Expansion of Microfinance Services
Country: Solomon Islands
Partner: South Pacific Business Development
Date: June 2015 – June 2019
Grant: USD $185,057
Target: 10,890 unique clients
Current reach: 5,454 (as of 30th September 2016)
The 2015 financial services demand side survey (DSS) conducted in the Solomon Islands reveals that only 34% of adult Solomon Islanders are enrolled in the formal financial sector, and active user rates are much lower. Fewer women (27%) claim to have access to bank accounts, microfinance, credit unions or other formal institutions than men (41%).
With a sparsely dispersed population and very few ATMs available in a few urban centers in the Solomon Islands, the majority of the adult population has never used a bank account or any form of formal financial services. There is a clear demand for microcredit with almost two-thirds of adults obtaining credit in the previous year, the majority of whom use shop credit, moneylenders or family or friends to meet their needs.
These factors lead to many Solomon Islanders resorting to informal means of saving and lending, such as storing their money under a mattress, using savings clubs, moneylenders or shop credit, however such options leave Solomon Islanders vulnerable to risks such as loss, theft and predatory lenders.
SPBD, a regional microfinance institution, was operating sustainably in Honiara. SPBD uses Grameen group-lending methodology to enable micro-savings, provide micro business loans of around US$400 to rural women entrepreneurs to start or grow a small business, and also offers extensive financial literacy training integrated into its microfinance program with ongoing support. SPBD field officers travel to each village every week to enable regular convenient, affordable loan repayments and savings to empower rural women to improve their livelihoods and quality of life. With PFIP’s support, SPBD expanded its microfinance operations for women micro-entrepreneurs to financially-excluded rural communities in the Solomon Islands.
PFIP’s grant was utilized to enhance the capacity and infrastructure of SPBD to expand microfinance operations to various villages and communities in rural Solomon Islands in a phased manner, beginning with Guadalcanal, followed by establishing a branch office and operations in Western province. In 2017, SPBD plans to expand to Malaita province, with the potential to roll out the program in other provinces.
The South Pacific Business Development Microfinance (Solomon Islands) Ltd. is a private limited company under the Solomon Islands Companies Act 2009 and began operations in Solomon Islands in November 2012.
SPBD is a network of microfinance organizations operating in Samoa, Tonga, Fiji and the Solomon Islands dedicated to eradicating poverty by empowering women in poor rural villages with the opportunity to start, grow and maintain sustainable, income generating micro-enterprises.