SMALL BUSINESS GRANTS
Improve lives of 28,265: Ali
Shaheen Ali says the Government Micro and Small Business Grant (MSBG) Facility has had a positive direct impact on 5853 Fijians. The Permanent Secretary for Industry, Trade and Tourism said as a result the grant indirectly improved the lives of 29,265 people. He delivered a ministry submission before the Public Accounts Committee. He was responding to the meeting of PAC with the Fiji Development Bank, which had led to negative reports in the media on the grant. Mr Ali explained the reasons for the Government’s focus on micro and small business sector. “The micro, small and medium enterprise sector represents approximately 18 per cent of the Fijian GDP,” he said. “It should be noted that because a large majority of this sector operates as informal businesses. Therefore, this contribution is an underestimate of the real contribution of the MSME sector to the economy.
“It has been globally proven that the MSME sector can help build a resilient and robust economy. It creates the foundation for strong nations, nations that are able to withstand external shocks. Countries, such as, Malaysia, Thailand, Indonesia, to name a few are examples of economies that have been built on the MSME sector. “Additionally, the MSME sector is the catalyst for innovation. Therefore, the Fijian Government has initiated a number of projects and initiatives to harness the full potential of the MSME sector, which include:
National Export Strategy – focus on small and medium enterprises that are exporting;
Fijian Made-Buy Fijian Campaign – 176 Fijian crafters licensed under the campaign
Co-operatives development and training;
Integrated Human Resource Development Programme;
Northern Development Programme;
National Centre for Small and Micro Enterprises – which provides training, mentoring;
“In addition to the above initiatives, in 2015 the Micro and Small Business Grant Facility was launched. The Facility was to provide $1000 grants to micro and small entrepreneurs who were not able to obtain finance from banks or other financial institutions. “Why micro grants and not loans, a number of people would ask.
“Loans are difficult for a micro and small business to secure. And in the event they do secure loans, it can lead to indebtedness, hostile payments collectors and inflexible repayment schedules. Furthermore, having a debt constraints the ability of a micro and small business to graduate to the next level.
“Grants, unlike loans, can create independence and cultivate sustainable development in a community. A grant creates spaces for positive relationships and an empowered individual. “Currently, a number of NGOs and other private sector organisations receive grants, however, there is no concerns raised on the accountability of the grant recipients. When it comes to individuals who are in need of the support questions are raised on the credibility of the project. “The MSBG aims to empower the micro and small entrepreneur, who were not able to get access to finance from commercial financial institutions. “To reduce poverty and generate additional income. To create value chains and link to suppliers and markets. “The MSBG is open to all micro and small businesses in Fiji. These are businesses with turnover less than $30,000 and employing not more than 5 individuals.
“As stated earlier the target was to generate economic activity at the grassroot level and also to empower young Fijians and women. Rural communities – 70 per cent Women – 37 per cent Youth is - Young population 45 per cent under the age of 25 years and 60 per cent under the age of 40 years “The intended impact of the MSBG is to provide micro and small businesses the opportunity to become sustainable and grow into successful businesses. It also allows for the mainstreaming of the informal sector into the formal economy. “Through sustainable livelihood the programme also enables better socio-economic conditions, such as education, improved housing, water and sanitation, to name a few. “The MSBG is open to all micro and small businesses in Fiji. These are businesses with turnover less than $30,000 and employing not more than 5 individuals. There is a rating system, that has been developed in conjunction with Fiji Development Bank (FDB), to assess applications and scores are awarded on the documentation and information provided on project viability, competition and management skills.
“In order to qualify the applicants need to score at least 28 out of 50. The final approval is depending on the result of the validation site visit. “The process through which the approvals are given are very stringent, transparent and accountable. “The ministry partnered with the FDB to provide micro and small businesses the opportunity to be part of a commercial bank’s database. The businesses who are successful under the MSBG, essentially receives the approval of the Fijian Government.
So down the line, the possibility exists to raise a loan with the FDB to expand their businesses even further. “By having FDB as a partner we are opening up the mainstream banking system to people who were once excluded. And keeping them out of the clutches of loan sharks and other unscrupulous people. FDB compared to other financial institutions in Fiji, has the widest reach with a network of branches around Fiji, especially rural and areas that are not considered commercially viable to operate in, such as, Taveuni, Nabouwalu and Seaqaqa.
Industry, Trade and Tourism Permanent Secretary Shaheen Ali.