What Reserve Bank Doing to Help Small Business
An extract from Reserve Bank Governor, Sada Reddy's, address to last week's Indigenous Business Council meeting.
Now let me briefly highlight some of the work that the Reserve Bank is doing in the areas of small and micro enterprise development. Most of the work in this regard ties in with your Council’s role in developing Fijian businesses.
In April 2009, we made some institutional reforms within the Reserve Bank which resulted in the establishment of a Group called the Financial Systems Development and Compliance (FSDC) Group. One of the major roles of this Group (amongst others) was to ensure the development and provision of microfinance services to the greater Fijian community. After a little more than a year of its establishment, we have witnessed a lot of exciting developments.
From 1st January 2010, we have issued a new Microfinance Policy which requires all commercial banks to establish internal microfinance divisions and units that will serve to cater for SMEs and the
underserved. Most commercial banks have complied with this Policy and have begun to offer affordable products and services to their targeted customers.
On the same token, the Reserve Bank has, through the collaboration of various donor agencies and other players, set up a National Financial Inclusion Taskforce (NFIT) that will be responsible for
driving and promoting microfinance and greater financial inclusion initiatives in Fiji. The establishment of the Taskforce will provide a platform for stakeholders to encourage and foster sustained and
coordinated development of financial services to the poor and rural communities and more importantly expanding access to finance for small enterprises. Membership of this Taskforce includes representatives of the microfinance institutions, commercial banks, donor agencies and the RBF.
The RBF has recently introduced an Import Substitution Facility to try to assist large scale commercial agricultural businesses to obtain credit at concessional rates of interest. A total amount of $20 million is available through the scheme. New and existing local businesses engaged in commercial agriculture may access funds from the facility at a fixed rate of 6.00 percent per annum. The facility is available for a maximum loan term of 5 years and is available through the commercial banks, licensed credit institutions and the Fiji Development Bank (FDB).
The RBF has also offered a scholarship for Chef Training in Malaysia which should encourage the use of local foods in preparation of hotel menus. This is targeted at reducing our import bill and improving our balance of payments position, as well as encouraging local value adding.
Local businesses should try to seize the opportunities that are arising out of these initiatives I have just mentioned.
The Reserve Bank is also embarking on developing an effective and all-encompassing framework to guide community or village development. No doubt, there are abundant natural resources and manpower capacity in our rural areas. However, we continue to notice the lack of progress by successive authorities in developing our rural dwellers to become more economically active.
The rural area is home to about 52 percent of Fiji’s population. More importantly, most of Fiji’s key exports are rural based, providing the greatest potential for future development and prosperity, particularly in the tourism, agriculture, forestry and fisheries sectors. It is therefore important that a suitable development scheme or framework is put in place in our rural villages and communities.
Our policies do not discriminate between the nationalities of businesses. All of you have the same benefit from these policies as any other business in Fiji. You must seek these opportunities out.