Banking
From The Report: Papua New Guinea 2014
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Despite significant challenges linked to poor infrastructure, inadequate credit information and a largely rural population, commercial lenders are developing innovative means of broadening the sector’s reach. Framed by the government and the country’s central bank, the National Financial Inclusion and Financial Literacy Strategy encourages private banks, microfinance institutions, non-bank financial institutions and savings and loans societies to partner with non-financial actors to bridge the gap to access. Ongoing upgrades to Papua New Guinea’s financial infrastructure will improve banks’ efficiency and support alternative means of reaching out to low-income clients. Although lending growth is expected to cool in line with the wider economy in 2014, bankers have their eyes set on significant public infrastructure spending to sustain their loan books. Financial institutions are making progress in terms of providing services to PNGs unbanked population and lenders’ role as financial intermediaries is growing. Seeing through reforms will be key to making the financial system more efficient and broad-based. This chapter contains interviews with Loi M Bakani, Governor, Bank of Papua New Guinea; Mark Baker, Managing Director, ANZ Papua New Guinea; and Tony Westaway, Managing Director, Nationwide Microbank.

Articles from this Chapter

Overview

With plans for legislative reform, the sector is set to reach out to new customers in innovative ways
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Highly profitable by global standards, Papua New Guinea’s banking sector has traditionally focused on the government, larger firms and high-net-worth individuals. Despite significant challenges linked to poor infrastructure, inadequate credit information and a largely rural population, commercial lenders are developing innovative means of broadening the sector’s reach. Framed by the government and the central bank, the Bank of PNG (BPNG), the National Financial Inclusion and Financial Literacy…

Interview

OBG talks to Loi Martin Bakani, Governor, Bank of Papua New Guinea (BPNG)
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Interview:Loi Martin Bakani Given the strong GDP growth projected for 2015, how much is the kina likely to appreciate? LOI MARTIN BAKANI: Managing expectations during a period of accelerated growth is always difficult, but experience has taught us to be cautious, as we have been through positive cycles before without seeing any real benefit for the average Papua New Guinean. Completing the PNG liquefied natural gas (LNG) project ahead of schedule has allowed us to place early shipments in…

Analysis

Plans to automate payment systems are opening up new potential
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Long held back by inefficiencies linked to geography, manual operations and slow procedures, Papua New Guinea’s banking sector marked a watershed in 2013 with the initial implementation of a real-time gross settlement (RTGS) system. Running on the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network, the high-value settlement system, known as the Kina Automated Transfer System (KATS), has significantly sped up processing times and reduced the level of counterparty risk inherent…

Interview

OBG talks to Mark Baker, Managing Director, ANZ Papua New Guinea
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Interview:Mark Baker In what ways will Papua New Guinea’s liquefied natural gas (LNG) project benefit the local economy, given the government’s debt arrangements? MARK BAKER: Although some analysts have speculated that significant proceeds will not enter the market for a couple of years if not longer, I do not believe that this will be the case. Of course, considering the government’s debt arrangements with private lenders, there will be a waterfall as debt providers and shareholders…

Interview

Starting small: OBG talks to Tony Westaway, Managing Director, Nationwide Microbank
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Interview:Tony Westaway What is the relevance of microfinance in Papua New Guinea and where are there more opportunities? TONY WESTAWAY: Microfinance is a largely untapped industry in PNG, and two statistics that best illustrate the situation are that 85% of the population lives in rural areas and 81% of them are still unbanked. With only four registered licensed micro-banks in the market, it is clear that the supply does not meet the demand in PNG. Contrary to general wisdom, one of the…

Analysis

New technologies offer unbanked populations more convenience
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Formally launched in December 2013, the Bank of Papua New Guinea’s (BPNG) National Financial Inclusion and Financial Literacy Strategy aims to expand the reach of formal financial services to 1m of the previously unbanked, half of which are women, by the end of 2015. While ambitious, the strategy builds on initial successes in rural banking, mobile money and micro-finance to bridge the significant gaps in financial access. Downward revisions of commercial bank charges, aimed particularly at younger…

Analysis

Bolstering SMEs will require offering new options for financing
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While the new financial inclusion policy aims to expand access to and usage of financial services – Bank South Pacific (BSP) estimates some 98% of its over 1m accounts in Papua New Guinea are used for transaction purposes only – facilitating access to funding for small and medium-sized enterprises (SMEs) will be key to broadening economic growth. As the Department of Commerce and Industry (DCI) circulated its draft SME policy in early 2014, the Treasury and Bank of PNG (BPNG) have been trying…