Fijian Government Enhances MSME Credit Guarantee Scheme To Empower Women, Primary Sector
The Fijian Government has enhanced its Micro Small Medium Enterprise (MSME) Credit Guarantee Scheme to increase access to finance. This is in its ongoing efforts to help small businesses during the COVID-19 pandemic and to support local business activity. This scheme was announced by the Attorney-General and Minister for Economy Aiyaz SayedKhaiyum on Sunday at Level 10, Ro Lalabalavu House, Suva. Mr Sayed-Khaiyum said the MSME Credit Guarantee Scheme was established by the Government in 2012.
He said this was to help develop the local business industry, improve private sector lending by alleviating the requirement for high collateral and stimulate economic growth.
“Through a risk sharing arrangement, the Government initially guaranteed 50 per cent of the principal outstanding on defaulted SME loans up to a limit of $50,000 per business.
“As at March 2020, a total of 1,711 small businesses with $104.6 million in outstanding loans were covered under the scheme.
“The maximum interest rate that lending institutions could charge stood at 10.0 per cent per annum.”
Changes to the Credit Guarantee Scheme
The Fijian Government is now increasing its guarantee on new MSME loans, with particular focus on uplifting those in these highly-impacted groups.
This after a recent review of the Scheme to offer a number of financial lifelines for small businesses, and in recognition of the need for a targeted approach to support both women entrepreneurs and the primary sector.
“As part of the changes, the Government will now guarantee to pay 60 per cent of the principal outstanding on defaulted small and medium business loans up to a limit of $60,000 per business.” “In addition, to encourage women’s role in driving our economic recovery, and to support the development of the agriculture, fisheries and the forestry sectors;
■Gover■me■t will guarantee to pay 75 percent of the principal outstanding on defaulted loans up to a limit of $75,000 per business on all small business loans to women entrepreneurs, as well as loans to the agriculture, forestry and fisheries sectors.
He said businesses with an annual turnover of up to $1.25 million would now be able to enjoy the credit guarantee compared with $500,000.The waiting period to lodge claims on losses by financing institutions has been reduced from 180 days to 120 days. Additionally, the maximum interest rate that lending institutions can charge has been reduced to 9.49 per cent from 10.0 per cent per annum, offering significant financial
relief to all borrowers.