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Good practice Imported

SME Access to Finance Project — Papua New Guinea's Risk-Share Loan Guarantee Facility, and Its Overstated Results

Papua New Guinea · Port Moresby · See the Papua New Guinea profile · See the Port Moresby profile

Evidence: Observational / pre–post Top 74% 57/100 · Ask Evidence Copilot about this practice

A World Bank facility guaranteed $32.6m in PNG SME loans (46% of target) via the country's largest bank, 2012-2017 — a sum the Bank's own review had overstated at $140.2m until an independent audit corrected it.

1,471
SME loans guaranteed (2012-2017)
$32.6m PGK114.6m
Guaranteed loan value (corrected figure) (2012-2017)
$140.2m PGK492m
Guaranteed loan value (Bank's original, overstated figure)

Details

Maturity
Discontinued
Promoter
World Bank (IDA), with the Bank of Papua New Guinea and Bank South Pacific (BSP)
Period
2011-2018 (original facility); follow-on facilities from 2019
Keywords
SME finance, credit guarantees, banking, women's economic empowerment

Context

In 2011 the World Bank approved an IDA credit for Papua New Guinea's SME Access to Finance Project, centred on a Risk Share Facility (RSF) sharing credit risk on new SME loans with participating banks, designed around Bank South Pacific (BSP) as anchor participant.

Results

Between 2012 and 2017 the RSF guaranteed an estimated 1,471 SME loans (74% of the 2,000-loan target), reaching PGK114.6m (about $32.6m) against a PGK250m target (46%), with annualised loss rates averaging 3.1%.

Conclusions

The World Bank's own Completion and Learning Review initially overstated the result at PGK492m ($140.2m); a 2019 IEG review found the correct figure was PGK114.6m — about a quarter of the claimed amount — and downgraded the country programme's financial-sector objective from 'Achieved' to 'Partially Achieved'. Two follow-on facilities launched in 2019 found more traction, guaranteeing a further PGK70m and cutting guaranteed-loan interest rates from over 30% to 5%.

Implementation
Indicative cost
High (€500k–€5M)
Time to results
Long (> 3 years)
Staffing & skills
Bank South Pacific loan officers, World Bank/IDA project team

Conditions for success

  • multiple participating banks sharing credit risk (only one materialised)
  • explicit tracking of lending to women-owned SMEs

Common failure modes

  • two of three other target banks scaled back PNG operations rather than joining
  • initial Bank reporting overstated results by roughly 4x before independent correction

Commonly funded by

National / regional programmes

Indicative funding routes for practices of this type — always check each programme's current calls and eligibility rules.

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Data sources

Where this practice's information was retrieved from, and when.

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