MSC led an intervention on access to finance with the Central Bank of Papua New Guinea to build the country’s microfinance sector. As part of the four-year-long intervention, we facilitated setting up a risk share facility (RSF). The RSF helps manage some of the risks associated with MSE lending to encourage partner financial institutions to expand their loan portfolios. It improves the quantum of lending to MSMEs and channels more of the deposits collected into loans to business rather than into inter-bank deposits and government securities. We also set out procedures and provided support for rolling out the RSF facility for PFIs.
As a result of the project, the turnaround time of individual loans to MSMEs reduced from two months to eight days, and the average loan disbursed increased by 95% to USD 5,500. As at the end of 2017, the bank had reduced its PAR 30 from 29% in 2012 to under 5%. By June 2018, 1,765 loans have been given to MSMEs under the risk share facility. Out of this, 1,086 were women clients.