High interest rates won’t help SMEs

Letters, Normal

The National, Thursday October 17th, 2013

 PNG Microfinance Ltd’s (PML) slogan “Small Money, Big Difference” does not appear to ring true. 

Can someone explain why it charges very high interest rates? 

How does one expect an SME operator to repay loans with such high interest charged? 

For instance, if I got a K100,000 loan with PML’s 24% interest rate, in reality I would be paying back almost 72% of the sum borrowed over three years, plus the principal borrowed. 

This is a heavy burden on SME operators. 

Can the Bank of PNG or other regulatory bodies look into this? 

SME loans should be offered at reasonable interest rates so that Papua New Guineans can help build the economy. 

Is it not the government’s policy to promote SMEs?