Lik Lik Dinau/Abitore Trust (LLDAT) was established as an NGO to ensure efficient credit delivery and savings mobilization for improving living standards of underprivileged women and their families in Papua New Guinea.
The founding members of LLDAT included various government departments, non government organizations, the Papua New Guinea Banking Corporation and UNDP. The government departments include the Department of Village Services and Provincial Affairs, Department of Religion, Home Affairs and Youth Policy coordination and Monitoring Committee. The NGO members of the Trust are the Foundation for Law, Order and Justice, and the National Council of Women.
LLDAT began operations in September, 1993 and provided its first loans in August, 1994. The project currently has two branches covering four districts. As of August 1997, LLDAT had 662 borrowers. Loans totalling Kina 175,000 (US$130,000) have been disbursed and savings totalling about K61,000($45,000) mobilized. Of this amount, K26,000 ($19,000) are personal voluntary savings. LLDAT currently employs 15 staff. The repayment rate was reported to be 90%.
All borrowers are disadvantaged women in rural areas who play an important role in the household economy and are responsible for looking after the whole family, particularly the welfare of the children.
Funding and technical assistance to LLDAT has been provided by UNDP, Aus AID, Department of Provincial and Local Government, and Eastern Highlands Provincial Government. The project began with grant financing of K380,000 ($280,000), one vehicle, a permanent technical advisor and overseas study tours for program staff. Board members of LLDAT as well as a Branch Manager and Senior Assistant of the project have received training at Grameen Bank. The Branch Manager and two Senior Assistants have also received training at Project Dungganon in the Philippines.
The principal features of the lending procedure are based closely on the Grameen Bank approach(GBA):
� There is the group based lending. Groups of 5 self chosen members drawn from similar socio-economic background are formed. Each group selects its own chairperson and secretary, whose responsibilities include ensuring that all members attend the compulsory meeting. Groups are federated into centers. A center chief and deputy chief are selected from among the group chairpersons. The groups and centers are responsible for the approval, disbursement and recovery of loans under the guidance and supervision of the Trust staff.
� Loans are provided to individuals for different activities. Group liability and pressure substitute for collateral against loans. Groups are collectively responsible for the repayment of loans.
� Prospective members undergo comprehensive training for seven days. Before the group is recognized, members must satisfy Trust staff of their integrity and commitment, and their understanding of the principles of GBA and group responsibility.
� Loans are disbursed on a staggered 2-2-1 basis, with the two most disadvantaged group members receiving loans first. To be manageable, loans are repaid in small weekly instalments over a one year period. The upper limit of the first loan is K30 and the loan size is progressively increased with each loan cycle. The loan amount is determined by investment requirements.
� Savings: 5% of the loan amount deducted at the out set, goes into the group fund. The fund provides access to cash for individual members with the group's approval. In addition, each member makes a personal savings each week.
� The project is charging 20% interest at a flat rate per annum on the project loans with the objective of attaining financial sustainability.
According to the branch manager, Ms Karen Makeyu, personal savings are voluntary. There is no weekly compulsory saving. However, LLDAT has mobilized savings totaling K61,000. Of this total K26,000 makes up personal, and therefore, voluntary savings. This indicates the need for and attractiveness of a savings facility in the village for members, in addition to a credit facility. Other group and center funds include the Default Fund, the Mutual Aid Fund and the Emergency Fund.
Since landlessness is not a problem in general in PNG, the means test for prospective members of LLDAT is based on a housing index, asset ownership and household income.
There was a possibility that the Papua New Guinea Banking Corporation (PNGBC), the only state owned commercial bank operating in PNG, will increase its involvement in the implementation of LLDAT's microcredit program. However, it was unclear what would be the extent of the involvement of PNGBC. A positive outcome of the involvement would be a greater professionalization in the management of finances and maintenance of accounts.