US$4 million to boost Samoa SMEs

Up to US$4 million will be invested in the National Bank of Samoa (nbs) as part of efforts to boost access to finance for small and medium enterprises (SMEs) in Samoa, the International Finance Corporation (IFC) announced.

The investment, in the form of an eight-year unfunded risk-sharing facility (RSF), underscores a commitment on the part of IFC and nbs to support a sector vital to the Samoan economy, and in particular women-led businesses and SMEs focused on agriculture.

Under the agreement signed this week, the RSF is expected to help foster financial inclusion while also supporting the creation of thousands of jobs. IFC and nbs each will cover up to 50 percent of the principal losses in an up to US$8 million equivalent in Samoan Tala portfolio of SME loans to be originated by nbs.

“This facility, the first of its kind in Samoa, complemented by IFC’s global expertise, will enable us to offer more support to these crucial businesses, and which in turn will be able to contribute even more to the broader economy,” said National Bank of Samoa Chief Executive Officer Sam Swann. “Moreover, this landmark investment reinforces our commitment to supporting these vital sectors, which are crucial to job creation and an important driver of economic growth.”

Limited access to finance for SMEs in Samoa has significantly diminished their contribution to growth and job creation, inhibiting the nation’s economic recovery from the impacts of the COVID-19 pandemic.

At the same time, commercial banks are likely to have become more risk averse amid an uncertain global economic outlook, resulting in tightening lending conditions for SMEs and compounding tough conditions for small firms already disproportionately affected by the pandemic.

IFC and National Bank of Samoa estimate that over the next five years, as many as 340 new loans will be extended to SMEs under this partnership, doubling the bank’s SME portfolio volume. 

Source: IFC