Amy lofgren spbd tonga   what we know, what we don't know about microfinance in the pacific
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  • For those of you not familiar with SPBD, our first operation was opened in Samoa in 2000 by Greg Casagrande (wave to greg) as a not for profit entity using a modified Grameen model, oriented in character based lending to provide micro credit and ongoing, continuous motivation, training and support to low-income, self and unemployed women. Over the decade the SPBD program was refined and expanded into a truly microfinance organization rather than a purely credit based one. Three years ago SPBD Samoa transformed into a Non-bank financial institution. SPBD opened in Tonga in 2009, Fiji in 2010 and Solomon Islands in 2012. The SPBD today is focused on a range of financial services including savings products and life insurance. New financial products are in development across the network, in the Samoa market at the moment – there is a new migrant worker loans, other offices are working on additional insurance products, remittance services, and member driven development of further savings products for life events such as school fees and funerals. SPBD working to bridge the gap between national development plans and low-income entrepreneurs most specifically in the areas of tourism, bio-gas production and coconut oil production by filling the gap for the financing of small producers.9 offices – 2 Samoa, 3 Tonga, 3 Fiji – fiji has first completely cashless branch13 islands – 2 Samoa, 2 fiji and 9 in tonga = Tongatapu, Atata, Vava;u, olo’ua, ofa, otea, Lifuku, foa and uiha117 employees – 110 pacific islanders - 7 expats – 2 american, 2 indian, 2 philippine, 1 belgian – investing in skill acquisition for all levels of the staff is an important mandate from our President. Last year SPBD was blessed with the opportunity for 2 of the GMs to complete the WWB Advanced Leadership Program and 9 SPBD staff attended the Women in Leadership Training in Auckland last November – an experience I have been relating to the WWB team as transformational for the staff that attended.providing financial services is great but it’s not the end-game, you have to focus on impact – SPBD has a double bottom line that represents our interest in social impact, some impact metrics that we follow include increase in household income, increase in household and business assets, increase in savings (you will see on the next slide the amount of savings SPBD members have accumulated) Last year the tool we use to follow this was improved under the financial literacy program – to provide baseline and yearly data on these points – that tool is the Member Annual Profile (MAP) and provides a map by which we can gauge our effectiveness. We also recently participated in an IFC impact survey in Vava’u and are now awaiting the results.allows services to extend to micro islandsallows break-even services (savings)allows for loss making services (training)allows for multiple commercial funders (reduces single donor risk)
  • High level 30,000 foot viewA quick review of this slide speaks loudly to the depth and breadth of penetration SPBD has achieved in reaching down to the grassroots, informal sector.
  • SPBD members work in almost every sector of the economy. Some examples are given here it is interesting to note a couple key points Village retail shops – providing a Tongan alternative in the villages In two of the countries SPBD is operating and this may be increasingly true for our other two countries – since SPBD had begun operations there has been a noticeable increase in the production of local food both Crops and animal husbandry - an increase in variety, quality and quantity of food staples as well as an increase in healthier foods that move away from the some of the non-healthy choices. Both the Ministry of Health in Samoa and the Tonga Health department have complimented SPBDs work in this area.SPBD does not provide financing for income generation alone, it is part of our mission that all children of SPBD members should complete form 7 – to encourage members to keep their children in school, they may after starting and growing their businesses borrow for school fees and housing improvements. (story of the women with 9 children living in 2 rooms.)
