Loan scheme to grow formal sector

Business

THERE is likely to be a significant increase in the number of informal businesses graduating into formal sector after the allocation of K200 million by the Government for small-medium enterprises, an official says.
Small Micro Medium Enterprise Council (MSME) president Desmond Yaninen told The National yesterday that people who wanted to access the credit facility offered by banks would have to meet certain requirements such as being a registered businesses entity.
Government has already given K100 million to Bank South Pacific (BSP) as security to rollout the soft lending for businesses and will soon give K80 million to the National Development Bank (NDB).
“We will start to see a growth in the number of formal sector SME’s,” Yaninen said.
“The reason is being that Prime Minister (James Marape) and Commerce and Industry Minister William Duma have put in place requirements that all SMEs be registered if they want to access loans.
“They need to have Investment Promotion Authority registration. They need to register with the Internal Revenue Commission and get a Taxpayer Identification Number (TIN).
“If they are in small groups than they need to register in corporative societies, so because there are conditions to these loans, one of them being having to formally register with IPA, IRC or through corporative societies, that’s going to mean that a lot of people now will be forced to move from the informal sector to the formal sector in order to acces the SME loan.”

4 comments

  • In today post courier news to day, BSP Managing Director Robin Fleming said that the Bank will strictly fund existing SME who have annual turnover of K50,000 and above and NOT start-up business from the K100 million funding by the State. The BSP CEO further said that all the start-up business will be funded by NDB from the K80 million. Can Yaninen clarity this??

  • BSP is now talking on a different level of supporting SME from today’s newspaper. Hope the K100 million will be used to support local entrepreneurs. Time and changes in government with so many bank policies has always failed small business people in PNG.

    Its about time the truth must be said and done for real economic development and participation for small people to achieve economic prosperity and independent lowering poverty line.

  • Graduating from the informal to the formal business sector just to access funding is like putting the cart before the horse. Before one graduates they must first fulfil certain requirements. Formalisation comes with a lot of compliance issues. The government should be investing in training and information for the informal sector to prepare them for formalisation to ensure compliance and growth, success and long term survival of small businesses.

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