44304-013: Microfinance Expansion Project | Asian Development Bank

Papua New Guinea: Microfinance Expansion Project

Sovereign (Public) Project | 44304-013 Status: Active

ADB is helping rural communities in Papua New Guinea access financial services. The project will strengthen industry regulation and the capacity of lenders to deliver a wider range of financial services and products in rural areas, with a focus on lending to micro and small enterprises, and especially to women. The project will also support a large-scale financial literacy training program.

Project Details

Project Officer
Warid, Liliana Sera Pacific Department Request for information
Country
  • Papua New Guinea
Modality
  • Grant
  • Loan
Sector
  • Finance
 
Project Name Microfinance Expansion Project
Project Number 44304-013
Country Papua New Guinea
Project Status Active
Project Type / Modality of Assistance Grant
Loan
Source of Funding / Amount
Grant 0226-PNG: Microfinance Expansion Project
Government of Australia US$ 6.00 million
Loan 2686-PNG: Microfinance Expansion Project
concessional ordinary capital resources lending / Asian Development Fund US$ 13.00 million
Grant 0425-PNG: Microfinance Expansion Project (additional financing)
Government of Australia US$ 2.85 million
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Knowledge solutions
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

Partner financial institutions (PFIs) have strengthened capacity to improve operational efficiency and provide sustainable services to clients. Twenty seven new products have been developed in Q2 to meet the growing demands of clients such as loans for fisheries, agriculture and piggeries. Furthermore, credit practices have been tightened resulting in an improvement in the portfolio at risk from 48% to 17% over 3 years.

To ensure clients understand the products and services available to them, financial education training has been delivered to over 188,000 people.

Progress to date is on track to meet the outcome of PFIs sustainably and safely providing financial services to an increased number of clients across PNG.

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)

The firm finished their assignment in Dec 2015. Individual consultants have been contracted to continue supporting the PMU.

Q3 2017 progress report was received.

27 products designed as of Aug 2017 with 18 products piloted.

Reporting is ongoing.

Financial literacy and business development skills training ongoing.

report is ongoing

Nine PFIs have been reporting on agreed indicators.

Ongoing.

Ongoing.

Three risk sharing agreements have been signed as of 31 August 2017. The total value of loans covered by RSF is $5.23million.

Geographical Location Nation-wide
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 The project partners with commercial banks, microbanks, NGOs, faith-based organizations and cooperatives to reach very remote parts of the country to facilitate financial education and link clients to the formal banking sector.
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 Warid, Liliana Sera
Responsible ADB Department Pacific Department
Responsible ADB Division Pacific Liaison and Coordination Office in Sydney, Australia
Executing Agencies
Bank of Papua New Guinea
Douglas 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 05 Nov 2010
Last PDS Update 31 Oct 2017

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 30 Jun 2019 -
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 4.60 77%
Counterpart 5.05 Cumulative Disbursements
Cofinancing 6.00 28 Oct 2010 0.00 4.78 80%

Grant 0425-PNG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
09 Feb 2015 10 Jul 2015 10 Nov 2015 30 Jun 2018 30 Jun 2019 -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 2.85 Cumulative Contract Awards
ADB 0.00 09 Feb 2015 0.00 1.55 55%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 2.85 09 Feb 2015 0.00 1.15 41%

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 30 Jun 2019 -
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 0.00 10.91 89%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 28 Oct 2010 0.00 10.61 87%

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

Title Document Type Document Date
Papua New Guinea: Microfinance Expansion Project Brochures and Flyers Apr 2016

The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
Regulation Specialist Individual - Consulting Active 23 Sep 2017 06 Oct 2017
Finance Specialist Individual - Consulting Active 23 Aug 2017 05 Sep 2017
Financial Inclusion Data Mapping Firm - Consulting Closed 14 Jun 2017 13 Jul 2017

Contracts Awarded

Contract Title Approval Number Contract Date Contractor Contractor Address Executing Agency Contract Description Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
FINANCIAL EDUCATION Grant 0226 20 Jul 2017 K1 ASSOCIATION INC SECTION 34 LOT 12 WARAKUM MOUNT HAGEN WESTERN HIGHLANDS PAPUA NEW GUINEA Bank of Papua New Guinea 798935

Procurement Plan

Title Document Type Document Date
Microfinance Expansion Project: Procurement Plan Procurement Plans Jan 2015