US$13m for Pacific Small Businesses: ADB

The Asian Development Bank (ADB) will provide US$13 million in support of micro, small, and medium-sized enterprises (MSMEs) in five Pacific countries for the next five years.

The five-year support will help government-owned banks in Fiji, Samoa, Solomon Islands, Tonga, and Vanuatu to increase the number and volume of loans to MSMEs. It will also support business development services to help MSMEs become more bankable.

“MSMEs contribute largely to employment and household incomes in the Pacific, but access to finance remains an obstacle for many,” said Senior Private Sector Development Officer from ADB’s Pacific Liaison and Coordination Office Jonathon Kirkby. “ADB’s support will increase MSMEs’ access to finance, which will particularly benefit women who own or run their own businesses.” 

ADB says commercial banks that run the banking sector in the five countries choose to not lend to MSMEs because of the cost and perceived risk. It said in a statement: “MSMEs lack access to land as collateral and the use of movable assets such as boats, cars, or farm equipment as collateral is still developing in the region. Women-owned or led MSMEs face additional challenges as they often have less access to collateral, have family responsibilities that make it hard to get to a bank, and deal with gender norms that can discourage women from entering business.”

ADB says its support will boost MSME lending by reviewing and strengthening bank policies and customer relations management, providing training to management and staff, and improving information technology infrastructure.

The support will be administered by ADB and provided on a grant basis by the Investment Facility for the Pacific of the European Union.