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Access to Finance Stimulates Small Business Growth in Timor-Leste

Video | 11 February 2019

For Carlota da Silva, a trader who runs a general store in the market of Liquiça, Timor-Leste, bank loans have allowed her business to grow over the years.

The Asian Development Bank (ADB) helped launch Timor-Leste’s first locally-owned commercial bank that provides loans to individuals and businesses. The National Commercial Bank of Timor-Leste, known as NCBTL, now has branches in towns and rural areas across the country.

Access to credit is helping Timor-Leste diversify the economy beyond petroleum, making it more inclusive and resilient to external shocks.

Transcript

Liquiça, Timor-Leste – Poor access to credit is one of the main constraints on economic growth in developing Asia and the Pacific. Timor-Leste, Asia’s youngest country, is no exception.

“We sell groceries and things for peoples’ daily needs. Whatever people need, we sell it,” says Carlota da Silva who owns and runs a general store in the market of Liquiça, a town 30 minutes drive away from the capital city Dili.

“We also sell other goods like petrol. We sell whatever people need.”

Ms. Da Silva's business grew over the years thanks to the financial credit she received from the local bank.

“I started with weekly loans to be paid back immediately. Then, I moved on to monthly loans - my first monthly loan was in 2008. The first loan was of $1,000, and then I took one of $1,500. After that, I took a loan of $3,500, and then one of $5,000. Then, I took two loan of $10,000. The last time I took a loan it was $15,000,” explains da Silva.

“Altogether, I went to the bank to get a loan seven times.”

The Asian Development Bank (ADB) helped launch Timor-Leste’s first locally-owned commercial bank that provides loans to individuals and businesses.

The National Commercial Bank of Timor-Leste, known as NCBTL, now has branches in towns and rural areas across the country.

“There are several types of credit that we give to our clients. We lend money to businesses, to help improve communities, and to people involved in agriculture or fishing,” says Adriano Nuven Belo, BNCTL Branch Manager at Liquiça.

“Often, clients form cooperatives that we lend money to, so that they can use the money for their businesses.”

Access to credit is helping Timor-Leste diversify the economy beyond petroleum, making it more inclusive and resilient to external shocks.

“We are rolling out a program called Transformation Program, which will change the services we provide to our clients at BNCTL,” explains Brigido de Sousa, Chairman of BNCTL’s Board of Directors.

“Through this program we will provide access and banking services to all people in the country, which is also the plan of our Government and the Central Bank.

For small businesses, bank loans are the only way to grow.

“We have plans to expand our business but it all depends on the bank. I wish I could get more credit. I recently asked for a loan of $20,000 but they only gave me $15,000. If I could get more money I could make my kiosk bigger,” explains da Silva.

“Without a loan we will not be able to expand much, as everything is so expensive now.”

Access to credit is helping the people of Timor-Leste at home as well as at work.

“We use the money to buy the goods we sell. We also used some of the money to pay for our children’s education,” says da Silva.

“And we used the last loan we received to build our home. We use the money for so many things.”