Papua New Guinea: Microfinance Expansion Project

Sovereign Project | 44304-013

Summary

The Project will support the further development of the microfinance sector in Papua New Guinea (PNG) through an integrated package of support, including six outputs. Outputs 1, 2 and 3 will strengthen the capacity of the microfinance industry to provide financial services to a broader cross-section of the community and strengthen the capacity of its clients and potential clients to utilize these financial services. Output 4 will provide appropriate regulation for, and supervision of, microfinance institutions (MFI) and savings and loan societies (SLS) through the Bank of PNG (BPNG). Output 5 will seek to increase lending to micro and small enterprises (MSE) to increase rural income generation. Output 6 will provide efficient and effective project management services to the Project.

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Consulting Notices

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Procurement Notices

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Procurement Documents


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Project Name Microfinance Expansion Project
Project Number 44304-013
Country Papua New Guinea
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Grant 0226-PNG: Microfinance Expansion Project
Australian Grant US$ 6.00 million
Loan 2686-PNG: Microfinance Expansion Project
Asian Development Fund US$ 13.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Partnerships
Private sector development
Sector / Subsector Finance - Finance sector development - Inclusive finance - Small and medium enterprise finance and leasing
Gender Equity and Mainstreaming Effective gender mainstreaming
Description The Project will support the further development of the microfinance sector in Papua New Guinea (PNG) through an integrated package of support, including six outputs. Outputs 1, 2 and 3 will strengthen the capacity of the microfinance industry to provide financial services to a broader cross-section of the community and strengthen the capacity of its clients and potential clients to utilize these financial services. Output 4 will provide appropriate regulation for, and supervision of, microfinance institutions (MFI) and savings and loan societies (SLS) through the Bank of PNG (BPNG). Output 5 will seek to increase lending to micro and small enterprises (MSE) to increase rural income generation. Output 6 will provide efficient and effective project management services to the Project. As a result participating financial institutions (PFIs) throughout PNG, which will be identified through a series of institutional assessments, will be better able to provide profitable, appropriate, reliable and safe financial services to financially literate clients and capable businesses.
Project Rationale and Linkage to Country/Regional Strategy

The Asian Development Bank (ADB) estimates that only approximately 15% of the population in PNG has access to formal or informal banking facilities, and that this is lower in rural

areas. Lack of access to financial services is an impediment to the monetization of rural economies, a constraint on the growth of MSEs, and a restraint on the mobilization of domestic

capital. The project will extend and build on the experiences and lessons learned from ADB's Microfinance and Employment Project, which built a solid base for microfinance and developed microfinance as a suitable tool for rural development in PNG.

Impact Economic growth led by the private sector is enhanced
Project Outcome
Description of Outcome PFIs sustainably and safely provide financial services to a substantially increased number of clients across PNG
Progress Toward Outcome The project is in its third year of implementation. PFIs portfolio at risk ratio is declining and as of October 2014, stands at 21% on average (compared to 36% the year before). The PFIs are reporting a financial self-sufficiency ratio already above 100% (on average 116% as of October 2014).
Implementation Progress
Description of Project Outputs

Business and product management capacity of participating financial institutions is increased

Clients and potential clients understand and know how to access, financial services for personal or business use

The Association of MFIs monitors jointly agreed industry standards

BPNG regulation and supervision of MFIs and SLS is streamlined and improved

A risk-share facility supports increased micro and small enterprise lending

The PMU provides efficient and effective project management services

Status of Implementation Progress (Outputs, Activities, and Issues)

1. Institutional assessments have been completed for 10 PFIs. All PFIs produce quarterly reports and annual audited accounts. Support in market research has been provided and more than 20 different products have been designed for these PFIs (eight specifically targeted to women).

2. The roll-out of financial education (FE) is progressing exceptionally well with almost 28,000 people trained to-date (44% of which are women). About 6,600 trainees have signed up for new financial products.

3. CEFI was formally established in April 2013. Industry standards have been agreed during a consultation workshop in July 2014. Monitoring will start in January 2015 and will be published on CEFI's website.

4. A data management system which classifies according to risk and monitors performance of the PFIs has been introduced. Manuals for onsite and offsite supervision have been completed. Capacity building of BPNG supervision staff is near completion.

5. The risk share facility fund manager was fielded in June 2014. The trust deed was signed by the Treasurer in October 2014, and ADB transferred the funds in December 2014. The facility will be fully operational by Q1 2015 and reporting against respective indicator will start in Q2 2015.

6. The project has met all contract awards and disbursement targets in 2014.

Geographical Location
Safeguard Categories
Environment FI
Involuntary Resettlement C
Indigenous Peoples B
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services The lead implementation firm has been engaged. Various, smaller consulting packages for financial literacy and business development skills training, and others will be through QCBS/CQS/SSS/ICS method as suitable.
Procurement

All procurement of goods will be undertaken in accordance with ADB's Procurement Guidelines. Before the start of any procurement, ADB and the government will review the public procurement laws of the government to ensure consistency with ADB's Procurement Guidelines.

The PMU will be responsible for the procurement of all goods and related services, under the project. Shopping will be used for procuring readily available off-the-shelf goods and related services valued up to $100,000.

Responsible ADB Officer Sabine Spohn
Responsible ADB Department Pacific Department
Responsible ADB Division Pacific Liaison and Coordination Office in Sydney, Australia
Executing Agencies
Bank of Papua New GuineaLoi BakaniDouglas St., P. O. Box 121
Port Moresby
Papua New Guinea
Timetable
Concept Clearance 05 Mar 2010
Fact Finding 25 May 2010 to 28 May 2010
MRM 19 Aug 2009
Approval 28 Oct 2010
Last Review Mission -
PDS Creation Date 13 Jul 2010
Last PDS Update 18 Mar 2015

Grant 0226-PNG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
28 Oct 2010 25 Nov 2010 07 Mar 2011 30 Jun 2018 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 11.05 Cumulative Contract Awards
ADB 0.00 28 Oct 2010 0.00 3.98 66%
Counterpart 5.05 Cumulative Disbursements
Cofinancing 6.00 28 Oct 2010 0.00 2.70 45%

Loan 2686-PNG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
28 Oct 2010 25 Nov 2010 07 Mar 2011 30 Jun 2018 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 13.00 Cumulative Contract Awards
ADB 13.00 28 Oct 2010 10.77 0.00 88%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 28 Oct 2010 8.81 0.00 72%

Safeguard Documents

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Evaluation Documents

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