Informal lending backs banking system

Informal lending systems like dinau moni complement the role of formal finance and banking systems in Papua New Guinea,  a Japanese university lecturer says.
Dr Kiyotsugu Yoshihara, of Kyoto University, gave a lecture on PNG and Japanese monetary systems at the University of Papua New Guinea yesterday as part of the Vice-Chancellor’s Lecture Series.
According to Yoshihara, although the concept of dinau moni helped sustain livelihood in Papua New Guinea, the inability to calculate interest rates and social obligations to relatives could bankrupt the informal lenders.
Yoshihara has a vast banking background.
“Dinau moni is good but the problem in Papua New Guinea is calculating interest rates and also family and friends who do not repay quickly can cause the lender to go bankrupt,” Yoshihara said.
He said PNG had an authentic finance and banking system and future bankers and financiers should learn more about the PNG monetary systems than foreign systems.
UPNG’s acting Vice-Chancellor Vincent Malaibe, acknowledged Yoshihara for his insight and acknowledged the Japanese Ambassador Satoshi Nakajima and the embassy for making the lecture possible.
Malaibe said Papua New Guinea still had a lot to understand about their own banking systems and basic numeracy played an important role in calculating interest rates.
“Basic numeracy is vital for calculating interest rates. A lot of people do not understand the conversation of interest rates in percentage into real kina. Thirty per cent interest rate is not K30,” Malaibe said.