New laws for MSMEs financing
A NATIONWIDE consultation will begin next week on proposed laws to regulate new forms of raising capital for Micro, Small and Medium Enterprises (MSMEs).
Trade Minister and Minister for SMEs Manoa Kamikamica made the announcement yesterday, extensively deliberating on the chronic difficulty faced by MSMEs in accessing finance.
“Despite incentives offered by the Government, the issue persists,” Mr Kamikamica said.
“Currently, funding is through commercial banks which do not offer MSME friendly or MSME tailored products and services such as lower interest rates, collateral — free and unsecured lending, to name a few.
“Furthermore, the cost of borrowing for MSMEs is high and collateral requirements are stringent — often making it unviable and difficult for MSMEs to access finance.”
With no other formal regulated processes other than banks, financial institutions and the stock market available for raising capital, potential and small start-ups rely heavily on their personal savings and occasional small business grants from Government or from other parties to fund their growth.
In December last year, Cabinet endorsed the need for a new legislation to introduce, implement and regulate new financing alternatives to MSMEs in order to address the issue.
“It is an exciting initiative that will shape the future and development of MSMEs in Fiji,” Mr Kamikamica said.
“In Fiji, it is estimated that the financing gap for MSMEs is around $2.2 billion — but we have a robust, vibrant and innovative entrepreneur in Fiji who cannot access capital easily,” he said.
“Therefore, it is through this Bill that is proposed that new forms of raising capital, which is either through equity or debt, be introduced in a regulated manner.”
Mr Kamikamica said the three financial regimes being considered were: small offers, equity crowdfunding and peerto-peer lending.
A working group has been set up to carry out the public as well as industry consultations beginning next Friday.
“The Working Group comprises of the Ministry of Trade Cooperatives Small Medium Enterprises and Communications, Ministry of Finance, Reserve Bank of Fiji, Office of the Solicitor – General and Asian Development Bank to obtain views from MSME stakeholders and general public to introduce alternative financing that would essentially assist MSMEs in accessing to finance.”