Further funding possible: RBF
Exporters have utilised $115 million of the $300 million Import and Subsidy Export Finance Facility (ISEFF).
The revelation from the Reserve Bank of Fiji follows an earlier announcement of an additional $100 million injection into the facility. “We increased it by $100 million so that businesses can benefit using this facility by borrowing at lower rates,” RBF Governor Ariff Ali said.
Mr Ali said $40 million from the facility was used by businesses involved in renewable energy projects and other import substitution activities.
Balance
“A further $12 million is awaiting drawdown, leaving a balance of $133 million available for eligible businesses,” he said.
Since the inception of ISEFF with an approved funding of $40 million in 2010, the appetite for funds from eligible businesses has continued to grow, resulting in subsequent increases in funding allocations over the years, Mr Ali said.
Textile industry
But the Textile, Clothing and Footwear Industry Council of Fiji said the Reserve Bank of Fiji’s export facility was difficult to comply with. President Mike Towler said loan requirements when processed via commercial banks were difficult to comply with for such funds.
“The few members who have been able to acquire finance via this facility find that the interest rate offered via commercial banks was not competitive.
“One particular bank is offering a competitive rate at 3.99 per cent, but most are asking for 5 per cent,”
Mr Towler said.
Lending rates
The funds were made available via the RBF at 1 per cent to the commercial banks, he said.
“When they charge a margin of 4 per cent, it makes these funds expensive.”
Commercial banks normally will accept a property valuation for security purposes that is no older than four years, he said.
Questions sent to the Association of Banks in Fiji and the Construction
Industry Council of Fiji remained unanswered when this edition went to press.
Valuation concerns
Mr Towler said valuers were kept busy valuing properties for bank security purposes as the commercial banks were not accepting valuations that are more than 12 months old.
While valuers were happy for the extra work, the exercise meant borrowers had to fork out more money and more time, Mr Towler said. He added: “Engineers have added substantial extra costs for borrowers by adding even more onerous compliance conditions for cyclone certificates for insurance purposes.”
Mr Towler said no cyclone insurance rendered properties valueless for bank security purposes.
“It is extremely challenging to comply with all extra requirements and costs to borrow more money to keep our businesses alive during these very difficult times.”