Following concerns that were raised about the risk of taking money from the Vanuatu National Provident Fund (VNPF) to support the government’s scholarship scheme, the VNPF General Manager, Parmod Achary, has assured it is a safe investment thus, members’ funds are safe.
During a forum held recently, a concerned parent and member of the fund has questioned whether it is legal for VNPF to provide loan to students and also if the members’ funds are considered safe and will not cause loss in the scheme.
A VNPF staff said the members’ fund will not be affected and the students will be repaying the loan with an additional interest of 4%.
The officer conveyed that works are underway to ensure that policy and legislation is in place to guide the implementation process.
Section 16 of the VNPF Act states that money belonging to the fund should be invested by the board in accordance with policy guidelines approved by Order by the minister responsible after consultation with appropriate departments of the government in regards to the interest of members.
Investment guidelines shall have regard to the need for a balanced portfolio bearing in mind the need for sufficient vatu liquidity, prudent diversification and rates of returns on the various sources of investment, according to the act
The Vanuatu National Provident Fund GM, Parmod Achary, said the VNPF Act provides for the establishment of the scheme.
He conveyed in a statement that the concept will operate as a micro-finance scheme whereby students are expected to repay loans plus principle; making a profit where the surplus will be paid to members through annual interest.
“At the moment, the scheme is managed by the Members Financial Services Limited (MFSL). It will become a separate entity operating under its own board once the trial period is over,” he said.
“It’s an investment scheme and it’s safe. Though it is not compulsory.
“It’s for members who want to invest in their children’s or loved-one’s education but are facing financial constraints. Our vision is to ensure members have a piece of mind during employment and after retirement.
“The students should complete loan repayment within five years after completion of studies.”
Vanuatu has a low literacy rate in the Pacific, with a survival rate of early education through to primary education higher than in secondary education.
GM Achary said one of the objectives of the scheme is to increase number of qualified human resources and improve the country’s economic wellbeing.