Alternative financing for MSMEs
THE public consultation on proposed laws to regulate new forms of raising capital for Micro, Small and Medium Enterprises (MSMEs) started in Suva yesterday, attended by a handful of MSME operators at the Flea Market.
The initiative is a joint effort by the Ministry of Trade Co-operatives Small Medium Enterprises and Communications, Ministry of Finance, Reserve Bank of Fiji, Office of the Solicitor – General and Asian Development Bank.
“Basically what the Government is aiming to do it there’s a Bill that has been drafted that will enable businesses to access alternative forms of finance,” Faizal Khan, Programme Director for MSME Fiji at the Ministry of Trade said.
“Right now traditionally, they either go to the banks, government grants or they informally raise funds through their own efforts.
“So there are three regimes or three methodologies that we are trying to introduce. One is small offers, one is peer to peer lending, which is a loans structure, and the third is equity crowd funding. So there are two equity structure types of fundraising and the third one is through way of debt.”
Fiji, Mr Ali said, is estimated to have a financing gap for MSMEs of around $2.2billion, meaning these were the value of loans applied for to commercial banks but were rejected because they did not meet requirements.
He said response was good from the first public consultation and the team will be moving to the main centres of Viti Levu and Vanua Levu next week.
“We’ve had focus groups consultations that started earlier in the week, so we’ve met bankers, we’ve met insurance providers, professional bodies, credit unions, those that represent different MSME groups as well.
“Overall, there has been positive response, everyone is looking forward to these alternatives, there has been a lot of support, however, as we mentioned, through the consultation, we expect a lot of feedback as well so we have taken note of some of the comments that have come through and as mentioned in the consultations, we welcome any written feedback by the 27th of February.”