Grants

The PFIP Support Facility offers grants and/or loans to institutions to help PFIP achieve its desired outcome of reaching 250,000 unbanked Pacific Islanders.

PFIP financial support may be used to prove the feasibility or “concept” of new products, delivery mechanisms and models, as well as catalyze the mobilization of funds from other sources. In most cases, PFIP funding is not designed to provide long-term equity, debt or subsidies to financial service providers.

In April 2009, PFIP launched its Support Facility with an inaugural round of grants directed at leveraging innovative technologies to rapidly expand access to financial services in the Pacific Region. Five service providers were funded to test and introduce branchless banking solutions using new technologies such as mobile phones. Support ranged from US$100,000 to US$500,000.

For the second round of support, PFIP is seeking to work with partners to increase the financial security and build the financial resilience of low income and rural households. Products like flexible deposit accounts,microinsurance, and cost-effective money transfer services allow clients to accumulate or access useful lump sums of money to mitigate risks. These risks may involve financial shocks (e.g. death, illness, natural disasters) or lifecycle events (e.g. funerals, school fees,housing). PFIP is particularly interested on leveraging existing networks to deliver financial services. These may include physical networks (e.g. bank branches, store chains, agencies), social networks (e.g. associations, employers unions, schools) or technological networks (e.g. mobile phones, point of sale devices, handheld devices) and are likely to provide partnerships between two or more institutions.

Proposals that include high quality or innovative financial literacy training or capacity building for low income households as part of the provision or services are encouraged.

The purpose of the Pacific Financial Inclusion Programme (PFIP) Support Facility is to provide direct financial support to eligible organizations, in both private and public sectors, that to can contribute to PFIP’s mission of reaching 250,000 more Pacific households with financial services. PFIP’s funding is intended to be catalytic, encouraging other funders, including the private sector, to invest in the partner.

Background

PFIP solicits applications through Expressions of Interest. PFIP issued an expression of Interest in February 2009 that closed on 15 April, 2009. Thirty institutions applied, seven were shortlisted, and six were approved resulting in five signed grant agreements with:

• National Bank of Vanuatu (NBV), Vanuatu
• DataNets Ltd, PNG
• Nationwide Microbank, PNG
• Vodafone, Fiji
• FlexPacific Mobile Money, Fiji, Samoa and Vanuatu

A second round of Expressions of Interest will be announced by PFIP in the second half of 2010. 

Terms & Conditions
Oversight of Facility: The support facility policy was approved by the PFIP Investment Committee (IC) in January 2009. All expressions of interest and grant decisions are also approved by the IC.
 

Types of Support: PFIP may provide performance-based grants, loans, loan guarantees, technical assistance contracts or a combination of these instruments. Cash grants are generally not made to capitalize, increase equity or directly finance microloan portfolios; rather they are intended to fund innovative approaches or initiatives that have the potential to be either highly scalable or replicable.

Amount of Support: The maximum amount of support to any organization is US$1 million. The median grant thus far has been $250,000, with a range of $100,000 to $500,000.
 

Period of Support: All agreements must terminate by the end of PFIP’s anticipated operations, namely by December 2012. There is no minimum term.

Eligible Institutions: Partner institutions include two broad groups: financial service providers (FSPs) and financial sector support organizations. Eligible FSPs include, but are not limited to:

• for-profit microfinance institutions (MFIs), commercial banks, non-bank financial institutions (NBFIs);
• non-profit MFIs including specialized microfinance NGOs and credit unions;
• other financial institutions including remittance companies, insurance companies, and provident funds; government or development financing institutions; and,
• non-financial service companies with potential of providing financial services such as telecommunications, internet service providers and retail stores

Financial sector support organizations may include:

• microfinance or bank network organizations or associations;
• business service providers, consulting companies, training institutions;
• research and educational institutions; and
• credit bureaus, registries and other organizations that support the financial sector.

Minimum Requirements:

Partner institutions must:

• be compliant with all applicable statutory and regulatory requirements including (but not limited to) those relating to: taxation, financial institutions legislation and regulatory requirements, companies acts and official registration;
• demonstrate clear management capacity to manage the financial support;
• have an adequate financial reporting system in place or a documented and credible plan for such a system prior to disbursement of financial support;and
• have full, documented support from management and the governing body for their application for support.

There are no fixed eligibility requirements in regard to the age, financial performance or condition of partners; rather preconditions to disbursement and on-going financial performance targets will be set out in the Support Agreement.

Selection Criteria: Each expression of interest shall indicate the selection criteria for funding. These criteria may change from time to time depending on the identified needs and opportunities.