Bougainville Microfinance: Rebuilding Rural Communities After the Crisis

This paper describes the conception, progress and future of the Bougainville Microfinance Scheme (BMFS).

The paper states that:

• The scheme began in 1996, with a series of participatory workshops that involved grassroots people from all over the province;
• The BMFS scheme was based on these people’s identification of their financial and community development needs;
• BMFS attracted AusAid funding in 1998;
• Phase I began in four pilot areas;
• “Bougainville Haus Moni” (BHM) - a central federated body - coordinated all development on a locally directed basis;
• Two Australian non-government organizations (NGOs) supported the project;
• Phase I achieved its targets despite competition from other microfinance organizations (MFIs);
• Phase II began in 2000.

The paper identifies the following main features of BMFS:

• It is designed by the members themselves, to be ultimately sustainable;
• It is savings-based, yet provides a comprehensive range of loans and other services through a multi-tiered financial intermediation system;
• It is an MFI that displays all the features of the institutional model;
• It has achieved both broad and deep outreach.

The paper concludes that as BMFS grows in tandem with the more formal elements of the Bougainville economy, it can contribute greatly to the engagement of the people at the grassroots in social and economic development.