MICROCAPITAL BRIEF: International Finance Corporation (IFC) Grants $771k to Bank South Pacific (BSP) Rural Through Pacific Microfinance Initiative to Bring Electronic Banking Services to Rural Entrepreneurs in Papua New Guinea

The International Finance Corporation (IFC), the investment arm of the World Bank Group, a multilateral development finance organization based in Washington, DC, recently provided Bank South Pacific (BSP) Rural, a subsidiary of the privately-owned commercial bank BSP, a USD 771,000 “performance-based” grant through the Pacific Microfinance Initiative, a joint effort between the Australian government and IFC, to bring electronic banking services to small business owners in Papua New Guinea.

With the grant, IFC intends to incent BSP Rural to offer modern banking services to rural businesses far from BSP branches. It is expected that the project will offer electronic fund-transfer services in local shops or post offices acting as agents for BSP Rural. Clients will also be able to obtain debit and savings cards that can be used to send and receive money in rural areas. Under the grant agreement, IFC will assist BSP Rural in technology development, product distribution, customer literacy programs and call-center management. Grant disbursement will be made in stages and is contingent on BSP meeting performance targets.

According to Paul Thornton, head of BSP Rural, “With IFC’s support, we aim to acquire 200,000 new customers over the next three years and establish another 20 branches [1].”

By John Howard-Smith, Research Associate

About International Finance Corporation (IFC): A member of the World Bank Group, the International Finance Corporation (IFC) offers loan and debt securities, equity investments, advisory services and technical assistance intended to alleviate poverty and promote open and competitive markets in developing countries. The IFC has 182 member countries that “collectively determine its policies, and approve investments.” In fiscal year 2009, IFC’s new investments totaled USD 14.5 billion. For more information, see MicroCapital’s wiki on the World Bank Group: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=The+World+Bank+Group

About Pacific Microfinance Initiative: Launched in 2010 through the joint efforts of the International Finance Corporation (IFC) and the Australian government, the Pacific Microfinance Initiative is a four-year, AUD 12.3 million (USD 11.1 million) project designed to improve access to basic financial services, particularly for women, rural households and enterprises in Papua New Guinea, Timor-Leste and the Pacific Islands. As part of the initiative, IFC provides performance-based grants and business advice to financial service providers with the aim of developing business plans with measurable expansion targets. Grant disbursement is contingent on meeting performance targets.

About Bank South Pacific (BSP): Established in 1974 in Port Moresby, Papua New Guinea, Bank South Pacific (BSP) is a private commercial bank with 35 branches in Papua New Guinea, Fiji, Niue and the Solomon Islands. BSP is publicly listed on the Port Moresby Stock Exchange. As of December 31, 2009, BSP had PGK 9.4 billion (USD 3.6 billion) in total assets, return on assets (ROA) of 3.2 percent and return on equity (ROE) of 30.6 percent.

[1] IFC Press Release: “IFC Helps BSP Extend Banking Services to Entrepreneurs in Papua New Guinea’s Rural Areas”, http://www.ifc.org/ifcext/media.nsf/content/SelectedPressRelease?OpenDocument&UNID=1E8A8FF1F0F428B885257831007C183C

MicroCapital.org story, August 30, 2010: “MICROCAPITAL BRIEF: The International Finance Corporation (IFC) and the Australian Government Launch the Pacific Microfinance Initiative”, https://www.microcapital.org/microcapital-brief-the-international-finance-corporation-ifc-and-the-australian-government-launch-the-pacific-microfinance-initiative/

MicroCapital’s Microfinance Universe profile: International Finance Corporation (IFC), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Finance+Corporation+(IFC)

MicroCapital’s Microfinance Universe profile: Pacific Microfinance Initiative, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Pacific+Microfinance+Initiative

MicroCapital’s Microfinance Universe profile: Bank South Pacific (BSP), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+South+Pacific

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

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