Ellison Pidik: A milestone in Papua New Guinea's micro finance industry
Speech by Mr Ellison Pidik, Assistant Governor for Financial System Stability of the Bank of
Papua New Guinea, on behalf of Mr Loi Bakani, Governor of the Bank of Papua New
Guinea, at the opening of Women's Micro Bank Limited, Port Moresby, 15 August 2014.
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Acknowledgements
• Board of Directors
• Hon. Richard Maru, MP, Minister for Trade, Commerce and Industry.
• Management & Staff of Women's Micro Bank Ltd (WMBL)
National Council of Women
•
• Other Women Groups of PNG
• Distinguish Guests
• Ladies and Gentlemen
1.0 Introduction
Good Morning to you all.
I am representing the Governor of the Bank of PNG, Mr. Loi Bakani, to officiate at this event
- the Official Opening Ceremony of the Women's Micro Bank Limited.
I wish to thank the Board and CEO of Women's Micro Bank Ltd (WMBL) for the invitation to
officiate in today's event in what promises to be a historic milestone in PNG's micro finance
industry, a women's only micro bank. Just recently in June this year I had the pleasure of
accompanying the Governor of the Central Bank to officiate in the historic occasion of the
presentation of the banking business licence to Women's Micro Bank. There are few
important reasons for being here today partly to witness the results of the hard work of the
Board, Management and Staff of WMBL, culminating in the opening of the new micro
banking premises. This event is remarkable in a sense that WMBL has achieved a milestone
of being the fifth (5th) deposit taking microfinance institution to be licensed by the Bank under
the Banks & Financial Institutions Act 2000 (BFIA) and more importantly the first women's'
micro bank in PNG and the Pacific region. Women's Micro Bank will finally open its doors to
the public especially our women folks for business and we commend you. We look forward to
the difference this institution will have on the lives of many families through the financial
services that you will make available to the women and mothers of this nation. The PNG
Government stresses the need for development of the financial and banking sector to
promote inclusive growth to achieve the objectives of Vision 2050. As an institution, you will
now contribute towards achieving that vision.
2.0 Global movements in financial inclusion
Everyone is talking about financial inclusion at the international level. It is a major agenda of
development right across the globe with financial illiteracy as a serious hindrance to positive
development. As far as the Bank is concerned, we have another reason to pursue financial
inclusion. This is to address and improve the transmission process of our monetary policy to
the real economy. This relates to the process where any change we make to monetary policy
through a signalling interest rate or other means, its effects should translate down to the real
economy, through business houses, consumers, institutions etc. One of the major reasons
for the transmission not working is because of the lack of financial services, due to fewer
financial intermediaries and products.
It is important for PNG as a developing nation to have this transmission mechanism working
right down to the rural communities to eradicate financial exclusion. PNG is a member of
APEC and Financial Inclusion & Financial Literacy is one of APEC's key priorities, as
demonstrated by the launch of the APEC Financial Inclusion Initiative in 2010. At the 2012
APEC Finance Ministerial Meeting, Finance Ministers of the APEC economies recognized
financial literacy to be an essential skill for everyone in the 21st century and an important
component of any economy's efforts that will effectively support economic and financial
stability, inclusive development to improve individual and families wellbeing.
The Bank of PNG is in the forefront of promoting the financial inclusion agenda and is
committed to several international initiatives such as the Maya Declaration and the Money
Pacific Advisory Group Goals. The Money Pacific Goals emphasises the importance of
financial education where all Central Banks in the Pacific, including PNG signed up to ensure
all children receive financial education through the core curriculum by 2020. The Bank also
made a commitment under the Maya Declaration in Malaysia in 2013 to achieve several
goals by 2015, one of which is to increase financial services access to one (1) million more of
the currently unbanked population in PNG, of which 50% of them will be women. I am
pleased to announce that PNG is reaching around 1⁄2 million clients as I speak.
At this juncture, I would like to reiterate Governor Bakani's comments of WMBL
spearheading the goal of reaching the 500,000 unbanked women in PNG before end 2015.
