ADB Approves $13 Million for Pacific Small Businesses
MANILA — The Asian Development Bank (ADB) has approved $13 million to expand lending for businesses in five Pacific countries.
The 5-year support will help government-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 creditworthy and 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.”
The support will be administered by ADB and financed on a grant basis by the Investment Facility for the Pacific of the European Union.
The commercial banks that dominate the banking sector in the five countries are reluctant to lend to MSMEs because of the cost and perceived risk. 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.
The ADB 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 assistance will help banks to deliver better services and outreach. Particular attention will be given to the needs of businesses owned or led by women, and MSMEs will be supported to access business development services.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.