilities ahead of a tourism season, this matters in a direct and personal way. Development financing is not a subsidy or a grant. It is a loan, extended on the premise that the borrower will put the money to productive use in ways that justify the public institution’s mandate and the preferential terms it may offer. When the lending institution has no way to confirm the money was used as intended, it cannot know whether the nation’s development goals are advancing or whether the same funds, applied differently, might have done more.

The service sector received the largest share of DBJ lending over the period — $6.95 billion, or 38.7 percent of total disbursements. Agriculture came second at $5.71 billion, representing 31.8 percent. Manufacturing received $1.96 billion, or 10.9 percent. By channel, Approved Financial Institutions accounted for 61 percent of disbursements at $10.9 billion. Micro-Financing Institutions received 16 percent, cooperatives 13 percent, and direct lending made up the remaining 10 percent.

The audit’s findings on the monitoring of financial intermediaries reveal the depth of the problem. The DBJ does not lend directly to most end-borrowers. It routes funds through AFIs and MFIs, which are then supposed to on-lend to individuals and enterprises in approved sectors. This structure requires vigilance: the DBJ must satisfy itself that the intermediaries are lending to the right people, in the right sectors, and that borrowers are actually using the funds for their stated purpose. The audit found that this vigilance was largely absent.

In a sample of 46 loans totalling $2.7 billion channelled through AFIs, auditors found that the financial institutions were unaware of requirements to submit disbursement evidence back to the DBJ. The monitoring chain had a fundamental break in it. The DBJ was releasing hundreds of millions of dollars through partner institutions without those institutions understanding what they were obligated to report back. Whether the money reached the intended borrowers in the intended sectors — whether a loan categorised as agricultural financing actually reached a farmer, or whether a manufacturing loan funded actual productive capacity — could not be confirmed.

The picture for Micro-Financing Institutions is even more troubling given the nature of the borrowers involved. MFIs serve small operators, informal traders, micro-entrepreneurs — people with limited access to traditional banking who rely on development-oriented credit to build livelihoods. Between 2009 and 2015, MFIs received $405.2 million in DBJ funds on behalf of 4,764 applicants. The DBJ made contact with 323 of those borrowers to follow up on whether funds were used appropriately. That is 6.7 percent. The remaining 4,441 borrowers — 93 percent of the people who received development finance through MFIs — received no follow-up contact whatsoever from the institution that provided the money in the public interest.

In communities where microfinance is often the primary route to economic participation, this is not an abstract governance failure. It means the DBJ has no basis to distinguish between funds that genuinely supported a small business, a market vendor, or a craft producer and funds that were misapplied or simply disappeared into the gap between documentation and reality. It means the case for expanding microfinance as a development tool rests on disbursement figures rather than on demonstrated outcomes.

The audit’s findings about the DBJ’s attempt to address its impact measurement deficit reveal something important about institutional culture. In February 2015, the bank engaged a consultant to measure loan impact — an acknowledgement, implicit if not explicit, that the problem existed and needed addressing. The bank paid a deposit of $3,487,500, representing 50 percent of the total contract value. Then, by June 2015, the consultancy agreement had been modified to exclude the impact assessment deliverable that was the reason for the engagement in the first place. The agreement was terminated on June 26, 2015. The DBJ received no impact assessment. Half the contract value, $3.49 million of public money, had been paid out. The bank was left with nothing to show for the exercise.

That sequence is worth sitting with. The institution recognised it lacked the data to demonstrate development impact. It contracted external expertise to fill that gap. It then allowed the contract to be restructured so that the critical deliverable was removed — and then terminated entirely. The audit does not assign individual blame for those decisions. But the pattern it reveals is one in which accountability for results was repeatedly deferred, outsourced, or quietly abandoned when it became inconvenient.

The non-performing loan data adds another dimension to the audit’s portrait of the DBJ. From March 2010, when NPLs stood at $1.1 billion, they climbed steeply to a peak of $2.5 billion in March 2012 before declining to $897.8 million by March 2015. On the surface, that trajectory looks like improvement. The audit, however, found that the reduction was driven primarily by write-offs rather than by actual loan recovery. The DBJ was not collecting loans in difficulty — it was writing them off. For taxpayers who ultimately stand behind a state-owned development bank, write-offs are not a resolution. They are a transfer of loss from the bank’s books to the public account.

Taken together, the audit’s four findings describe a development finance institution that was effective at one thing: disbursing money. Whether that money achieved development outcomes — whether it created jobs, expanded productive capacity, reduced poverty, or built economic resilience in the communities the DBJ was established to serve — the institution simply could not say. The Auditor General recommended that the DBJ develop a monitoring strategy to periodically assess the impact of loan disbursements on economic growth, implement a follow-up mechanism to verify whether projected economic benefits were realised, properly monitor AFIs, MFIs, and cooperatives to confirm that loans reached intended borrowers in approved sectors, and treat post-disbursement monitoring as a standard governance function rather than a special project commissioned and then cancelled.

The DBJ’s management responses to those recommendations were not published on the Auditor General’s website at the time the report was released, with full details contained in the PDF audit document. What is publicly available is the audit itself, and the findings it contains are sufficient to raise serious questions about the accountability framework governing one of Jamaica’s most significant development finance institutions.

The audit record suggests that Jamaica’s development banking framework requires a structural overhaul in how it defines success. Disbursement targets and loan volume are inputs, not outcomes. A development bank’s true measure is whether the economy it serves becomes more productive, more equitable, and more resilient as a result of its activity. That measurement requires building monitoring into the lending cycle from commitment letter to final repayment, requiring intermediaries to report as a condition of access rather than as an afterthought, and establishing an independent baseline against which actual job creation, sector growth, and borrower outcomes can be assessed. Without that infrastructure, Jamaica’s billions in development financing will continue to generate paperwork without generating the evidence needed to prove — or improve — their worth to the country’s farmers, entrepreneurs, workers, and communities.

Jamaica Accountability Watch is an independent editorial series by Jamaica Homes News examining what government audit reports reveal about the management of public money. Source: Auditor General’s Department of Jamaica.

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