Partner: National Bank of Vanuatu
About the National Bank of Vanuatu
National Bank of Vanuatu (NBV) is the only commercial bank in Vanuatu that provides services outside of the major population centres of Port Vila and Luganville. It achieves this through its network of 25 branches, mobile microfinance officers while running an extensive micro-loan portfolio and nation-wide financial literacy program.
NBV offers a comprehensive range of services in Business, Retail, Rural, International, Treasury and Investment Banking. NBV has three shareholders: The Government of Vanuatu (70%), Vanuatu National Provident Fund (15%), and the International Finance Corporation of the World Bank (15%).
Earlier this year, with support from PFIP, the bank started a project to digitize many of its front and back-end processes using a tablet-based application to create more customer convenience and significantly reduce operational costs, which in turn allowed NBV to increase penetration in remote and rural areas of Vanuatu.
While all MSMEs in the Pacific region face significant constraints regarding the enabling environment, access to finance typically ranks top of the list of barriers in most surveys and market research reports. These barriers may include, among others; limited access to assets that can be used as collateral, lack of sufficient business and personal documentation to meet KYC regimes, limited available data on cash-flow to estimate working capital needs, and lower levels of business skills and financial competence and confidence.
As a result, there is a substantial unmet demand in the market for MSME financing; e.g. working capital (manage cash-flows), asset acquisition (machinery or equipment), infrastructure (shop improvement). An IFC study estimated it is USD 135 million.
These barriers equally apply to both demand-side of the market (i.e. MSMEs) as well as for the supply-side (i.e. financial service providers). These are amplified by the logistical challenges of working in remote island locations which have had, until very recently, an almost complete lack of ICT infrastructure to support the credit application and appraisal process. This led to inefficient business processes and the bank’s inability to expand the portfolio.
In recent times, ICT infrastructure including 4G mobile communications, smartphones & tablets, solar power solutions etc. have become available in these remote island locations. It is now possible to build digital application systems to support efficient loan application, appraisal and disbursement processes. Leveraging this opportunity, the goal of NBV is to significantly reduce the average loan application-to- disbursement time for rural MSMEs.
Though NBV already has a substantial micro-loan portfolio, it has the ambition to expand this by improving access to finance facilities for MSMEs. Therefore, it is looking for FinTechs that can offer innovative digital solutions that leverage its existing digitisation project and addresses explicitly the earlier mentioned barriers for them to offer MSME financing facilities more efficiently.
The value proposition for the Fintech
Other Relevant Information
 IFC SME Financing Gap estimates, 2017