Paper
Microfinance in Vanuatu: Institutions and Policy
Proceedings from "Pacific updates on Solomon Islands, Fiji and Vanuatu", June 2000
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8 pages
This paper provides an introduction to microfinance in Vanuatu.
The paper begins by discussing:
- The three key principles of microfinance: knowing the market, using techniques to lower administrative costs and ensure high repayment rates;
- The developmental benefits of microfinance: poverty reduction, smoothing consumption, managing risks better, and enhancing income earning capacity.
The paper describes the characteristics of:
- Commercial banks in Vanuatu;
- The 'Vanuatu Women's Development Scheme' (VANWODS);
- The credit union movement;
- Demand for microfinance in Vanuatu:
- Unmet demand from the 'poorest of the rich',
- High demand for voluntary savings products,
- Demand for credit for income generating activities in larger centers,
- Demand for low cost models that emphasize savings mobilization and loans for provident purposes.
It states that microfinance in Vanuatu would find it difficult to attain sustainability and financial self-sufficiency and lists the following key policy issues facing donors and the government:
- Selection of appropriate centers for the establishment of microfinance programs;
- Resources needed for the establishment and sustainability of these programs.
The paper concludes with the following recommendations for a bright future for microfinance in Vanuatu:
- Getting support from the government and donor agencies;
- Taking into account the nature of the local economy;
- Following microfinance best practice principles.
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