Dear Editor – Bob Pollard kindly replied to my letter in your newspaper in which I had outlined the potential for coconut virgin oil production as a valuable, much needed commodity, and a source of income for farmers.
Bob said one of the difficulties his company faced was farmers wanting to participate in the scheme, his company operated, was a lack of finance because there were no existing sources of obtaining loans.
I pointed out in a reply to your paper that some MPs had helped by giving out a proportion of their constituency funds to the farmers so they could join the 50 or so other farming communities already sharing in the profits of the company.
With 80 percent of the community in rural areas in what can best be described as subsistence living, something more needs to be done to help rural people earn a living and improve their well being and livelihoods.
The ANZ Bank has been promoting its ANZ-go-Money awareness scheme in the Western Province which has aided close to 20 market vendors, mostly women to open accounts with the bank.
The money the women would have deposited in their accounts would, no doubt have come from the sale of their crops or produce.
What about the majority of people who would like to begin a business, sell a few eggs, sell or farm fish, grow and sell their fruit crops or, as I have indicated, buy into the coconut virgin oil scheme outlined by Bob Porter?
The answer seems to lie in being able to obtain the money to start-up and here micro credit loans could be the answer if only existing Solomon Islands banks would initiate such loans.
Let me clarify what I am meaning about micro-credit.
Micro credit loans enable poor people to lift themselves out of poverty through entrepreneurship.
Providing loans to the poor for small enterprises is a recognized solution to alleviating poverty.
Small scale farmers in many developing countries cannot borrow from banks because they have no collateral to offer.
When loans are available the interest rate is very high so starting a new enterprise, diversifying or expanding a business is impossible for impoverished, small scale
There are organizations and institutions that do provide credit to the rural poor with a fair and practical version that differs from other typical micro finance loans that charge very high interest rates.
Loans are often in stages where borrowers demonstrate credit worthiness with a very small loan before advancing to a larger loan.
To give some examples. Micro credit loans have been given for meat and egg laying chickens, irrigation systems, seeds, tools, and small animals.
Women’s groups have borrowed sewing machines, a roaster for drying bananas or equipment such as pots and pans or jars for added food production.
Our neighbours in Papua New Guinea already benefit from micro credit loans, so why not in the Solomon Islands? Let me quote from what I have read about micro credit in Papua New Guinea.
‘We loan to small business people, who we like to call micro entrepreneurs,’ says Nationwide’s Tony Westaway. ‘Many of them are small traders with under five employees, family businesses, bakeries, public motor vehicle operators, and fishing businesses.
‘We have 140,000 accounts,’ he says. ‘Our main focus is on the grass roots, those 85 per cent who live in rural areas, farmers, subsistence farmers rural dwellers, people who are finding it a bit tough out there.
‘Micro-credit is increasingly becoming an important means to bridge the gap of providing access to formal banking services for the marginalized and unbanked population of the country,’ Anthony Dela Cruz, Chief Executive Officer of the People’s Micro Bank (PMBL), told Business Advantage PNG.
So what is micro-credit? Small loans, is the short answer, with a wide range of loan amounts on offer. Nationwide Microbank, for instance, will loan between K200 and K200,000. ‘Micro-credit is increasingly becoming an important means to bridge the gap of providing access to formal banking services for the marginalized and unbanked population of PNG.
If PNG can do it then so can the Solomon Islands and it is my suggestion that either the banking sector or the DCC Government consider implementing micro credit and contact with the CEO of the People’s Micro Bank (PMBL) in PNG could initiate some sound ideas, even if the Solomon Island’s banking laws and regulations might have to be amended or new legislation introduced to facilitate micro credit programs to alleviate rural poverty and bring forth a community of self-supporting, earning, entrepreneurs.