Manila, 29 July 2022 (TDI): The Asian Development Bank (ADB) approved a loan of $13million to expand lending for businesses in five Pacific countries.
The five Pacific countries include Fiji, Samoa, Solomon Islands, Tonga, and Vanuatu. This five-year program would help the government banks of these states to provide better loans to small businesses.
An increase in the volume of loans to micro, small, and medium-sized enterprises (MSMEs) would make them more creditworthy.
#ADBNews: ADB will help government-owned banks in Fiji, Samoa, Solomon Islands, Tonga, and Vanuatu increase micro, small, and medium-sized enterprises’ access to finance, including women-led businesses.
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— Asian Development Bank (@ADB_HQ) July 29, 2022
Asian Development Bank will administer the support. The Investment Facility for the Pacific of the European Union would finance this program. Finances will be provided in form of grants to the banks.
MSMEs
“MSMEs contribute largely to employment and household incomes in the Pacific, but access to finance remains an obstacle for many,” said Jonathan Kirkby from ADB.
He added, “ADB’s support will increase MSMEs’ access to finance, which will particularly benefit women who own or run their own businesses.”
Due to the expense and perceived danger, the commercial banks that control the banking industry in the five countries are hesitant to lend to MSMEs.
The use of moveable assets like vehicles, boats, or farm equipment as collateral is still developing in the region. And MSMEs lack access to land as collateral.
MSMEs that are owned or run by women generally face additional difficulties. They frequently lack access to collateral and have obligations to their families that make it difficult to visit a bank.
They also must contend with gender conventions that may deter women from starting their own businesses.
ADB improving Banking services
The ADB’s assistance will increase MSME lending by reviewing and enhancing bank policies. Improving customer relations management, providing management, training employees, and enhancing information technology infrastructure would also assist further.
Banks will be able to provide better services and outreach thanks to the aid. Women-owned or led firms will receive special consideration, and MSMEs will be helped to obtain business development services.
