The main shareholders of PML are proposed to be PNG Sustainable Development Program Ltd. (40%), Bank South Pacific (BSP) – largest commercial bank in PNG (27%), IFC (19%) and technical partners (14%). BASIX, a leading Indian microfinance provider and an IFC investee company, is proposed to be a leading technical partner possibly in cooperation with Developpement International Desjardins (DID) - a Canadian corporation that supplies technical and financial support to microfinance institutions in developing countries. PNG SDP was created in October 2001 following agreement between the BHP Billiton and the Papua New Guinean Government, which led to BHP Billiton’s withdrawal from OK Tedi Mining Limited (OTML) and transfer of BHP Billiton’s 52% ownership interest in OTML to PNG SDP. PNG SDP’s organizational mandate is to ensure the sound use of the funds generated by the OK Tedi mine and to fund sustainable development programs throughout the remaining 10-year economic life of the mine and for up to 40 years following the mine’s closure.

IFC’s investment is proposed to consist of: - an equity investment of Kina 3 million (approximately $1.0 million equivalent); and - a term loan of up to $2.0 million.

3.20 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	2.0
Equity	1.20

* These investment figures are indicative

PNG Microfinance Ltd. will operate across Papua New Guinea. Its headquarters will be in Port Moresby.

IFC has strong institution building, technical and catalytic roles in the proposed project. IFC commissioned a diagnostic study to evaluate the feasibility of expanding PML’s microfinance operations in PNG with the assistance of a strong technical partner for the project. The diagnostic study has been funded by the IFC Dutch Trust Funds. A number of potential TA providers were contacted and, in consultation with the Sponsor, BASIX was selected as a proposed technical partner. IFC will assist in securing the further three-year TA funding for the company for a multi-year technical assistance program. Supplementary TA funding will be provided by PNG SDP. PML will be the first commercial microfinance project in PNG. IFC’s approach is to ensure that the company is commercially oriented from the onset and operates with full financial accountability. IFC is providing strong inputs to develop PML as a model institution in the commercial microfinance field and expects PML to have a demonstration effect in both PNG and South Pacific region. IFC’s equity and loan will support institution building effort, which also stands to benefit from IFC’s global experience in setting up microfinance institutions (MFIs) in difficult parts of the world. IFC’s roles: - Institution building: helping to create the first commercial MFI in PNG. - Technical: designing and developing the project on a sound basis in collaboration with the Sponsor, bringing its experience in establishing greenfield MFIs. - Catalytic: helping to attract a credible and experienced partner to PNG and the interest of donors in providing TA funding for the project and its twinning arrangements. - Investment: IFC’s equity investment will support capacity building in PNG for microfinance and its credit facility will provide funding for the underserved sectors of the local population including the indigenous population. The proposed investment in PML is expected to be strongly developmental in terms of its economic impacts, stimulus for business growth, employment generation and deepening of the banking sector. PML will be providing financial services to a section of the community largely ignored by banks and financial institutions in PNG helping employment generation and providing livelihoods to the segments of society that lack access to credit and social services. IFC's involvement in PML is also expected to result in: - Institutional strengthening and capacity building in the microfinance sector in PNG; - Staff training in micro and small business finance; - Encourage replication of commercially-oriented MFIs in the market and downscaling by existing commercial banks to serve Micro and Small Enterprises (MSEs); - Generate spill-over benefits in the form of trained managers and employees available to other local financial institutions; - Establishment of small private sector business activities through the provision of working capital start-up loans; - Customer training in business and technical skills; and - Mobilize savings.

FI Category Type 1. PML will establish an environmental management system to ensure that investments under relevant operations meet host country environmental, health and safety requirements and are consistent with IFC’s microfinance exclusion list. PML will provide an annual environmental performance report to IFC.
Location of environmental documents in locally affected community