SMEs get K13m facility

 By GYNNIE KERO

THE US$6 million (K13 million) risk share facility (RSF) funded by the Bank of Papua New Guinea is aimed at assisting small to medium enterprises (SMEs), deputy governor Benny Popoitai says.

He said this to more than 400 SME owners in Madang during a three-day meeting on the sector earlier this week. 

Popoitai said the development and implementation of the risk share facility (RSF) would contribute to providing the financial support the SMEs need.

“The creation of the US$6 million RSF will leverage its resources to partially guarantee loans through participating financial intermediaries’ loans to SMEs.  

“The RSF will share in guaranteeing loans to SMEs, and thus mitigating risk, for intermediaries that may have otherwise been discouraged or outright refused before to extend any lending.  

This will result in the following by 2017:

• 52,000 loans disbursed
• K66 million leveraged into a loan portfolio for micro, small and medium enterprises (MSMEs)

Popoitai said these and other efforts to develop the inclusive financial sector would create the kind of professionalism and competition that would reduce lending costs to SMEs, risks, and expand lending accordingly.  

“The extent to which confidence in lending increases, costs in its financing will decrease, making access easier to quality financial services for SMEs and others normally excluded from accessing them.

“We will be pleased to not only watch your efforts in developing the sector, but to also be active directly, collaborating with you as we move forward in SME growth and expansion,” he said.

Popoitai said: “The bank, with the support of several international and national partners, is particularly focusing on increasing financial sector inclusion supporting SME development.  

In developed, more sophisticated market economies such as those in the US, Europe, East Asia and Australia, SMEs form around 90% of all enterprises, and an equivalent share of employment generation.  

The SMEs contribute significantly to wealth, employment, more internally generated tax revenues to support their government services, and income creation.

He said: “There is a popular expression in the financial sector inclusion industry about SMEs being the ‘missing middle’ 

“SMEs are either too big to be interested to get small-scale financing from microfinance institutions, or too small and risky for commercial banks to lend to them.”