Presenter: Jemima Gerrett
Speaker: Deva de Silva, from the International Finance Corporation
DE SILVA: The priority or the focus here is the lower income segments of the economies in the Pacific Island countries, starting from Timor Leste to PNG and all the other Pacific countries. So the projects and the focus will be at the microfinance and the small business segments of these markets.
GARRETT: Your first partner is the South Pacific Business Development Foundation, why that organisation?
DE SILVA: As I see always does in rolling out its programs of this nature we undertake scoping, and that scoping was done in about six or seven priority countries in this whole program, and in Samoa, Tonga, these are countries where the financial inclusion numbers are very low. And we looked for potential partners and we identified SPBD as a partner that has access to the grassroots level, and also access to the rural sector, and also access to the women in their portfolio, which were three key criteria that we looked at in terms of identifying partners. So this was identified as an initial partner but I must tell you that it’s only just one of the initial pipeline. It’s just that we brought it out because we’ve kind of signed up and ready to go with this project, but the others that we have which will come along in the near few months actually are very similar, and this should give an indication of our direction.
GARRETT: You are trying some new ideas, for instance you say you’re willing to fund mobile phone companies and agri-business to provide microfinance. Why do you see potential there?
DE SILVA: In the Pacific one key issue that is that the rural segment is 80 per cent of the population but is not linked or integrated into the economy. And the other is that these pockets of people live geographically dispersed. I mean this is very common in all the countries in fact in our Pacific region, in the smaller nations especially. So what we have looked for is more novelty ways of reaching these people because the traditional bank branches, brick and mortar branches as we call them, it’s not a viable way forward, and running it in a practical and viable and commercial and financial manner is not feasible. So we’ve looked at different models; can we link up larger coffee exporters or the large agri-supply captive buyers with rural or grower farmers through agri-supply chain channels, and supply chain programs? Or can we look at the phone where the penetration levels have been tremendous in the Pacific, can we use the phone as a means of reaching the under-banked or unbanked populations in these regions. So we’re looking for things a little beyond the traditional way of bringing financial services to the rural sector.
GARRETT: Twelve-point-three million dollars is not a lot of money and this project covers a lot of countries. Do microfinance organisations need to get in quickly if they want to secure some funding?
DE SILVA: The 12-point-three that you’re referring to is our initial funding envelope that the IFC and AusAid has put together, and going forward we expect other donors to join in, and we expect that the lessons learnt will help us expand this program and to go more deeper in the markets in the Pacific countries.
GARRETT: How will you make sure that some of these microfinance projects get out to countries that haven’t had microfinance before?
DE SILVA: Jemima that’s a very interesting question because some of these countries are very small, you’re talking of countries that have a population of 100-thousand, 65-thousand. So in nations of that nature starting them green field microfinance institution locally sometimes may not be viable. On the other hand there may not be potential partners who can do that. So in the Pacific we’re trying to take a more regional approach. We’re trying to see how we can develop a partner who is well established in one country expand beyond that country to another country, and then to a third country. This has a few advantages; one is that this gives this particular entity commercial sustainability, gives them the size and gives them the ability to share their learning experiences across the region. And the other is that for the countries that do not have the capacity to come up with a green field institution, which is commercially sustainable, they get access to products, access to an institution that has a tested system and proven methodology of serving the unbanked. So we are taking a more regional approach rather than an in-country approach, in expandiing this outreach.