The Asian Development Bank (ADB) has approved $13 million to expand business lending in five Pacific countries.
The five-year support will help state-owned banks in Fiji, Samoa, Solomon Islands, Tonga and Vanuatu to increase the number and volume of loans to micro, small and medium-sized enterprises (MSMEs). It will also support business development services to help MSMEs become more solvent and bankable.
“MSMEs contribute greatly to employment and household income in the Pacific, but access to finance remains a barrier for many,” said Senior Private Sector Development Officer of the Pacific Liaison and Coordination Office. ADB in the Pacific, Jonathon Kirkby.
“The ADB’s support will increase MSMEs’ access to finance, which will especially benefit women who own or run their own businesses.”
The support will be administered by the ADB and financed in the form of a grant by the Pacific Investment Facility of the European Union.
The commercial banks that dominate the banking sector in all five countries are reluctant to lend to MSMEs due to cost and perceived risk.
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MSMEs lack access to land as collateral and the use of movable assets such as boats, cars or agricultural equipment as collateral is still developing in the region.
Women-owned or managed MSMEs face additional challenges, as they often have less access to collateral, have family responsibilities that make it difficult to access a bank, and face gender norms that can discourage women from entering a bank. go into business.
ADB support will boost lending to MSMEs by reviewing and strengthening banking policies and customer relationship management, training managers and staff, and improving IT infrastructure. The assistance will help banks offer better services and reach.
Special attention will be paid to the needs of women-owned and -managed businesses, and MSMEs will be supported to access business development services.
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