stakeholders, including researchers, financial service providers, Fresh Produce Development Agency, church groups, women in coffee and community workers, came together to the presentation of the portfolios of low-income households in Goroka, a 22 weeks Financial Diaries Project carried out by the Bank of Papua New Guinea and the Pacific Financial Inclusion Programme (PFIP).
According to stakeholders attending the workshop, the major challenges of banking more people and increasing usage of formal financial instruments in the Highlands are lack of financial education, cumbersome paperwork required by financial institutions to open accounts, financial products that are costly and not tailored to the needs of the low-income people, and most importantly the lack of financial access points – the ecosystem – supporting ease of deposits and withdrawals.
According to Tenzin Keyzom Ngodup, PFIP representative in PNG, the findings of these comprehensive records of financial transactions, formal and informal, made by low-income households in Goroka will have implications for financial service providers: they will need to review and customize their current product offerings, including pricing, to suit the needs of the unbanked people in PNG, in particular in the Highlands Region, where the percentage of formally banked adults is 8.3% compared to the national average of 14.6%.
The study highlighted that over 74% of informal financial transactions are within the family network, so there is potential to migrate these cash based transactions to mobile or branchless banking. In addition, there is huge potential for expanding access to formal credit products as all the borrowing were through informal channels with 50% being store credit and transactions carried out predominantly by women closer to their dwelling, as they lent and borrowed money twice as often as men. Borrowing from money lenders, who charge 50% interest rates on micro-loans of PGK 500, is the only source of external loans for low-income people.
Accordingly to Deputy Governor Benny Popoitai, ICT has given us an opportunity to leapfrog and give access to the remotest parts of our country, and the Central Bank is balancing its role as the regulator and enabler of innovation to increase this access. This is critical because of the inherent role of financial inclusion in furthering sustainable inclusive growth in the country.
The one day workshop was facilitated by Augustine Brie, Team Leader for the Financial Diaries Project based at the Bank of PNG.
The Pacific Financial Inclusion Programme (PFIP) is a joint programme of the United Nations Capital Development Fund (UNCDF) and United Nations Development Programme (UNDP) with additional funding support from Australian Government and the European Union/Africa, Caribbean and Pacific Microfinance Framework Programme (EU/ACP).