Impact. The expected impact of the proposed S-CDTA is a growth in financial inclusion in Vanuatu, particularly in rural areas. This will be measured by the increase in the number of people with accounts in Vanuatu.
Outcome. The expected outcome of the S-CDTA is the improved operational performance of VANWODS. This will be measured by the decrease in the operating expense ratio of VANWODS.
Methodology and Key Activities. ADB's assistance will support VANWODS to upgrade its institutional capacity (including human resources and technology) and governance arrangements. It will have the following key outputs:
Output 1: Appropriate IT system is identified and implementation is supported. The S-CDTA will assess VANWODS' existing IT system and future requirements to identify a suitable system on the market that ensures sufficient capacity for growth of its operations, caters for a potential partnership with NBV, and enables the reporting required by management and the Reserve Bank of Vanuatu. Once a suitable system is selected, the S-CDTA will support the implementation, in particular through supporting the migration of data to the new system and capacity building of staff.
Output 2: Strategic and managerial capacity of VANWODS senior management is improved. Support will be provided to the management and board of directors of VANWODS to facilitate the introduction of international best practice microfinance standards and to ensure that the organization adheres to local best practise standards of internal audit and prudential supervision. A capacity building needs assessment will determine current weaknesses and design a prioritized capacity building plan. Areas requiring immediate support will be addressed through workshops and on-the-job training for selected senior staff. As part of the output, the S-CDTA will support the management and board of directors to review the strategic plan of the organization and to identify additional areas where VANWODS requires support to effectively implement its mission.
Output 3: Products and services are reviewed and revised as necessary. The S-CDTA will review the current products and services through a product demand and client satisfaction survey. Based on the results of the survey and a product costing exercise, adjusted or new products will be developed and tested.
|Project Rationale and Linkage to Country/Regional Strategy
This small-scale capacity development technical assistance (S-CDTA) is included in ADB's Vanuatu Country Operations Business Plan 20132015. It is consistent with ADB's Vanuatu Country Partnership Strategy 20102014 and ADB's Pacific Approach 20102014.
As an archipelago of 83 islands, 67 of which are inhabited, Vanuatu faces challenges to provide access to financial services to the majority of its 250,000. Based on 2011 figures, it is estimated that only 19% of the population has access to formal or semi-formal financial services. Approximately 75% thereof live in rural and remote areas. The services of the four commercial banks (ANZ, Westpac, BRED, and National Bank of Vanuatu (NBV)) concentrate on urban centres and leave rural areas mainly without banking facilities.
The primary non-bank financial institution providing savings and loan services outside the urban centres is the Vanuatu Women's Development Scheme (VANWODS), albeit on a small scale. VANWODS is a non-profit microfinance institution with a mission consistent with ADB's financial inclusion objectives. VANWODS is a valued brand name in Vanuatu and enjoys strong support from local communities and in particular women's groups. It has great potential to further expand access to financial services in rural and remote areas since its target clientele is low-income women or informal women businesses, the majority of whom are currently financially excluded. Its mission is in line with the government's priorities and action agenda. VANWODS will need assistance to cope with increasing demand for services and subsequent challenges of growth.
VANWODS was established by the then Department of Women and Culture in 1996 with funding and technical support from the United Nations Development Programme. The member-based organization was registered under the Charitable Organisations Act in 2003, and is registered with the Financial Services Commission. It provides microfinance services to rural women based on a modified Grameen Bank model. Since 2008 it has had ni-Vanuatu management and has grown to service (with loan and savings products) almost 7,000 women through 4 branches in 4 provinces (Efate, Espiritu Santo, Malekula and Tanna). From 2001, savings customers grew from 430 to 6,133 (2012) and respectively borrowers from 430 to 3,987 (2012). The savings volume reached VT262 million or $2.9 million equivalent at the end of 2012. Loan amounts are small (up to Vt 250,000 or $2,750 equivalent) with a flat interest rate pricing base, and reached a total volume at end 2012 of VT286 million or $3.1 million equivalent. VANWODS has reached the stage where it needs to upgrade its institutional capacity and governance to support further expansion and to operate on a financially sustainable basis. Additionally, opportunities have arisen to develop technological partnerships (i.e. with NBV ) and to use new technologies, such as branchless banking, to more cost efficiently increase outreach in remote and rural areas.