We only have 16 months to be able to achieve that target and we are confident that WMBL
will provide further initiatives and services to achieve this goal.
3.0 Financial Inclusion and its relevance for PNG
Ladies and gentlemen, as we know, PNG is characterized by rugged terrains, scattered
islands and lacks basic infrastructures making government services including financial
services unreachable for most parts of the country. Improving access to financial services
remains one of the major developmental challenges in the country and a collaborative effort
is needed to extend financial services to the unbanked majority. It is estimated that
approximately 85 percent of the adult population is excluded from the formal financial sector
and live a subsistence lifestyle well below global poverty line. Hence, financial inclusion
initiatives are vital to enable the unbanked population to participate meaningfully in the
monetized economy. We are confident that our efforts through financial inclusion will have
reduced this unbanked ratio of population below 85 percent.
4.0 Challenges & achievements for the microfinance industry
A major challenge for the microfinance industry and particularly the first four (4) licensed
microfinance institutions is to ensure the institution is sustainable in short and long term
whilst expanding branch network (outreach) into rural areas to reach the unbanked
population. Meanwhile microfinance institutions are succumbed to the pitfalls of reliance on
subsidies and other market distortions which should be avoided and self-reliance should be
encouraged as a way forward for the growing industry.
On a positive note, let me highlight some achievements of the micro finance industry in PNG
in the last few years since its inception which includes:
• The industry is reaching around 500,000 clients as I speak. This is a remarkable
achievement,
• The industry continues to develop a range of client centered products and services
suitable for the grassroots,
• The use of technology to extend financial services to the very remotest parts of the
country through mobile phone banking,
• The introduction of micro insurance as part of its service delivery,
• The establishment of industry standards in line with the international best practices.
This was non-existence before.
In your endeavour to grow this entity, there is a need for a result based professional
approach for the future. Be forward looking, Women's Micro Bank is not here to only provide
financial services but also ensure that the services make a positive impact or change in the
lives of its clients. This includes both the change of life style and improving of living
standards which is what is defined as the double bottom-line in microfinance, Sustainability
and Impact
5.0 Financial literacy and education
I understand the parent entity, Women in Business has been conducting literacy programs
for its members in the past. I encourage you to continue with this program and educate the
womenfolks in financial matters to enable them to make informed decisions about their
finances.
Also, the Bank has seen the need to educating our young generation to be financially
competent citizens in PNG. To complement our efforts to instil savings culture of school
children at an early age, the Bank went ahead and launched the "National Savings
Campaign for Young Minds" and 13 financial institutions made commitment to design and
introduce savings products for young minds. A joint Savings Campaign was launched
together with the 13 institutions in NDC and Central Provinces followed by Schools in WNBP
to promote savings culture for young minds and the occasion was a success with a big
turnout. In Kokopo, during the Financial Exposition 2014, many students from 14 Schools
attended the training programs and visited booths in the Expo Village where financial
institutions were displaying and demonstrating financial products. Many also opened bank
accounts. Next week the Bank will roll out the National Young Minds Savings Campaign to
10 schools in Manus Province.
Before I conclude, Ladies and Gentlemen, I would like to once again congratulate Women's
Micro Bank Limited for its achievement as a licenced Deposit Taking Microfinance Institution.
On our part, the Central Bank would like to assure WMBL and the industry and all the
stakeholders of its continued support in the development & supervision of the Microfinance
Industry and look forward to working collaboratively with the market to increase access to
financial services in the country. The Central Bank is out to create a strong stable financial
system and encourage prudent behavior in the market. That is the way we can develop and
deepen the financial market. We also would like to thank the staff and the management team
at Women's Micro Bank Limited who have tirelessly worked hard, hand in hand with the
Central Bank team in meeting the vigorous assessment requirements from the time of
lodgement to its final approval stages towards a speedy licencing of the institution.
Finally it is my pleasure, On behalf of the Governor of the Central Bank, Mr. Loi M Bakani, to
now declare the Women's Micro Bank Limited premises opened for business.
Thank you, Ladies and Gentlemen.