Kina, govt discussing SME strategy
KINA Bank is still in dialogue with the government and will meet this month to discuss its participation in the government’s small to medium enterprise (SME) strategy.
The bank said this in response to queries from The National following the recently released appropriation of the K200 million SME funding which the bank initially missed out on.
“We are in dialogue and meeting later this month regarding our potential participation and SME strategy,” the bank said.
Micro small medium enterprise (MSME) council president Desmond Yaninen said the break down of the K200 million SME funding would see K100 million go to the Bank South Pacific (BSP), K80 million to the National Development Bank and K20 million to the Department of Commerce and Industry with Kina Bank missing out.
Yaninen said however no money had actually been released yet.
“These banks have developed concessional loans for MSMEs which will have low interest rates and long repayment terms,” Yaninen said earlier.
3 comments
Commercial banks lending interest rates for various lending products offered to MSMEs are simply too expensive , well over and above cost of funds. I doubt very much K200million SME funding would result in any significant reductions in interest rates charged. Commercial banks still perceive lending to MSMEs as very high risks and thus apply what is commonly referred to as pricing for risks. The K200million should be applied towards more training and skills based formation of MSMEs sector and participants. The approach is misconceived in my view.
MSMEs needs skills and training to better manage the funds that are going to be allocated. Portions of the funds needed to be injected into institutions solely for incubation and acceleration programs targeting nascent and established MSMEs entrepreneurs in this difficult period of entrepreneurship. Mentoring with proper skills will steer them through volatile economic depression. Risks of mismanaging the funds is high and there is still obscure entrepreneurship pathway as new normal of doing business is phasing conventional practices with internet usage taking precedent, which PNG is yet to fully adapt and adopt to this platform.
If the Government consider funding BSP with K100 million of the K200 million loan package then the other should be slotted to Kina Bank and Westpac Bank. The Government must be well aware that the Micro Banks and NDB mode of lending and loan pricing was much higher than what the commercial Banks are lending. Therefore BSP already taps into SME lending whilst Kina Bank will do the same. The BPNG partnership with ADB and Aus Aid has funded millions of kina for the financial inclusion program where NDB and the Micro Bank staff were provided with trainings to enhanced SME lending in the country. Nothing has improved as many SME owners through out the country were killed due to costly lending by these small banks. The past Governments have heavily funded million of kina every year in its development budgets to NDB but there is no show case or data publicize by NDB. NDB instead of growing SME in the country, it allegedly created two subsidiary companies know as People Micro Bank Ltd and NDB Investment Ltd. Desmond Yaninen was the CEO of NDB Investment Ltd but he nearly run down the entity by funding “Stret Pasin Stores” around the country with no success stories. There was rampant allegation of commission fee lending which their lenders were directly asking customers to pay them first before they lend. I was one of their victim. The parent NBD has been funding millions of kina to its subsidiary NDB Investment Ltd in which this so called “Micro Small Medium Enterprise (MSME) council president Desmond Yaninen” was CEO. He literally bankrupted the entity and now he is begging the Government to release more millions. The Government under PMJM should be very careful to deal with Desmond and cohorts in MSME.
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