During COVID-19 pandemic when the economy contracted by 17.2 per cent the first businesses to be affected were the SMEs.
This was according to the Reserve Bank of Fiji governor Ariff Ali during the submissions to the Standing Committee on Public Accounts on the compliance audits relating to Micro, Small and Medium Enterprises Credit Guarantee Scheme on Thursday.
“So we all know that a number of small businesses has been closed or have been affected that’s the reality of this.
“A number of large businesses are struggling as well.”
He said when businesses were already struggling and did not have cash-flow banks had to ensure that whoever they lent to had a good credit rating. “So ultimately the people will pay so that the depositors funds are not lost out.
“So if you do not have cash flow, because of COVID, then the banks will be hesitant to lend.”
He said the guarantee scheme which was announced in the budget whereby Government would pay interest in the first two years saw a strong uptake.
“That take up has been very strong, 5500 businesses of that almost 4000 businesses are micro and small businesses.
“They all need access to credit and I think these type of facilities ultimately, is there to help.” He said ultimately the challenge for SMEs ultimately was having no collateral.
“The guarantee scheme helps because the banks will say, in the event that this SME or micro business will not be able to pay, we know, Government will pay a certain percentage.
“And what we did in the last two years and convince government is to increase the guarantee amount.
“So their guarantee amount increases from 50, to about 75 per cent. Mr Ali said one of the other areas they strongly felt which needed assistance was for women in business.
