Banking Services Put Women in Business in Papua New Guinea
Project Result / Case Study | 26 February 2015
In Papua New Guinea, a microfinance project delivering banking services to the poor supports the financial and social empowerment of women.
Anna Goi, a 54-year-old businesswoman in Papua New Guinea (PNG), runs a trade store, which sells food stuff, secondhand clothes and toys, and jewelry. She also offers tailoring and sewing services at the store. The business is a family affair, as most of her five children work there.
Anna is illiterate but that hasn’t stopped her from opening and maintaining three bank accounts - one of them with Women’s Micro Bank. She is also in the process of applying for a loan with the microbank to help expand her tailoring business.
Women’s Micro Bank is the first microbank in PNG to focus on the needs of female clients. “We know women are better money managers than men in this country and women have particular special needs when it comes to banking services and finances,” says chief executive officer (CEO) Thushari Hewapathirana.
A growing industry
The microfinance industry is growing rapidly in some of the most remote and poorest regions of the country. The Bank of PNG, the country’s central bank, confirms that it has licensed no less than five microbanks to date. But it wasn’t always like this.
Fifteen years ago, more than 90% of PNG’s population of about five million had no access to financial services of any kind. The percentage of the population living below $1.25 per day was growing. Livelihood opportunities were scarce.
Since 2010, the $24.9 million PNG Microfinance Expansion Project has been expanding access to financial services in rural communities. Supported by ADB and the Governments of PNG and Australia, the project is building on the experiences and lessons from its predecessor - the Microfinance and Employment Project. Both projects are responsible for establishing microfinance in PNG.
The Microfinance Expansion Project is strengthening industry regulation and boosting the capacity of lenders to deliver a wider range of financial services and products in rural areas, with a focus on lending, savings, and remittance products to micro and small enterprises, and especially to women.
Introducing mobile banking
The first microbank to be licensed in PNG is the biggest microfinance bank in the country and the South Pacific. Now 10 years old, Nationwide Microbank or MiBank grew from a small ADB pilot program.
MiBank chief executive officer Tony Westaway says microfinance is not just about access to credit, but also about people having somewhere to safely put their money. “Unbanked people in PNG bury their money in bamboo tubes in the garden and hide their money under fireplaces. Some people won’t leave their homes, too scared to go to town in case their lifesavings are found,” he says.
MiBank launched MiCash in 2011, the first bank-led deployment of mobile money in the Pacific. It is a bank account accessed via a mobile phone. People can use MiCash to save money and pay bills. It has become popular with women in particular.
Kobo Davana, a 42-year-old mother of five, finds MiCash easy to use. Through it she has learned to manage more wisely the money she earns from her vegetable garden. She feels she has more control of her finances.
Women’s Micro Bank is also a partner of the Microfinance Expansion Project. It received its banking license in August 2014. “We have migrated nearly 10,000 women customers from the nongovernmental organization that the bank emerged from,” says CEO Hewapathirana. “In addition to these customers we have opened nearly 650 new accounts so far.”
Aside from banking services, the microbank also conducts financial literacy training for its clients.
Promoting financial literacy
The Microfinance Expansion Project supports a large-scale financial literacy program, targeting more than 130,000 people in PNG. At least 40% of the trainees will be women. To date, about 80% of the population still do not have access to financial services. The program will help determine what financial services they need.
“The demand for access to financial knowledge and services in rural areas is growing,” says Bank of PNG Deputy Governor Benny Popoitai, who is also chairman of the steering committee of the project. “The Microfinance Expansion Project has enabled rural villagers to get access to finance for the first time. Our challenge is to keep expanding our financial literacy activities to ensure more people are financially educated and help low-income earners contribute to economic development.”