N.Z.'s $12 million COVID-19 business injection
The New Zealand Government is investing NZ$6.9 million (T$12.4m) to help the private sector in Samoa and the Pacific recover from the impact of COVID-19.
The assistance was confirmed in a statement issued by Business Link Pacific (B.L.P.), a private sector development programme funded by the New Zealand Ministry of Foreign Affairs and Trade (M.F.A.T.), and aimed at supporting the economic growth of Pacific Island countries.
According to the statement, it states that a recent partnership between the New Zealand M.F.A.T. and B.L.P. was launched with a new programme for access to finance for small-to-medium enterprises (S.M.E.).
A recent survey of more than 360 businesses by B.L.P. on financing for S.M.E.s and the impact of the COVID-19-led downturn, found a lack of access to capital has had a severe impact on the sector in the region.
The survey found more than 90 per cent of small-to-medium-sized businesses across the Pacific have reported revenue declines.
Just under half of businesses surveyed reported closure or expected permanent closure in the future due to the effects of the COVID-19 downturn.
The B.L.P. service will be available initially in Tonga, Samoa, Kiribati, the Cook Islands, the Solomon Islands, Papua New Guinea and Fiji.
The new finance facility will enable access to capital for stabilisation, recovery and growth of viable but financially distressed S.M.E. due to COVID-19’s impact in the regional economy. The facility will offer adaptation grants, concessional loans and curated information on available S.M.E. financial services.
Adaptation grants applications are open now until the end of January 2021 via the organisation’s website.
Concessional loans for S.M.E.s will be available in the first quarter of 2021 through selected local financial institutions.
In addition to responding to the current COVID-19 downturn, the B.L.P. facility will contribute to New Zealand’s long-term strategy to achieve a stable and prosperous region in partnership with Pacific neighbouring countries and under the Pacific Agreement on Closer Economic Relations Plus (P.A.C.E.R. Plus) free trade agreement.
The trade agreement, to which Samoa is a party to with eight other regional nations, took effect this month on 13 December.
Other parties to the agreement include Australia, Cook Islands, Kiribati, Niue, Solomon Islands, Tonga and New Zealand.
Pacific Island countries face unique and historical challenges through international trade.
P.A.C.E.R. Plus will lower barriers to trade.
Its advocates say it will help participating countries create a private sector more resilient to external threats, such as COVID-19, and which is able to create jobs and increase living standards and wealth for families.
But the agreement’s critics suggest that small Pacific economies such as Samoa will be overwhelmed by the agreement’s most powerful economic signatories: Australia and New Zealand.
Under the agreement, some Australian exports will have the tariffs reduced or removed including medication, gold coin and offal to Samoa. While Australian tariffs on a range of imported products from Pacific states will be lowered or eliminated.
The largest Pacific island economies, Papua New Guinea and Fiji, declined to sign the agreement.
The Director of Business Link Pacific, Steve Knapp has said that they know that S.M.E. have long-standing problems in accessing financial services due to both demand and supply-side factors, overlain by significant gender-related issues.
“These problems have become more acute since the onset of the COVID-19 crisis and it is our hope that by launching this new service we will be able to break down some of those barriers by supporting businesses to rebuild better with the right finance and business advice,” Mr. Knapp said.
The new financing service will provide adaptation grants combined with concessional loans delivered in partnership with regional and local financial institutions, he said.
“They will also be supported by our network of business advisory services providers and in-country network representatives,” Mr. Knapp said.
Business Link Pacific hopes this new service will allow more S.M.E. to access in-country business advisory services in key areas such as financial management, information technology, continuity planning and e-commerce in order to bounce back from the pandemic.
Since Business Link Pacific was established in 2017, it has assisted over 2,500 small-medium sized businesses with online business advice, and planning and diagnostic services.
It has also facilitated 765 business advisory services subsidies, and contributed to the creation of an estimated 890 new jobs; 49 per cent which are filled by women.
B.L.P. invites S.M.E. in Tonga, Samoa, Kiribati, Cook Islands, the Solomon Islands, Papua New Guinea and Fiji to visit the website to find out more information about the grant programme.
Applications are open now until the end of January 2021. Information about new finance services will be released during the first quarter of 2021.
The Business Link Pacific team is based in Auckland, New Zealand and is currently supported by in-country partners in Vanuatu, Fiji, Samoa, Papua New Guinea, Solomon Islands and the Cook Islands.
Over 110 business advisory firms are part of B.L.P.’s network of advisors.
They have helped to create new products, supported many digital transformations, and helped many businesses through a variety of crises, including the onset of COVID-19 and helping to sustain economic growth across Samoa, Vanuatu, Fiji, Cook Islands, Solomon Islands and Papua New Guinea.