Microfinance Focus, Oct 29, 2010: The Asian Development Bank (ADB) and the Australian Government will support a $24 million Microfinance Expansion Project to help rural communities in Papua New Guinea access credit and financial services.
 
ADB’s loan, from its concessional Asian Development Fund, covers 54% of the project cost of $24.06 million. The loan has a 32-year term, including a grace period of eight years. Interest is charged at 1% per annum during the grace period and 1.5% per year for the rest of the term. AusAID will provide a grant of $6 million to be administered by ADB. The Government of Papua New Guinea and project beneficiaries will cover the remaining cost of $3.09 million. The project is due for completion around the end of 2017.
 
The project will extend and build on the experiences and lessons learned from ADB’s Microfinance and Employment Project, also co-financed by the Australian Government through AusAID, an 8 year project that began in 2002 and established a solid base for microfinance in Papua New Guinea.
 
ADB estimates that only 15% of the population has access to formal or informal banking facilities, and many parts of the country still use a non-monetary barter system for transactions.
 
“This project will help rural areas move from a subsistence to a modern cash-based economy and in the process it will increase incomes and reduce poverty by stimulating informal business activity,” said Robert Wihtol, Director General of ADB’s Pacific Department.