Port Moresby, May 23, 2006
—The International Finance Corporation, the private sector arm of the World Bank Group, today signed an agreement to invest in PNG Microfinance. The deal marks IFC’s first investment in Papua New Guinea’s financial sector and will assist PNG Microfinance in creating the country’s first commercial microfinance project. It will strive to provide support for productive micro- and small enterprises, thereby stimulating employment generation and strengthening the financial sector.
“IFC’s input will help develop PNG Microfinance as a model commercial institution,” said Jyrki Koskelo, IFC's director for global financial markets. “PNG Microfinance aims to provide financial services to a section of the community largely ignored by banks and financial institutions, thereby helping employment generation and providing livelihoods to those who lack access to credit and social services,” he added.
IFC will make a $1 million equity investment in PNG Microfinance, giving it a 19 per cent shareholding. Majority shareholders in PNG Microfinance include the founding shareholder PNG Sustainable Development Program, and the largest commercial bank in Papua New Guinea, Bank South Pacific.
Japan’s trust fund and IFC will provide a further $2 million for a three-year capacity building technical assistance program, with BASIX, a leading Indian microfinance provider and an IFC invested company, acting as technical partner. The project also received funding from the Netherlands trust fund at the feasibility study stage.
“We’re pleased to be working with IFC and sharing in the common goal of reducing poverty through business growth, job creation and the deepening of the banking sector,” said Robert Igara, Chief Executive Officer of PNG Sustainable Development Program. “With IFC’s support and investment, we have also been able to secure the interest of the European Investment Bank as a possible shareholder in PNG Microfinance.”
PNG Microfinance was granted a license on December 24, 2004 by the Bank of Papua New Guinea as a specialized financial institution to provide credit and financial services, including savings, to small business and microenterprises. It operates on a commercial basis across the country and aims to achieve long-term financial sustainability.
“We’re delighted to have played a role in the development of PNG Microfinance and to be finalizing this investment today. The project will encourage the development of the microfinance sector in Papua New Guinea and the wider South Pacific region,” said Javed Hamid, IFC's director for East Asia and the Pacific.
Microfinance is a key strategic objective for IFC stemming from its mission to alleviate poverty through the development of private micro- and small enterprise. As of December 31, 2005, IFC had invested $358 million in 105 microfinance projects in 45 countries to try to bridge the gap between the demand and supply for financial services among underserved groups in developing countries. These investments are reaching more than 3 million clients for a total microcredit volume of more than $2.3 billion.
About IFC
The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C. IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent. Its 178 member countries provide its share capital and collectively determine its policies.
The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For more information, visit
www.ifc.org
.
