World Bank project commits $781,000
PORT MORESBY, Papua New Guinea (The National, Feb. 7, 2011) – The International Finance Corp (IFC), a member of the World Bank Group, has signed an agreement with Bank South Pacific (BSP) Rural to help use electronic technology to provide small entrepreneurs in remote parts of Papua New Guinea (PNG) with banking services needed in business.
IFC had committed AU$770,500 [US$781,000] to the project under the Pacific microfinance initiative, a partnership with the Australian government.
The performance-based grant was an incentive for BSP Rural, a subsidiary of BSP, to connect to subsistence households and rural businesses far from the nearest branch.
For the first time, the project would provide banking services to customers in rural areas by setting up electronic fund-transfer services in local shops or post offices acting as agents for BSP Rural.
This would enable people to obtain a debit and savings card and to do basic banking transactions while shopping.
Access to banking services was critical for poor households and smaller rural enterprises to boost productivity, create jobs, and reduce poverty, Lars Thunell, IFC executive vice-president and chief executive officer, said.
More than 90 percent of adults in PNG lacked access, which denied them opportunities to improve their lives, Thunnel said.
Affordable and reliable banking services were also important in improving people’s living standards.
Farmers, small-scale producers and rural women would benefit as the project would provide a safe and secure way to save and transfer money.
“This project would make significant inroads in terms of allowing people in remote areas to send and receive money quickly and more efficiently,” Paul Thornton, head of BSP rural banking, said.
“With IFC’s support, we aimed to draw 200,000 new customers over the next three years and establish another 20 branches.”
Under the grant agreement, IFC would assist BSP Rural in technology development, product distribution, customer literacy programmes and call-centre management.
Grant disbursement would be contingent on meeting agreed performance targets.
Improving access to finance is a priority for IFC in the Pacific region.
Last year, IFC and IFC Capitalization Fund invested US$140 million in BSP that is helping expand financial services in PNG and bolstering the banks presence across the Pacific region.
The Pacific microfinance initiative aims to improve the ability of microfinance and other financial-service providers to deliver banking services to Pacific Island communities with limited or no access.