The Microfinance Promise in Financial Inclusion: Evidence from Pacific Region
This paper studies the microfinance industry in the Pacific Islands. It examines the nature of MFIs in the region and analyzes the role of governments in facilitating measures to promote financial inclusion.
It provides an overview of the global microfinance sector and traces the evolution of microfinance in the Pacific region. It profiles the 3 MFIs in the region listed with the Microfinance information Exchange (MIX) and studies Fiji's microfinance model. Findings include:
- MFIs and cooperatives provide microfinance services in Fiji;
- Papua New Guinea (PNG) has a mixed microfinance model involving licensed and non-licensed MFIs, National Development Bank and savings and loan societies;
- All financial institutions in PNG are bound by national laws, and the regulatory framework has been reformed in recent years;
- Microfinance services in Samoa and Tonga are primarily provided by an NGO;
- Performance of MFIs in the Pacific has been mixed.
The paper states that MFIs in the Pacific are constrained by lack of funding, challenging geography and lack of technical support. It recommends innovative technology and mixed strategies for providing relevant, affordable and accessible financial services to the poor.