UNCDF in Papua New Guinea

UNCDF in Papua New Guinea

The Challenge

Papua New Guinea (PNG) is the largest and most populated of all the Pacific Island Countries (PICs) with a population of approximately 7.2 million people in 2012 speaking over 850 indigenous languages. About 40 percent of the population lives on less than $1 per day and 75 percent of households depend on subsistence agriculture. Forty-one percent of rural inhabitants compared to 16 percent of urban dwellers live in poverty and are harder to reach with service.

Economic growth averaged around seven percent over the last five years, largely driven by the PNG Liquefied Natural Gas (LNG) Project - the single largest investment in the country’s history (US$15 billion). As a result of economic growth, the country has achieved ‘lower middle-income’ status, with a per capita income of US$2,386. Despite the country’s wealth, available data show that human development indicators remain worryingly low, with limited access to health and education services, as well as high inequality . The country is not on track to meet any of its Millennium Development Goal (MDG) targets and ranks at 156 out of 187 countries in the 2012 Human Development Index, with over 80 percent of the population without access to basic financial services.

How We Are Helping?

The United Nations Capital Development Fund (UNCDF) is helping PNG to meet its development challenges through a combination of local development and access to finance initiatives. Since 2009, UNCDF, through the Pacific Financial Inclusion Programme (PFIP), has led the opening of the mobile money market through its sector development approach. UNCDF works closely with the Central Bank, Bank of PNG, to create an enabling regulatory environment. UNCDF provided technical and financial assistance to develop the country’s first National Financial Inclusion & Financial Literacy Strategy 2014/2015 as part of PNG’s Maya Declaration. UNCDF also supports the overall coordination of financial inclusion, both at the regional and country-level, through the Alliance for Financial Inclusion’s Pacific Island Working Group (AFI’s-PIWG) and through its partnership with PNG’s Centre for Excellence in Financial Inclusion (CEFI).

UNCDF has de-risked innovation in the country through investment and technical support to Nationwide Microbank’s MiCash, PNG’s first mobile wallet, and through co-investment with UNCDF’s MicroLead in Westpac InStore, a branchless banking model supporting access to finance through a network of rural-based agents. UNCDF’s research has enabled PNG to better understand the financial competency level of low-income Papua New Guineans and their financial habits, thereby helping the sector to design appropriate products and policy changes to scale-up financial inclusion across the country.

UNCDF’s support through local development was initiated in 2014. Through the diagnostic study LoOking, UNCDF will assist PNG to build its local capacity and local markets, including private sector, at the provincial and district levels.

In Detail

Project

Pacific Financial Inclusion Programme Phase 2 

Goal To add one million Pacific Islanders to the formal financial sector by 2019 by spearheading policy and regulatory initiatives, facilitating access to appropriate financial services and delivery channels and by strengthening financial competencies and cons
How

Better Policies, Regulations and Coordinated Actions
Enabling policy and regulatory environment backed by a robust financial inclusion strategy that facilitates expansion of appropriate, innovative and secure financial products and delivery channels for low-income Pacific Islanders, particularly women and youth
Deepening Financial Access
Deepening financial access through product/ channel innovations that meet the financial service needs of low-income Pacific Islander, including women and youth, and at the same time result in sustainability of financial services delivery
Better Market Information and Access to Knowledge
Enhance sector understanding on products, channels, business models suited to the needs of low-income Pacific islanders through demand, supply and impact evaluation studies
Informed and Competent Consumers
Strengthening financial competencies of clients so that they can better leverage business and financial access opportunities to improve their livelihoods

Period 2014 – 2018
Partners  
Total project cost and UNCDF contribution USD 33,776,719
USD 400,000
Project

MicroLead

Goal To increase access to financial services, particularly savings, by supporting the expansion of microfinance savings-led market leaders in underserved countries.
How
  • Offering grants and loans that incentivize leading providers to start up new, or strengthen existing financial institutions that target low-income people, especially with savings, in underserved areas, particularly countries struggling to recover from crisis and conflict;
  • Through a competitive process to select leading indigenous microfinance providers from developing countries to expand their reach by implementing a variety of approaches including greenfields, transformations of Microfinance Institutions (MFIs) to formally regulated deposit-taking institutions, and providing technical assistance to in-country MFIs;
  • Supporting technical advisors who work to help those providers to develop the institutional capacity to extend their reach.
Period 2008-2017
Partners UNCDF, Bill & Melinda Gates Foundation, The MasterCard Foundation, LIFT Myanmar.
Total project cost and UNCDF contribution USD 58,562,939
USD 7,871,850
Project

Roadmap for institutional and economic growth at the local level through LoOking 

Goal A mapping of the distribution of public expenditure and of economic and social functions across a territory to identify bottlenecks and potential efficiency gains through the application of subsidiarity and fiscal decentralization, either through local
How
  • A high quality assessment, to global standards, of the institutional status of sub national territorial administration and public finance.
  • A high quality assessment, independently verified to global standards, of the organizational and institutional capacities of urban and rural local governments and the scope for improvement followed by a participatory self-diagnostic in which selected organizations design their own capacity strengthening programme with quantifiable public financial management targets.
  • An innovative analysis of the state of local economic development using tools applied to measure linkages, clustering, employment and investment flows.
Period 2014 – 2015
Partners Government of PNG, UNDP
Total project cost and UNCDF contribution USD 750,000
 

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