In 1976, Muhammad Yunus founded the Grameen Bank in Bangladesh with the key intention of alleviating poverty and encouraging entrepreneurship, particularly amongst women.
The bank now claims more than six million borrowers in more than 70,000 villages. Over 97 percent of its borrowers are women. Since its inception, it has lent over six (6) billion with a repayment rate at 99 percent.
Recent statistics released by the ANZ Bank estimate the unbanked people in the Pacific at 6 million. Unlike Yunus who went all out to establish a bank, ANZ has committed itself to an innovative initiative that takes the banking services to the people themselves.
Commercial banks tend to focus their efforts on the big guns as opposed to personal accounts. But ANZ’s Rural Banking manager Baro Saumaki insists the unbanked are not perceived by the bank as “a charity case”.
“The potential in the long-term is promising for us as a commercial bank, so while it is costing us a lot to continue this service, we are not about to throw in the towel,” Saumaki told Islands Business when he hosted journalists to a tour with his rural banking team into the Central/Eastern hill country of Viti Levu, Fiji’s main island.
ANZ serves 11 Pacific islands nations. Of these countries, rural banking is operational in the Solomon Islands and Vanuatu, and there are plans to start in Kiribati, Samoa and Tonga soon.
“It is not just about ensuring they open an account. We are offering all other services we can to assist the rural-based populace—they have money but may have to travel a long way to actually get to a bank, so we are making things easier by going to them,” Saumaka says.
When rural banking was launched in Fiji in October 2004, 400,000 people were estimated to have no access to banking—about half the population. Today, with coverage of 300 communities and 170 schools, rural banking claims more than 60,000 customers.
Saumaki confirms that total lending is over F$1 million; business has grown substantially to over F$8 million deposits. The bank has six rural banking teams across the country including two major islands—Kadavu and Taveuni.
Saumaki’s teams still have to deal with the threat of being robbed; wear and tear costs are high due to poor infrastructure; high operational costs; and ensuring a balance or as little loss as possible between overhead costs and the service it provides.
But what Saumaki really wants to see is the introduction of financial literacy in primary schools. “I still see the need to inculcate a mentality of savings amongst these children,” Saumaki said.
“If our services were complemented by that, our intentions of seeing a genuine change in savings habits amongst our people can be realistically achieved.”
Women were the main customers on the day journalists accompanied the bank’s rural banking team. In the hills where one is allocated land for subsistence farming and homesteads, a savings account has mainly been for education purposes and meeting financial obligations levied by the provinces and their respective villages or districts. Students cited Christmas holidays spending or next year’s school fees as catalysts for having savings accounts.
University of the South Pacific’s professor of economics, Dr Wadan Narsey’s 2008 quantative analysis of poverty in Fiji states that rural Indo-Fijians were the poorest ethnic sub-group of whom 44 percent were in poverty between 2002-2003. Speaking of affirmative action based on needs rather than ethnic groupings, Narsey said indigenous Fijians would still receive 49 percent —the largest proportion of the poor. Regardless of one’s financial situation however, Saumaka says the inculcated mentality of savings is obvious in Indo-Fijian students than indigenous Fijians.
“When one compares the savings habits of an Indian student and that of a Fijian student, the former will not touch his account at all and that can be for the entire secondary school period while the latter would most definitely get to it for various reasons,” Saumaka said.
“The difference in mentality is obvious. But this trend can change—at least with rural banking—with more rural-based indigenous Fijians becoming more familiar with how banks work and getting used to the idea of having a nest.”
The bank’s long-term vision rests on the hope that for those who decide to till the land when they grow up (as opposed to being a professional or simply choosing to live in urban centres) should develop a savings habit which could then allow them to diversify. Simply being financially prepared, in particular, when serious medical treatment is necessary, is another motivation for such savings habits.