  • This is TupouLesi’ili and one of her 9 children, she took her first loan to buy a large order of pandanus to weave – she told me she received a better price b/c she was able to buy a large quantity all at once. With that her second loan she helped her husband buy fertilizer for their plantation and hire a tractor to plow an additional portion of the land – her husband sells his crops in the local market. She now sells fai’kai’kai – Tongan deserts as well. With her third SPBD she is buidling a home for her, her husband and their 9 children – When I conducted her loan interview I asked about the housing improvements she was planning….brick by brick she told me, I now know a change is going to come to my family and my children, it’s coming already, it’s already here…
  • Small island states with economies dependent on tourism, and agricultural export - agriculture sector still suffering due to high costs of labor relative to other countries producing the same or comparable products with much lower labor costs. In addition to which the quotas for sugar have been reduced and demand has shifted to cheaper substitutes. However, there is an emerging focus on the exporting of services. In 2012 at the Tongan Economic Forum a World Bank presenter stated that what Tonga needs to do is export more labor – the question is do we export fruit pickers or do we export nurses and sailors. Investments in developing the service sector economy will be key to any future return to remittance rates of the 1990s and 2000s.The Caribbean is often lumped together with Latin America and/or Pacific and Latin America division in funders, donors and international intuitions – the Caribbean has little in common with Latin America similar to the Pacific being lumped in with Asia. Aid packages are being withdrawn and moving more to regional rather than National programs – the EU in particular.Within the Caribbean there are large numbers of micro enterprises and even the new term of nano-enterprises prevailing as well as cottage industries – governments are focused on stimulating this sector.
  • Islands that have pursued tourism as their main source of development have had the experience where infrastructure development is geared to the provision of tourism such as airstrips, improvements to power and water provision. Such benefits have a mixed impact – yes, low income families have access to electricity but can they afford to pay for it? Where clean water has been provided it is often still at the communal level – stand pipes, communal showers and toilets – helpful yes, but often hazardous to users as the resources become easy targets for criminal and aggressive behavior. However, tourist operators largely keep funds off the island, in the case of the Caribbean they enjoy huge tax holidays thereby not having the much needed generation of tax revenue. Tourism has suffered b/c of downturn in global economies and new tariffs – such as the UK Green tax which cause the price of tickets to the Caribbean to increaseCruise lines are able to play one island against another to negotiate the best deals, an example of this is in 2004 St. Lucia wanted to implement a $5 USD disembarkation fee – the cruise ships said they would go to a different island if that happened. While cruisers provide high volumes of tourists, tourist actually spend little on each island – in Tonga the average amount is $60 TOP which includes transport and food – and again, most activities are arranged on the ship. The missed opportunity is to cater to and provide services to those working on the cruise lines.The balance of trade in Caribbean countries is declining due to the export of non-value added primary products. The cost of imports make competitiveness difficult in most countries except in those countries that focus on niche products such as Barbadoes, enjoy rich natural resources such as natural gas in Trinidad and to a lesser extent in countries such as Jamaica and Suriname who have slightly larger economies of scaleThe Caribbean is characterized by fairly stable gov’t that flip flop b/w two parties – but who tend to have little impact on creating change, employment and development. Loyalties to leaders and political parties are historical and long-lived resulting in the same people taking over power again and again.China is playing a leading role in many developing economies. However the experience is mixed. Chinese investment comes with a string of commitments. The Chinese package is usually tied aid. Often these development projects employ little if any local labor, us no local inputs or resources – there is often little multiplier effect to employment and sales of products to project staff. Where these investments come as commercial transactions versus aid, grants or low cost loans, they come with a cheaper and often less quality package.
  • Geographic Markets (in order of population) PNG - huge market (Nationwide and PNG Mf)Fiji – SPBD growing rapidlySI – SPBD launchingSamoa - SPBD - well servedVanuatu - VANWODSKiribati – multiple challenges – but opportunity for a networkTonga - SPBD - well servedFederated States of Micronesia – small – but opportunity for a networkMarshall Islands – small – but opportunity for a network The Future of MF in the PIAll national markets coveredAll islands served (either a branch (>5,000 people) or via cell phonebroad range of products/servicesbroad use of technology to cut out non-value added costs (counting money) and to reduce costs to clientsto offer new services (credit scoring, FLT, SME finance via cell phone)to reach even more remote clients

