MAJOR PNG FUNDING PROJECT TO BOOST SMALL BUSINESSES

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PORT MORESBY, Papua New Guinea (October 30, 2000 - Post-Courier/PINA Nius Online)---The Papua New Guinea government has endorsed a $US 20 million micro-finance project.

"The project is to boost the small business sector by providing loans to domestic entrepreneurs," Prime Minister Sir Mekere Morauta said.

"Access to finance is one of the biggest constraints to development of the domestic small business sector, and this project will help alleviate the problem.

"Papua New Guinea has a growing entrepreneurial class and it needs to be encouraged.

"The domestic economy is also dominated by large foreign-owned enterprises, and the micro-finance scheme will help redress what is a quite serious imbalance.

"The project will hasten the development of a strong Papua New Guinean-owned private sector, whose profits remain in the country."

He said the scheme is to be funded by a $US 9 million loan from the Asian Development Bank, with contributions of K 4.7 million (US$ 1,583,900) from the government, K 434,000 (US$ 146,258) from the Bank of PNG, K 1.2 million (US$ 404,400) from the PNG Institute of Banking and Business Management, K 3.7 million (US$ 1,246,900) from micro-finance institutions and K 900,000 (US$ 303,300) from AusAID.

Sir Mekere said the Cabinet has approved the terms of the ADB loan. It is for 32 years, with eight years’ grace period, and the interest rate is 1.0 percent during the grace period and 1.5 percent afterwards.

He said a revolving finance facility would be set up with an account at a commercial bank through which micro-finance institutions would provide small loans to businesses.

Sir Mekere said the scheme is to be set up and monitored by the central bank and the PNG Institute of Banking and Business Management.

It is to be developed over four years in three stages:

* Capacity building of micro-finance institutions through a micro-finance competence center;

* Development, testing and implementation of new savings and loan products and delivery methods; and

*Provision of the revolving finance facility.

For additional reports from The Post-Courier, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The Post-Courier (Papua New Guinea).

Pacific Islands News Association (PINA) Website: http://www.pinanius.org 

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