Govt commits K50mil to support MSMEs

By SHIRLELY MAULUDU
THE Government has committed K50 million towards Credit Guarantee Corporation Ltd (CGC) which was launched yesterday.
Prime Minister James Marape made the announcement noting the importance of his Government’s support for the development of small businesses in the country.
The newly established corporation is a joint venture between the Bank of Papua New Guinea (BPNG) and Kumul Consolidated Holdings (KCH).
On Nov 27, 2018, National Executive Council (NEC) approved the establishment of the corporation under Medium Term Development Policy III to address the lack of access to credit and capital faced by micro, small and medium enterprises (MSMEs) in the country.
BPNG took the lead in preparing the corporation by incorporating it under the Companies Act (1997) on Jan 5, 2022.
Marape said the Government was committed to corporation and had invested an initial K50 million.
The corporation will support MSMEs by working in partnership and through participating financial institutions to provide credit guarantee to financial institutions as a credit risk mitigation to lenders to absorb a portion of their losses on the loans made to MSMEs in case of default to encourage them to lend to MSMEs.
BPNG chairman David Toua said in the absence of such an institution (CGC), MSMEs had been denied access to loans by banks and lenders to expand their capital base due to reasons such as a lack of collateral, poor credit history, and unregistered mortgages which were typical of most MSMEs in the country.
“The establishment of the CGC brings renewed hope into the MSME sector that has been struggling from the combined lack of basic infrastructure and skill sets that are necessary elements for their growth,” he said.
Toua said with the establishment of CGC, it would help the Government achieve its employment creation and growth objectives.