Amy lofgren spbd tonga what we know, what we don't know about microfinance in the pacific Presentation Transcript

  • 1. What We Know, What We Don’t Know and What We Need to Know About Microfinance in the Pacific The Practioner’s View South Pacific Business Development (SPBD) Microfinance Network
  • 2. SPBD Overview • Operates 9 offices - ccurrently serving 13 islands • Ha’apai (population 8,000) is smallest island with an office – serving remote and rural populations – 5 Islands served in Tonga have populations below 250 • Staff compliment – 117 employees • Conducting Social Impact Reviews – internal and external • Has reached Financial Self SufficiencySouth Pacific Business Development (SPBD) Microfinance Network
  • 3. SPBD Outreach Indicator (Year-end 2012) SPBD Microfinance Network Year Of Inception Samoa Tonga Fiji Solomon SPBD Islands Consolidate (2000) (2009) (2010) (2012)** NetworkTotal Active Micro-credit 6,482 4,230 3,287 - 13,999 membersLoans Outstanding 2,296,586 1,974,502 661,802 - 4,932,890Loans Disbursed 3,966,859 3,420,571 1,412,724 - 8,800,154Average Disbursed Loan Size 616 730 428 - 610Total Life Insurance Accounts 14,401 6,195 5,126 - 25,722Savings 345,832 243,672 301,892 - 891,402Total Life Insurance Accounts 6,482 4,230 3,287 - 13,999OSS 146% 130% 45% - 101%ROA 9% 9% -54% - 1%PAR>30 days 0.5% 0.1 4.0% - 0.8%Total Number of Staff 28 30 36 12 106 South Pacific Business Development (SPBD) Microfinance Network
  • 4. SPBD Financial Products • Micro Credit – Micro Enterprise (start up and existing business) – Childhood Education – Home Improvement • Savings – Fully secured savings collected weekly – Individual, Centre, Group Funds • Life Insurance – Currently only for members • Training – 50 “5 “ minute business development modules – Financial Literacy (Cash flow Diaries and data analysis) – Ongoing motivation and supportSouth Pacific Business Development (SPBD) Microfinance Network
  • 5. SPBD Member Profiles and Social Impact • SPBD members work in every sector of the economy – Traditional crafts – weaving, tapa making, handicrafts – Village retail shops, – Food production - schools, tourists, office workers – Growing crops and animal husbandry • Members have varying levels of education and opportunity • Housing conditions improvingSouth Pacific Business Development (SPBD) Microfinance Network
  • 6. One Brick At a Time – Tupou Lesi’ili I was born by the river in a little tent Oh and just like the river Ive been running ever since Its been a long, a long time coming But I know a change gonna come, oh yes it will ….. Sam Cooke South Pacific Business Development (SPBD) Microfinance Network
  • 7. Keys to Success• Adhering to MF Best Practices – Pushing for Operational Self Sufficiency – Ensuring transparency to MF members and donors• Investing and developing staff capacity• Building financial capacity of MF members• Collaborating with Governments to create enabling economic playing field South Pacific Business Development (SPBD) Microfinance Network
  • 8. The Caribbean Experience Characterized by a number of small and vulnerable economies who have single source dependencies A number of small island masses engulfed only by the Caribbean Sea and not physically or emotionally connected Political independence of all member states and as well some countries are overseas territories of the French, British, and the Netherland Antilles Public private sector dialogue exists at different levels if at all Multitude of first languages- English, Spanish, Dutch, French and local dialect South Pacific Business Development (SPBD) Microfinance Network
  • 9. Challenges in Small Island Developing States• What does Tourism really mean• Disenfranchisement of lower economic classes• High cost of imports and problems with balance of payments/trade• Governments and political parties• China South Pacific Business Development (SPBD) Microfinance Network
  • 10. How Does the Pacific Look for MF? Geographic Markets (in order of population)• PNG – huge market (Nationwide and PNG Mf)• Fiji – SPBD growing rapidly• Solomon Islands – SPBD launched• Samoa – SPBD• Vanuatu - VANWODS• Kiribati• Tonga – SPBD• Federated States of• Marshall Islands South Pacific Business Development (SPBD) Microfinance Network
  • 11. Not So Different from the Caribbean• Constraints to growth – Funding • local currency debt funding • grants for innovation – HR development – Technology costs • MIS • technology in the field South Pacific Business Development (SPBD) Microfinance Network
  • 12. What Donors Should Know• Developing island states have limited economies of scale• Need to think outside the boxes of agricultural export of primary products and tourism as tools of economic growth• Creating linkages between the micro sector and larger economy• Greater focus on development intra-regional trade and infrastructure• Innovation is expensive South Pacific Business Development (SPBD) Microfinance Network