Study: SMEs need credit facilities

Business

A LACK of credit facilities restrains the growth and development of locally owned small-to-medium enterprises (SME), according to the National Research Institute (NRI).The institute released a discussion paper yesterday calling for the revival of the Stret Pasin Stoa scheme which offered credit, entrepreneurship training and business management skills to support small new businesses in the 70s, 80s and 90s. But little is known about how the programme fared.
Thomas Honga and Dr. Francis Odhuno, who wrote the report, contacted some beneficiaries of the programme to assess whether they benefited from the scheme and what challenges they faced. They found that the Stret Pasin Stoa Scheme was beneficial to the growth of enterprises and the wellbeing of family and individual recipients.They said although the programme worked well back then, the business environment, market conditions, and development status in PNG have changed significantly.The report recommended that the Stret Pasin Stoa Programme be revived with new features to account for current market trends.The authors agreed that the original model that fizzled out in the 90s may not be effective today and some key features may not be relevant to the current credit market.They recommend that a new version of the scheme should include key features of the old scheme plus current market conditions.“The results support findings of other studies – adequate supply of credit and incentives to the SME sector – underpins social and economic development,” Honga said.“Thus, the programme has the potential to positively impact many low-income households and to help small businesses gain access to finance and credit.”

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