THE Ministry of Cooperative and Small and Medium Enterprises is in need of about $2.5million in micro, small and medium enterprises (MSME) funding to cater for the demands in grant applications from local MSMEs this year, says deputy Prime Minister and Cooperative and SME Minister Manoa Kamikamica.
Speaking in Parliament on Government’s new and innovative approach for MSME businesses, he attributed the funding gap to excessive demands in grant applications “of up to four times more than our budgetary allocation”.
“The in-depth assessment of the MSME landscape reported that there is a funding gap of up to $2.2billion in Fiji. This demonstrates the excess demand there is for finance from the financial sector,” Mr Kamikamica said.
“In the last financial year within our ministry alone, we had received excess demand for grant applications up to four times more than our budgetary allocation. So, even this year, there is already a funding gap we can see of about $2.5m.”
To address this, Mr Kamikamica said the ministry was working on a few methods of raising funds, including working with the Asian Development Bank (ADB) and the Reserve Bank of Fiji (RBF) to develop a law that would enable alternative sources of financing to be introduced in Fiji.
He said this would be the first in the South Pacific and will enable them to undertake forms of capital raising for businesses that includes small offers and crowd funding.
“Small offers are basically where an equity-based financial modality whereby a business will have the ability to seek limited capital injection of up to $2m into a business from a limited pool of investors (up to about 48 investors) that include family, friends, and business networks.
“The second method is crowd funding, and this will be undertaken through two structures either through equity or debt-based crowd funding. Essentially crowd funding provides a way of raising money on an approved online platform to fund businesses including MSMEs.
“The RBF will be issuing licences to the online platform provider that acts as an intermediary between the business and the investors/lender. The (Access to Capital) Bill also details the disclosures or information that the businesses must provide before seeking request for funds.”
He said the Bill was presently being vetted and would be presented at the next Cabinet sitting before going through its own consultations and then presented in Parliament to be debated.
