Provide financial literacy training

THE media statement by the Department of Commerce and Industry regarding financial partnership agreement to roll out K200 million for SME with the Bank of South Pacific (BSP) and the National Development Bank (NDB) in The National on Sept 7 is well articulated.
The policy covers individuals and organised groups in two categories as a start-up loan and a grower loan.
The start-up loan aims to support those who are not yet in business or targeting new business.
The loan aims to support those already in business.
The support comes as a loan through the two banks (BSP and NDB) with their terms and conditions that must to be met by potential SME loan applicants.
As this is a loan, the principle loan amount taken out should be repaid with an interest over the agreed period of time.
The support is timely and inclusive and stands to enable those who need assistance.
Though the support is well-intended, it is a risky investment by the Government with millions of kina.
The risk is that only a few borrowers will survive while most of them will not survive due to many challenges of operating businesses.
For positive results in the SME sector, capacity building of the SME participants through financial literacy skills training is important.
Firstly, most SMEs struggle, do not grow, or expand due to lack of skills and knowledge.
Secondly, the start-up for SME is critical as the participant is a new comer into business.
These people will not have the business skills and knowledge therefore will need financial literacy training.
Given the impediments for success in SME business, it is critical that financial literacy skills’ training is considered a priority by BSP and NDB.
The loan condition (four) states clearly that applicants must possess ‘financial literacy skills’.
As a financial literacy skills training provider, I see that all other loan conditions set out are captured in the financial literacy trainings conducted.
For maximum returns to SMEs, the banks and the government should prioritise and fund financial literacy skills training for applicants to attend and equip themselves.
As required, loan applicants will have met the financial literacy skills through presentation of the certificate.
In summary, financial literacy skills training is necessary to grow the overall investment for success achieve desired outcomes.
The lack of training will result in failure.
With the government’s seriousness in promoting SME sector with massive investment, BSP and NDB should consider creating partnership with financial literacy skills training providers.
This is to help roll out the policy directives for the success of the investment.
Let’s support our people and move PNG forward.

Wesley Lopele
Goroka