A-G to Sign Pack­age, Mi­cro, Small, and Medium En­ter­prises Ben­e­fit

Fiji Sun - - EXPLAINER - Feed­back: jy­otip@fi­jisun.com.fj

Attorney-Gen­eral and Min­is­ter for Econ­omy Aiyaz Sayed-Khaiyum is ex­pected to sign the Mi­cro, Small, and Medium En­ter­prises (MSME) COVID-19 con­ces­sional finance sup­port pack­age to­day. The pack­age will be made avail­able from 7 June.

This is a step taken by Gov­ern­ment to as­sist the mi­cro and small busi­nesses fac­ing fi­nan­cial dif­fi­cul­ties be­cause of the coro­n­avirus pan­demic.

Ba­si­cally, Gov­ern­ment will be mak­ing funds avail­able to these small and mi­cro busi­nesses with loans of 0.5 per cent to 1.5 per cent in­ter­est rate per an­num, and re­pay­ments to start af­ter one year of grace pe­riod.

All ap­pli­ca­tions will be as­sessed by “Busi­ness As­sis­tance Fiji”, which com­prises ac­cred­ited mem­bers of the Fiji In­sti­tute of Ac­coun­tants, Fiji Com­merce and Em­ploy­ers Fed­er­a­tio (FCEF), Fiji Cham­ber of Com­merce and In­dus­try, Women in Busi­ness and MSME Fiji.

Upon ap­proval by the “Busi­ness As­sis­tance Fiji”, Gov­ern­ment will make di­rect dis­burse­ment in the bank ac­count of ap­proved en­tity. This is great news for women and small and medium en­ter­prise own­ers.

This is a mas­sive in­vest­ment in the MSME sec­tor by Gov­ern­ment and a show of con­fi­dence in the sec­tor, which has great po­ten­tial.

Gov­ern­ment will not earn any in­ter­est in the first year and if the MSME own­ers had tried to seek a loan from com­mer­cial banks, they would have ended up pay­ing a much higher in­ter­est rate.

Why is this good news for women?

This is yet an­other step to­wards em­pow­er­ment of women busi­ness own­ers in the coun­try. You could be a newly un­em­ployed chef, tai­lor, or a house­wife who wants to ven­ture out into busi­ness, this could be your op­por­tu­nity.

MSME Credit Guar­an­tee Scheme:

In 2012, Gov­ern­ment es­tab­lished the MSME Credit Guar­an­tee Scheme 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, 1711 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:

Fol­low­ing a 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, the Gov­ern­ment is now in­creas­ing its guar­an­tee on new MSME loans, with par­tic­u­lar focus on up­lift­ing those in these highly-im­pacted groups.

As part of the changes, 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, Gov­ern­ment will guar­an­tee to pay 75 per cent 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.

Busi­nesses with an an­nual turnover of up to $1.25 mil­lion will now be able to en­joy the credit guar­an­tee com­pared with $500,000.

Photo: Of­fice of the Prime Min­is­ter

The Mi­cro, Small and Medium En­ter­prises COVID-19 pack­age will ben­e­fit many busi­ness af­fected by the pan­demic. Pic­tured is a ven­dor and her fam­ily at the new Raki­raki mar­ket, which was opened by Prime Min­is­ter Voreqe Bain­i­marama on June 2, 2020.

Jy­oti Pratibha

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