Microcredit,' 'Microfinance' or 'Access To Financial Services': What Do Pacific People Need?

The terms 'microcredit' and 'microfinance' are often used interchangeably and yet they represent the provision of different and distinct levels of financial service. It is also necessary to understand the distinctions between the more famous models of microfinance and, perhaps more importantly, the context in which each evolved.

Often it seems that these models are applied, with very little variation, in situations where the operating context is much different from that in which they were developed.

This paper argues that there are many elements in the economic and socio-cultural context of the Pacific region which distinguish it from Asia, and asks the following questions:

• Could the rush to replicate existing microfinance models, using best practice principles developed far from the Pacific, be curtailing careful market analysis?
• Could it also be stifling innovation, in the sense of finding alternative solutions for providing access to financial services for the poor in the Pacific?

The paper asks readers to consider the types of financial services and the methods of their delivery which may be appropriate in the Pacific context, and more important, which meet the needs of people in the Pacific.