MSMEs face challenges in Fiji during COVID-19 pandemic

Micro, small and medium enterprises (MSMEs) in Fiji face challenges in keeping afloat, especially during the COVID-19 pandemic, said Fiji’s central bank chief on Friday.

The Reserve Bank of Fiji (RBF) Governor Ariff Ali highlighted this while making a submission on the Audit Report on Compliance Audits Relating to COVID-19 in Fiji to a parliamentary committee.

Under the COVID-19 recovery guarantee scheme, the RBF has been able to assist 5,500 SMEs that were struggling to meet their financial needs.

“So if you do not have cash flow because of COVID-19 then the banks will be hesitant to lend. When you look at the guarantee scheme that was announced in the budget whereby the government will pay interest in the first two years, the take has been very strong. 5,500 businesses, of that almost 4,000 businesses are micro and small businesses,” Ali said.

Ali said when the Fijian economy contracted by 17.2 percent in 2020, MSMEs were the first to suffer, and a number of businesses closed while large businesses struggled to survive.

The RBF has lent about 350 million Fijian dollars (about 160 million U.S. dollars) to 300 customers under the Disaster Recovery Facility and 500 million Fijian dollars (about 228.8 million U.S. dollars) to 261 companies through the Import Substitution and Export Finance Facility.

MSMEs form the backbone of the Fijian economy and contribute over 18 percent of the gross domestic product (GDP) and provide employment for approximately 60 percent of the Fijian labor force even though they face challenges to their establishment and operation.

In 2015, Fijian Prime Minister Voreqe Bainimarama launched the Micro Small Business Grant (MSBG) Scheme, an initiative designed to provide grants for start-ups and assistance to new and existing micro and small businesses, of up to 1,000 Fijian dollars (about 457.6 U.S. dollars).

The grant is targeted at individuals who have particular skill sets. Beneficiaries of this scheme will be able to use the funds to overcome barriers to starting up new businesses or to boost their existing businesses.