No Stereotyping: It is All About the Governance and Management

The Financial Times carried a story "Rock solid development bank in an ocean of volatility" on CAF in its March 8 issue.

CAF (Corporacion Andina de Fomento) is the only development bank owned by Latin American countries. The bank in English is known as the Development Bank of Latin America or the Andean Development Corporation. It is headquartered in Caracas, Venezuela and lends only to members in this economically turbulent area.

The bank is one of the main sources of multilateral financing and is an important generator of knowledge for the region. It provides more infrastructure project financing to Latin America than the World Bank and the Inter-American Development Bank combined in recent years. With approved USD 11.7 billion in loans for development projects in the region in 2014, it is just a little smaller than the much richer Asian Development Bank’s loans of USD 13.7 billion.

The bank has 19 members - Argentina, Barbados, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Jamaica, Mexico, Panama, Paraguay, Peru, Portugal, Spain, Trinidad & Tobago, Uruguay, Venezuela. The amazing thing is CAF enjoys a credit rating of AA-, a notch higher than the economically strongest, Chile, and several notches higher than most of the other members.

Analysts believe the success of CAF stems from the leadership skills of its long term president, Bolivian economist Enrique Garcia Fernandez, who has served the bank since 1991 and will retire at the end of 2016 after 25 years of service. He has fostered an institution known for agility and the ability to cherry-pick projects, and of course, he has exploited the bank's multilateral status and built up an adroit management.

CAF's story proves that good governance and sound management can still perform miracles under extremely unfriendly economic conditions. Never stereotype a economic downtrodden region or state.