In a bustling market place in a rural coffee-growing village about 45 kilometers from Dili, Marquita dos Santos oversees a kiosk selling sweets, shampoos and lotions, soap, stationary items, and canned goods.
In 2006, 40-year-old dos Santos set up a much smaller kiosk in Gleno, financed by her own savings. In no time business flourished and dos Santos set her sights on expansion. Over the next few years she approached the Institute of Microfinance Timor-Leste (IMTL) and successfully gained three loans. Dos Santos is gradually paying off her latest loan of $2,000 in weekly installments of $45.20. She has just six to go.
A mother of eight, the extra money dos Santos is making from her expanded business is paying for her two eldest children's tuition at university.
"My children are studying architecture at the Dili Institute of Technology, and industry at the University of Peace in Dili," she says. "I am very proud."
The Birth of a Bank
IMTL was established in 2001 under the Asian Development Bank (ADB) managed Microfinance Development Project. It was originally owned by the Foundation for Poverty Reduction (FPR), which was created by the Government of Timor-Leste with the support of development partners including ADB.
On 11 July 2011, at a special inauguration ceremony, IMTL officially became Banco Nacional Comércio de Timor-Leste─the National Commercial Bank of Timor-Leste (BNCTL)─ the country's first locally owned commercial bank. The President of ADB Haruhiko Kuroda participated in the ceremony.
The Minister for Economy and Development, Joao Goncalves, on behalf of the Government of Timor-Leste, was instrumental in helping transform IMFTL into the country's first fully fledged bank.
"Seeing IMFTL become Timor-Leste's first commercial bank serving rural and urban areas was a dream come true for me," said Minister Goncalves at the launch event. "We appreciate ADB's assistance with the transformation process."
President Kuroda added: "The role of the finance sector is to channel savings into productive investment. Increasing access to finance spreads investment and business beyond urban centers and helps make economic growth more balanced, inclusive, and sustainable. The BNCTL has made an important contribution towards achieving these aims."
Visiting the bank's Dili branch a few days after the inauguration ceremony, the President of Timor-Leste, José Ramos-Horta, said he would like to see Timor-Leste's first local, commercial bank expand its operations and improve the lives of East Timorese. "Now is the time to build on its strengths, manage it well, and expand rural outreach," he said.
BNCTL now has 12 branches, almost 10,020 borrowers, and 45,066 depositors with about $7.5 million in savings. It has also provided $9.4 million in loans, 40% of which are held by women. Microfinance accounts for 30% of the bank's portfolio.
Making Dreams Possible
Gleno restaurant owner, 34-year-old Lourenca Iswandy is just one of the many women benefiting from loans from BNCTL. She established her roadside restaurant 11 years ago with her own capital, and today Iswandy describes her main customers as "hungry travelers" who stop by her restaurant to sample her fish, chicken, and rice dishes.
Iswandy received her first loan of $300 from the bank (when it was still IMTL) in 2008. More recently, she was provided a loan of $5,000, the maximum. An aspiring entrepreneur, she set about diversifying her business, establishing sidelines in coffee and a photocopy service.
"My daily income helps feed my children and pay for their education," says Iswandy, who employs most of her extended family of nine in her businesses.
Since the Gleno branch of the Commercial Bank of Timor-Leste opened its doors in 2002, it has secured 1,000 savings clients and 1,500 borrowers, and disbursed $900,000 in loans.
According to Gleno Branch Manager Manuel Antonio da Luz, despite challenges such as the civil unrest that occurred in 2006 and crop failures over the past 9 years, fewer than 2% of borrowers have defaulted on their loans. This small percentage of loan defaults is shared by all 12 of the bank's branches.
Olivio Borges Moniz, branch manager of BNCTL's inaugural branch in Mandarin, Dili, credits ADB's assistance in helping keep the default rate low.
"We had a good experience working with ADB as IMTL transformed into a commercial bank. They supported us with a good business plan, reviewed all our procedures, and still support our staff training," says Moniz.
Zelia dos Santos, 27, and her husband Jose Leite have a clothing business in Dili's Halilaran Market. Since they established the business 11 years ago, they have received a market vendor loan and a business loan. She says business has doubled with the help of IMTL.
"We're able to comfortably support our four sons and pay back the loans at the same time," says dos Santos.
"Some of IMTL's customers are now earning $100 to $200 per day because they used loans to build their businesses," says Craig Sugden, ADB resident representative in Timor Leste.
The bank's general manager, Sergio Spirito Santo, confirms that, along with three more branches soon to open (in the districts of Liquisa, Manatutu, and Lospalos), there are also plans to extend mobile banking into rural areas in 2012. This will enable people to access financial services without having to leave their villages to make withdrawals or deposits, or pay bills.
"ADB stands ready to build on the successful transition of IMTL to the Commercial Bank of Timor-Leste with further support for the financial sector. We will continue to help the sector find innovative ways to ensure that all Timorese have access to finance," says Sugden.