Port Moresby, Papua New Guinea, October 31, 2011—
IFC, the World Bank, and the Papua New Guinea government today launched a program that helps improve access to credit for small and medium enterprises, the primary drivers for job creation, poverty reduction, and economic growth in the country.
Bank South Pacific, Papua New Guinea’s largest bank, is the program’s first partner. Papua New Guinean-owned small and medium enterprises that are formally registered and employ at least three people – such as mechanical shops, carpenters, and trading stores -- can apply for loans under the facility starting this week.
The program helps mitigate the default risk that participating banks face by guaranteeing 50 percent of loans that they extend to small and medium enterprises. The guarantee will help banks extend such loans and hence the program is expected to support up to 150 million Papua New Guinea kina (around $61 million) in new financing to small and midsize businesses.
“The program will allow small and medium enterprises to expand and create jobs in Papua New Guinea,” said Carolyn Blacklock, IFC’s Resident Representative in Papua New Guinea. “It will also provide opportunities for women to become more active in managing and expanding their businesses.”
Through the program, IFC will help banks better understand the market and raise their comfort level in lending to small and medium enterprises. Currently, only about 25 percent of up to 20,000 registered smaller enterprises in Papua New Guinea have access to credit. In addition, the program will provide training for businesses, particularly female entrepreneurs, on how to borrow from banks. It also will focus on improving the regulatory environment to make it easier for small and medium enterprises to operate.
“In order to benefit from Papua New Guinea’s resource boom small and medium enterprises need better access to finance,” said Laura Bailey, World Bank Country Manager for Papua New Guinea. “With the ability to obtain loans, entrepreneurs can expand their activities, create jobs and help raise incomes for those who need it most.”
The program is a collaborative effort between the Papua New Guinea government; IFC, the member of the World Bank Group focused on private sector development in emerging markets; and the International Development Association, the arm of the World Bank Group that provides interest-free loans and grants to help the world’s poorest countries.
About the World Bank Group
The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. It comprises five closely associated institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), which together form the World Bank; the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Each institution plays a distinct role in the mission to fight poverty and improve living standards for people in the developing world. For more information, please visit
www.worldbank.org
,
www.miga.org
, and
www.ifc.org
.
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