Success under the MSME Credit Guarantee Program

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Only 30 companies have defaulted under the Reserve Bank of Fiji’s Micro-Small and Medium Enterprise Credit Guarantee Scheme. This compares to the 314 companies that benefited from the program that accessed loans with an interest rate capped at 9.45%, Attorney General and Economy Minister Aiyaz Sayed-Khaiyum said.


Attorney General and Minister of Economy Aiyaz Sayed-Khaiyum. Photo: Parliament News

Only 30 defaulted under the Reserve Bank of Fiji Micro-Small and Medium Enterprise Credit Guarantee Scheme.

This is compared to 314 company that benefited from the scheme that had access to loans whose interest rate was capped at 9.45%Attorney General and Economy Minister Aiyaz Sayed-Khaiyum said.

Mr Sayed-Khaiyum was responding to opposition MP Ro Filipe Tuisawau on the update on the review of the scheme in parliament on Monday.

“In fact, it was very little even before COVID-19 and just because of COVID-19, the amount of exposure has not been $0.32 millionsaid Mr. Sayed-Khaiyum.

“Because of the guarantee, the equity requirement was also lower than normal.”

“The program has helped create MSMEs to access finance and at the same time enabled lending institutions to share some of the risk with the government and we encourage all private sector banks to do the same.”

“Furthermore, under the program, under the COVID-19 Recovery Credit Guarantee Program in the 2021-2022 Financial Budget, the government through RBF has made available $200 million to the COVID-19 Recovery Credit Guarantee program to help businesses meet their working capital.

About the program
The scheme was established in 2012 and administered by the Central Bank.

The objective of the program was to encourage and expand private sector lending to MSMEs and complement the government’s initiative to promote MSME development, investment and local business activity.

Mr. Sayed-Khaiyum said, “Under this scheme, the government guarantees the outstanding principal amount of defaulted loans which are available to all micro, small and medium enterprises with a turnover of up to $1.25 million per year.

“Following the last review in 2020, the risk-sharing agreement between the government and the lenders has been strengthened, allowing the government to increase its guarantee for 60% of the principal outstanding on loans to MSMEs in default within the limit of $60,000 by companies of 50% Where $50,000.”

“In addition to encouraging women’s participation in business and supporting the development of rural areas and traditional sectors, the government guarantee has been increased to 75% of the principal outstanding on loans in default within the limit of $75,000 for businesses on all

“MSME loans to women entrepreneurs, as well as those involved in the agriculture, forestry and fisheries sectors.”

The government pays the interest rate for the first two years and they (the MSMEs) pay no more than 3.99%.

As of April 1, 2022, Mr. Sayed-Khaiyum declared 5,471 loan applications were approved for approximately $114.7 million.

“Among the successful candidates, 47% Where 2573 are micro-enterprises; 31% Where 1,718 are small businesses; 13% Where 703 are medium-sized companies; and 9% Where 477 are, in fact, big companies,” Mr. Sayed-Khaiyum said.

“To date, the government has also paid $203 million as an interest subsidy for loans, as I mentioned earlier, covered by the guarantee scheme.

“The total cost of interest to the government on the $114.7 million approved two-year loan facility would be $9.2 million.”

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