Transcript Australian Broadcasting Corporation PM News Tuesday, January 11, 2000 6:23

First bank for the poor opens in East Timor

COMPERE: While emergency aid continues to flow into East Timor the Micro Enterprise Development Agency, Opportunity International, is preparing to open the first bank for the poor in Dili. With the domestic financial system all but destroyed, the People's Opportunity Bank of East Timor, as it's called, is attempting to rekindle financial independence amongst the regions poorest citizens.

Kirsty O'Brien is speaking with the Agency's Indonesia Director, Simon Lynch.

KIRSTY O'BRIEN: It's an unlikely scenario for a bank to actively seek customers from the lowest end of the poverty scale, but Opportunity International is hoping it will provide sustainable development.

SIMON LYNCH: The aim of the Bank is to ensure that we can provide financial services to all people throughout the nation of East Timor, particularly ensuring that those people that are living in poverty, the lower echelon of the economy, have access to credit so that they can then create jobs. They can earn incomes from the utilisation of that credit and that they won't be reliant on a …

KIRSTY O'BRIEN: The Bank, which is due to open its doors within two months, will be the only institution offering financial services to all East Timorese.

SIMON LYNCH: We'll encourage savings by offering number one a safe, secure place and also by ensuring that the people have a bank which they can see is caring for them. It will be a people's bank and in the end we want it owned and run by the locals.

KIRSTY O'BRIEN: Given that there is some ambiguity about what the currency will be, what will the Bank actually be dealing in?

SIMON LYNCH: As you've indicated there is ambiguity. The Bank will deal in whatever currencies are acceptable to the people. So as long as they're easily transferable currencies and they can be exchanged on the international market, then we'll be able to deal in that currency.,

KIRSTY O'BRIEN: It's a new venture for the organisation which has traditionally limited its activities to job creation through small business loans.

Through your Alliance Programme you've been able to recoup, I understand, about 95 per cent of the loans. Are you at great risk of not recouping a long of the money if you are just giving out loans to people that … that have no collateral?

SIMON LYNCH: Actually, on the contrary. What we've found is that those people without collateral, their repayment rate is higher than the commercial banks that are lending to the retail sector. The reason is there's opportunity over 20 years has developed methodologies that ensure that we focus on identifying the character of the people that we're lending to. And it's actually their sense of character and their sense of commitment to their community that ensures that the repayment rates are in excess of 95 per cent.

KIRSTY O'BRIEN: Simon Lynch says it's Opportunities way of avoiding situations like Cambodia, where people have lost self determination because of their dependence on aid.

SIMON LYNCH: When you give somebody a loan and you give somebody the opportunity to create a business, what you do is empower them to actually create their own future and you give them a sense of dignity and a sense of achievement that no handout can ever give.

COMPERE: Simon Lynch of Opportunity International with Kirsty O'Brien.

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