The Community Finance partnership is proud to welcome today the Pacific Peoples community organisation Vaka Tautua as a provider of its low and no interest loans programme.
“We’re pleased that Vaka Tautua’s team of loan workers in West and South Auckland and Porirua can now provide families who are struggling to live on limited incomes with access to fair and affordable borrowing options,” said Good Shepherd New Zealand Chair Diana Crossan.
Speaking at a special celebration in Otara today, Bank of New Zealand Director of Retail and Marketing Paul Carter said expanding the community partners to include Vaka Tautua will enable more New Zealand families to benefit from the Community Finance loans.
Vaka Tautua Chief Executive Vui Mark Gosche says, “Pacific families are captive to the worst loan providers in New Zealand and have been paying outrageous levels of interest because of their inability to access normal lending rates.
“We see families paying between 20-30% or much worse to buy basic necessities. Being able to provide Community Finance loans means we will be able to offer a fair option for families who are already in financial distress,” he says.
A key finding of Ministry of Social Development research into the impact of the financial conversations which are an integral part of Community Finance was that participants’ said their financial management improved over time helping them become more independent and successful.
Paul Carter says, “BNZ’s mission is to enable a high achieving New Zealand so we are particularly proud that the research found that a significant proportion of Community Finance clients reported an increase in their employability.
“Many clients use their loans for second-hand cars or car repairs and this improved access to transport has benefits for their employment situations such as being able to look at a wider range of opportunities, in a broader geographic area or with working hours outside those covered by public transport,” Paul Carter says.
“It is encouraging that the portion of participants employed increased regardless of whether they received a loan or not, and that loan recipients said it helped them keep their jobs and even pick up extra or longer shifts when they aren’t confined by public transport,” he says.
Diana Crossan says, “This valuable programme is making a tangible difference helping Kiwis living on limited incomes to improve their financial capability and independence while saving thousands in interest.”
Community Finance estimates that the $2 million of lending to date has saved clients more than $1.1 million in interest and charges when compared to borrowing the same amount through high-cost lenders.
“Over two-thirds of participants in the MSD research said the financial conversation meant they were spending less on things they did not need and around half said they understood their finances better and were paying off debt faster or saving more money,” Diana Crossan says.
“Our loan workers share heart-warming client stories with us all the time and the research backs this up with comments that those who had engaged in financial conversations felt more in control of their finances and were proud of the changes they had made,” she says.
“Even those who did not get a loan said they got something out of the experience in terms of growing in confidence and learning how to look at their budget critically. Sometimes they go away and sort out some of their debt then return to us for a loan when they’re in a better financial position,” Diana Crossan says.
For the past four years Vaka Tautua staff have been providing financial capability programmes to hundreds of Pacific families, Vui Mark Gosche says.
“Many Pacific workers work in precarious employment with irregular hours and need a reliable vehicle. Being able to borrow at an affordable rate will benefit them financially and enable them to continue to work,” he says.
“Unaffordable housing and high levels of debt are common amongst the families we work with. Providing affordable loans will help families lift themselves out of poverty and improve the lives of their children,” Vui Mark Gosche says.
About Community Finance:
- The Ministry of Social Development commissioned Malatest International to undertake the “Outcomes evaluation of the Community Finance Initiative”. The first phase of the evaluation is complete. Phase 2 will, when completed, validate causality claims.
- The programme is run by Good Shepherd New Zealand and BNZ, with support from the Ministry of Social Development, and delivered by community partners like The Salvation Army, Aviva and Vaka Tautua.
- Loans are provided to a group of New Zealanders described as financially excluded – meaning they don’t meet standard bank criteria and have exhausted their Work and Income options. As a result, many are forced to take out loans with alternative lenders, many of whom charge high interest rates and fees.
- Community Finance is now available in Whangarei, Hamilton, Tauranga, Napier, Palmerston North, Porirua, Wellington, Christchurch, Invercargill and Manukau, Mt Wellington, Waitakere and Henderson in Auckland.
- The Ministry of Social Development contributes operational funding to Good Shepherd New Zealand who sub-contracts community providers.
- In the 2016 Budget, Community Finance was awarded an additional $4.2 million of operational funding over four years.
- Good Shepherd New Zealand has been supported through the development of the programme here by Good Shepherd Microfinance in Australia which has been operating microfinance programmes in Australia for more than 35 years.
- BNZ has committed $60 million in lending to the programme.
- Community Finance loan products have no fees or charges and are available to people on limited incomes who are eligible for a Community Services Card.
- No Interest Loan Scheme (NILS) loans are available for amounts up to $1,000 for essential goods and services. StepUP, the low interest loan, provides loans of up to $5,000 with up to three years to pay loans back.
- The most popular purpose for a StepUP loan is for second-hand cars or car repairs.
- For more information visit www.nils.org.nz or www.stepuploan.org.nz