MSC led an intervention on access to finance with the Central Bank of Papua New Guinea to build a microfinance sector in the country. 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 a greater number of the deposits collected into loans to businesses rather than into inter-bank deposits and government securities. We also set out procedures and provided support for rolling out the RSF facility for partner financial institutions.
Through the project, MSC’s intervention reduced the turnaround time of individual loans to MSMEs from two months to eight days, while 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 of 2018, the Central Bank had given 1,765 loans to MSMEs, including 1,086 women clients, under the risk share facility.