MICROCAPITAL BRIEF: “Financial Diaries Project” Preliminary Readings: Low-Income People in Papua New Guinea Travel Long Distances for Financial Transactions

The “Financial Diaries Project,” an initiative launched in September 2012 by the Bank of Papua New Guinea (BPNG), the nation’s central banking authority, and the Pacific Financial Inclusion Program (PFIP), a project designed by the United Nations to increase access to financial services for low-income Pacific Islanders, recently released a preliminary report that found that low-income people in Papua New Guinea often travel “unusually long” distances to urban centers to carry out financial transactions [1,2]. These transactions, which reportedly amount to PGK 400 (USD 171) on average for each roundtrip, generally include activities such as withdrawals by workers whose employers pay wages through direct bank deposits. David Mclachlan-Karr, the United Nations Development Program Resident Representative in Papua New Guinea, expressed that this report will not only “enable financial service providers to gain a deeper understanding of the ways in which consumers use money, interact with financial service providers and transact within their social networks,” but also further understand the rationale for Papua New Guineans travelling long distances despite allegedly having an established network of financial agents close by [1].

This preliminary report, which is not yet available to the public, will be followed by a series of interviews across the country to gain additional insight about this trend. The final report will be shared through various workshops to financial service providers and policymakers in November 2013 [1].

In the year 2011, BPNG had total assets of PGK 30.1 billion (USD 13.9 billion), deposits of PGK 18.1 billion (USD 8.37 billion) and a gross loan portfolio of PGK 8.7 billion (USD 4.0 billion). The number of depositors is unavailable. As of July 2013, PFIP has operations in seven countries. Financial information on PFIP is unavailable.

By Michael Averell, Research Associate

About the Bank of Papua New Guinea (BPNG)

Established in 1973, the Bank of Papua New Guinea (BPNG) is the nation’s central banking authority. The core responsibilities of BPNG are to ensure the stability of the nation’s financial sector as well as the economy as a whole. In the year 2011, BPNG had total assets of PGK 30.1 billion (USD 13.9 billion), deposits of PGK 18.1 billion (USD 8.37 billion) and a gross loan portfolio of PGK 8.7 billion (USD 4.0 billion). The number of depositors is unavailable.

About the Pacific Financial Inclusion Program (PFIP)

About the Pacific Financial Inclusion Program (PFIP): The nonprofit Pacific Financial Inclusion Program (PFIP) aims to deliver financial services to poor Pacific islanders who have limited or no access to banks. It was established with funding from the United Nations Capital Development Fund, the European Union and the United Nations Development Programme. As of July 2013, PFIP has operations in seven countries. Financial data on the organization is not available.

Sources and Additional Resources

[1] The Jet Newspaper: “Financial Diaries – Presentation of Preliminary Findings,” http://thejetnewspaper.com/2013/07/15/financial-diaries-presentation-of-preliminary-findings/

[2] Pacific Financial Inclusion Program (PFIP) Press Release: “Financial Diaries – Portfolios of Papua New Guinea Low Income Households,” http://www.pfip.org/media-centre/press-releases/financial-diaries-portfolios-of-papua-new-guinea-low-income-households.html

MicroCapital story, March 29, 2012, “MICROCAPITAL BRIEF: Survey: Majority in Fiji Prefer Cash to Mobile Money,” https://www.microcapital.org/microcapital-brief-survey-majority-in-fiji-prefer-cash-to-mobile-money/

MicroCapital story, June 8, 2010, “MICROCAPITAL BRIEF: The United Nations’ Pacific Financial Inclusion Program (PFIP) Releases “Fiji Financial Services Sector Assessment” Calling for Expansion of Microfinance Sector, Especially Through the Development of Accessible Savings Services,” https://www.microcapital.org/microcapital-brief-the-united-nations-pacific-financial-inclusion-program-pfip-releases-fiji-financial-services-sector-assessment-calling-for-expansion-of-microfinance-sector-especially-thro/

MicroCapital story, April 19, 2013, “MICROCAPITAL BRIEF: National Microbank of Papua New Guinea Launches MiLife Mobile Life Microinsurance,” https://www.microcapital.org/microcapital-brief-nationwide-microbank-of-papua-new-guinea-launches-milife-mobile-life-microinsurance/

MicroCapital Universe Profile: Bank of Papua New Guinea (BPNG) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+of+Papua+New+Guinea+%28BPNG%29

MicroCapital Universe Profile: Pacific Financial Inclusion Program (PFIP) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Pacific+Financial+Inclusion+Program+%28PFIP%29

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