Mibank funds first cocoa farmer loan

Caption: Vunamami cocoa farmer, Blasius Vovore (L) receiving his approved AVC loan agreement from the Agriculture and Livestock (DAL) acting Secretary, Daniel Kombuk at Vunamami government station, East New Britain province recently. Watching back row: Tony Vigil, CBPNG executive manager industries & corporate services (L), ADB’s David Hill (R). Background: Hosea Tubarat (former East New Britain Provincial Administrator) (L) and MiBank’s head of operations, Trudi Egi (centre). Pics by CYRIL GARE.  

 

By CYRIL GARE

A simple rural Cocoa farmer can now get a commercial bank loan using his cocoa block as collateral or security.

Thanks to the new law – the Personal Property Security Act 2011 – which officially came into effect and full operation in 2016.

Among the first beneficiaries in the agriculture was cocoa farmer, Blasius Vovore who represented his Vunamami Cocoa Cooperative of East New Britain.

Mr Vovore received a cheque of K1,000 from the MiBank – a newly established commercial bank subsidiary of the National Development Bank (NDB) during a ceremony at Vunamami recently.

This was a revolutionary partnership forged between the Cocoa Board of PNG (CBPNG), the PNG Agriculture Company (PNGAC) (a subsidiary of the CBPNG) and the MiBank with technical assistance and continuous support from the Asian Development Bank (ADB) since 2002.

The tri-parties created a product – the Agriculture Value Chain (AVC) Loan scheme which now enables simple rural cocoa farmers to access commercial bank loans to help them improve their smallholder cocoa blocks and run it as a business sustainably into the future.

Should a farmer wishes to acquire an AVC loan, s/he must first become a registered Member of the PNGAC, have an existing bank account with MiBank, allow PNGAC to inspect and collate relevant information on his or her cocoa block and thereby compile report and recommendations to MiBank, has a 20 per cent equity, and be able to repay loan at two (2) per cent monthly.

Since Independence, citizens who do not own “stationary assets and properties” such as land or house found it difficult to obtain bank loans resulting in economy being held stagnant and redundant.

In 1995, the Mekere Government introduced the financial sector reforms which saw amendments to the Central Bank Act, creation and up surge of financial intermediaries including super funds, financial institutions, savings & loan societies, and more commercial banks, among others which enables the economy to resuscitate – based on the basic economic principle that “money is created when money is lend”.

Riding on this, the CBPNG under the leadership of CEO, Boto Gaupu created the PNGAC in 2017 and over the recent past – prior to launching of the AVC loan facility – had been involved in financial literacy and training of cocoa farmers so that they run their cocoa farms as a business, be able to make and save money and sustain their livelihoods into the future.

The ADB has long been involved as well in the initial setting up of the legal framework for “agro financing” and “mobile money concept;

  • 2002: micro financial expansion project
  • 2004: micro bank
  • 2007: MiBank (NDB) through the Pacific Private Sector Development Sector Initiative (PPSDI).

“It has been a long road to get to this point,” said ADB’s David Hill, during the Vunamami launching,” he said.

CBPNG says the Vunamami AVC loan product was the first and the service will expand to other cocoa growing provinces as well.

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