SMEs a ‘sleeping giant’ for PNG

The Government has allocated K200 million to small-to-medium enterprises (SMEs) to empower businessmen and women to engage in business activities. To empower SME business activities, certain organisations have agreed to promote financial literacy training for SMEs to boost their skills and knowledge. Reporter MICHAEL PHILIP writes about the importance of SME training and how key organisations will partner to roll out the training in the country.

The small-to-medium enterprise business policy in the country has to date attracted so many locals to tap into the business world with loans from the two banks – Bank South Pacific (BSP) and National Development Bank (NDB).
But, how are they going to use the money?
How are they moving forward with their businesses?

Prime Minister James Marape
The Government has plans to grow the country’s economy and the SME businesses policy is one such effort towards economic growth.
We announced in Budget 2022 in November a K200 million allocation to grow SMEs in Papua New Guinea.
BSP has given out more than K100 million parked with the bank under the policy to help boost more 300 businesses that had received loans.

Researcher Peter Kora
SME is the key sector to provide income opportunities for PNG’s largest rural population.
SMEs have a great potential to create jobs, contribute to sustainable economic development, allocate resources more effectively, expand exports, achieve a more equal distribution of incomes and help in rural and regional developments.
The bulk of the rural population is involved in the SME sector and therefore policies that enhance SME development will create opportunities for the rural population to gain better a livelihood.
The money, processes involved and requirements to get the loan and start up a SME business are ever ready and available to everyone.
But the concern now, identified by NDB and BSP, is financial literacy training in SME for SME owners.
SME financial literacy training has, therefore, been agreed to encouraged those who are already into SME business and those who wish to join the growth bandwagon.
In recent weeks, Pacific Institute of Leadership and Governance (Pilag) graduated its pioneer financial training in SME participants.
The training introduced the partnership between Pilag and NDB to roll out the SME training programmes nationwide.
Pilag is the first Government institution to introduce SME financial literacy training programme.

NDB chairman Michael Mell
SME owners need to be educated and trained so that they know the importance and benefits in SME start-ups.
Their partnership with Pilag would be a boost to SME in terms of trainings so SME owners can educate themselves before stepping out into the real business world.
SME is the way forward for the betterment of this country and that is why our Government has allocated huge amounts of money to this programme.
Every citizen has the right to come and borrow from us to start up their SME businesses but how they will run it, that is the problem (and concern).
Some SME owners are literate while some are not. That is why we need to step up trainings to educate all involved in SMEs and how to drive their business into the future.
This year is the right time to grow the SME programmes in PNG and such initiatives brought forward by Pilag needed to be supported by all business departments.
SME is a “sleeping giant” for all SME players to help drive PNG’s economy to historic growths.
We want them (SME owners) to dig deeper so they know and explore their business potentials.
We want SME owners to be successful so that the money the Government invested did not go to waste or at least put to good use for economic success and rewards.
The trainings will provide SME players with a better idea on how to manage their business efficiently without any consultation from expatriates.

Pilag chief executive officer Michael Barobe
The institution wants to partner with the Government following the decision to drive SME forward and make it as an individual source of employment.
Such trainings are designed to support the Government’s SME policy.
People have to make use of the money that the Government had allocated to NDB and BSP under the SME scheme.
The money is there, but we want the people to be well trained and competent to use the money to grow businesses. The trainings are aimed at preparing individuals to be able to venture into SME start-ups with competency.
Government funding support for SME is limited but those interested individuals with potential must have reasonable knowledge and skill about SME start-ups.
You can start up SME business but if you do not know how to use the money, where will you get the money, how to budget the money and where to put the money, then the training is for you.
The aim is to groom self-reliant SME individuals who can contribute to nation-building with their successful operations.

BSP group CEO Robin Fleming
The trainings help small businesses understand compliance issues which are important for their start-up operations.
You can be a SME owner but it is very important to be trained to broaden knowledge in business and its challenges.
We want SME owners to be literate in whatever areas of business when launching start-ups.
The requirements are there if you want to get a SME loan from us. We know who have been in the business world and who is not, so we are not blind, we screen the applications.
And if you have attained a SME training certificate, that adds weight to your application.
SME training will always involve some basic accounting principles, distinguishing between cash and profit, cash management which can include stock or inventory control and debt collection.
It will also go into basic bank reconciliations and tax payments that are required.
There is likely to be some guidance on the importance of business plans and how to develop them for certain types of business.
Collectively, the training and awareness give SMEs a higher chance of success.

Conclusion
While the Government is playing its part to allocate funding into the SME sector, NDB, BSP and Pilag, on the other end, would provide the extra support, via financial literacy trainings, to educate all who wish to venture into SME businesses and also to those who are already in the industry.