Supporting Inclusive Growth in Timor Leste by "Infusing" Financial Services for the Poor
New programme addresses financial obstacles at both the level of the micro-entrepreneur and national sectoral policy
Entrepreneur Rosalina Monis of Bobonaro, Timor Leste, attends a store she started with a small loan from a local microfinance institute. "Following the civil war in my country we were desperate for income, to start a new life. The loan gave us a fresh start and new dreams," she said. Photo by Adam Rogers.
DILI, 18 April 2008: UNCDF launched a major new initiative in Timor Leste that will facilitate easier access to credit, savings and other financial services for the economically disadvantaged, promote inclusive growth and raise the financial sector’s prospects in the country.
The five-year, Inclusive Finance for the Under-Served Economy (INFUSE) is a joint programme between the United Nations Capital Development Fund (UNCDF) and the UN Development Programme (UNDP). It will be undertaken in collaboration with the Ministry of Economy and Development (MoED), of the Government of Timor-Leste. It seeks to contribute to the achievement of the Millennium Development Goals (MDGs), in particular the goal of cutting absolute poverty in Timor-Leste by one third by 2015, by increasing sustainable access to financial services for the poor and low-income people.
A ceremony to mark the signing of project document was held on 18 April 2008 at the premises of the United Nations Integrated Mission in Timor-Leste (UNMIT). The papers were endorsed by Joao Goncalves, Minister for Economy and Development and Finn Reske-Nielsen, UNDP Resident Representative as well as the acting Executive Secretary of the UNCDF in Timor-Leste, Henriette Keijzers (who could not be present at the ceremony).
“Facilitating inclusive growth is central to UNDP’s mandate” said UNDP Resident Representative Finn-Reske-Nielsen, adding “We are delighted to see that this project has finally kicked off, which opens a window for more people in the low-income group to access financial services and support.” In his remarks, the MoED Joao Goncalves expressed gratitude to UNCDF and UNDP for their assistance, saying this augurs well for the achievement of MDGs and the growth of an “entrepreneurship culture” in the country.
INFUSE will focus on policy development and strategic coordination to foster an enabling environment in the financial sector, facilitate the growth and long-term sustainability of the retail financial service providers so that they can reach an increasing number of the poor and low-income people and establish a financial business support infrastructure in Timor-Leste.
Although supply of credit has increased significantly in recent years, experts say the money market in Timor-Leste remains fragmented, with the majority of the population largely excluded from access to financial services. But safe and sound savings services remain crucial to those at the bottom of the economic pyramid as a means of paying for major life events like weddings and funerals. They also need it in order to exploit business opportunities and as a cushion against sudden shocks, such as illness or a bad harvest.
Under the project, the MoED will be supported with the necessary technical assistance to facilitate the accomplishment of a national policy on inclusive finance and provided flexible funding and expertise to explore emerging trends, including relevant regulatory framework. In addition, the project will support various financial service providers in Timor-Leste by enabling equitable access to a broad range of funding through a facility called Fund For Inclusive Finance (FIF). Meanwhile, existing and potential professional networks and associations as well as providers of business support services to the financial sector will have equitable access to temporary and declining funding through a special window of the FIF.
This project will complement the efforts of other organizations like the Asian Development Bank, GTZ, USAID and the IFC that have played a vanguard role in promoting the financial sector. It also comes against the background of the Economic Commission funded Skills Training for Gainful Employment (STAGE) which entails business development training implemented by the International Labour Organization (ILO) in collaboration with UNDP.
For more information on UNCDF programmes in Timor Leste, please visit the UNCDF Timor-Leste Homepage.
