Apia, SAMOA – September 1, 2020: 11:14am (RNZ PACIFIC): A United Nations report has found that while finance for micro, small and medium enterprises (MSMEs) in Samoa is accessible to many, only 50 percent of them receive the support.
The UN’s Director Trade and Investment for Asia-Pacific, Mia Mikic, said the study also identified a need to help Samoan businesses use the financial services available to them.
“Micro enterprises in Samoa do get proper access and they are covered very well. But for the small medium-sized enterprises and commercial finance or their access to the commercial finance, we find that only half of the applicants get that access.”
Mikic said one of the reasons for the lack of access was that applicants fail to submit solid business proposals.
Another reason was applicants did not have adequate collateral to offer the banks to assure the lenders about the businesses’ ability to collect the financing assistance.
Last week, the UN’s Economic and Social Commission for Asia Pacific (ESCAP) and the Central Bank of Samoa (CBS) launched the Micro, Small and Medium-sized Enterprises’ Access to Finance in Samoa Report.
Samoa’s treasurer Maiava Atalina Ainuu-Enari said the government welcomed the support from ESCAP and the UN’s Capital Development Fund (UNCDF).
Maiava said the two agencies had enabled the MSME studies to be carried out.
“This support and studies assist in carrying out the mission of the CBS in fostering a sound and vibrant financial system for Samoa’s economic development.
“We look forward to taking these up with our key stakeholders and development partners to improve access to finance for MSMEs.”
Maiava said MSMEs make up a significant contribution to economic growth and job creation across the region.
However, they often encounter difficulties in accessing finance, Maiva said, with women-owned MSMEs particularly “underserved by financial institutions due to economic and socio-cultural factors.
This report identifies several concrete recommendations to bridge the financing gap, said the UN’s Under-Secretary-General, Armida Salsiah Alisjahbana.
Judith Karl, UNCDF’s executive secretary said the report revealed there was “considerable unmet demand for commercial finance from MSMEs in Samoa, including for women entrepreneurs.
Karl said it also highlighted useful measures to address constraints such as the lack of collateral and weak business cases.
“Through our activities in the Pacific, UNCDF helps address some of these constraints by supporting MSMEs to leverage digital tools to improve and grow their businesses,” she said.
“We stand ready to continue our collaboration with ESCAP and the Central Bank of Samoa to further help MSMEs access capital and to address the devastating impacts of the COVID-19 pandemic.”
Karl said the socio-economic impacts of the Covid-19 pandemic has also reached the shores of Samoa.
In April, the World Bank approved funding of $US3.4 million to further support Samoa’s efforts to prevent the spread of the virus to the country.
The funds are in addition to the $US5.1m already delivered to Samoa for its coronavirus response in March.
The additional $3.4m is being delivered through a dedicated emergency health project, and from the Contingency Emergency Response Component of the Samoa – Pacific Resilience Project.