By BOSORINA ROBBY
THE International Financial Council (IFC), the World Bank, and the Papua New Guinea government yesterday signed an agreement to establish a financial programme that will help improve access to credit for small and medium enterprises (SMEs), The National reports.
The collaborative effort was aimed at assisting SMEs, the primary drivers for job creation, poverty reduction and economic growth in PNG, which do not have much access to getting loans to expand their businesses.
World Bank country manager Laura Bailey explained that the programme, which will take months to set up, concentrated on SMEs as they were a little known sector.
Currently, there are financial institutions providing finance for the micro-level businesses.
The programme, valued at K150 million, will also help mitigate the default risk that participating banks face by guaranteeing 50% of loans for SMEs.
Bailey said though Bank South Pacific, Papua New Guinea’s largest bank, was the programme’s first partner and it was hoped that when the programme was fully functioning, other banks would come on board.
IFC principal country officer Julia Brickell said SMEs were engines of job creation and growth, thus smaller enterprises made a special contribution, helping to diversify and strengthen local economies.
“They can create significant income opportunities for their workers, generate new tax revenues for government services and given the right conditions, can grow into large thriving firms,” she said.
Department of Commerce and Industry secretary Stephan Mera, on behalf of the minister, said the department was aware of the role SMEs played in wealth creation envisaged in Vision 2050.
“In doing so, on behalf of the Ministry of Commerce and Industry, and the government, we would like to express our sincere thanks to the World Bank and its subsidiaries, IFC and International Development Association for the support in developing this project,” he said.
Mera also said the risk sharing facility was not a grant by the government or the World Bank but a means to finance businesses through all partners to put into place delivery mechanism before the launching expected at the end of the year.
“Papua New Guineans must now stand up, take ownership of this programme and ensure that the mindset and attitudes of the SMEs are transformed into a systematic approach to conducting their individual business,” he said.