The International Finance Corporation (I.F.C.) will invest up to USD$4 million in the National Bank of Samoa (N.B.S.) to boost access to finance for small and medium enterprises.

The I.F.C. and the N.B.S. signed an agreement last Friday to give effect to the partnership – which will see the establishment of an eight-year unfunded risk-sharing facility (R.S.F.) – to assist Samoa's S.M.E. sector with a particular focus on women-led and agriculture-based businesses. According to a joint statement issued by the I.F.C. and the Samoan bank last Friday, their partnership agreement underscored a commitment on their part to support a sector vital to the Samoan economy.

N.B.S. Chief Executive Officer Sam Swann highlighted the benefits of the partnership between his bank and the I.F.C. and the potential flow-on effects on the economy. 

“This facility, the first of its kind in Samoa, complemented by I.F.C.’s global expertise, will enable us to offer more support to these crucial businesses, which in turn will be able to contribute even more to the broader economy,” Mr. Swann said. “Moreover, this landmark investment reinforces our commitment to supporting these vital sectors, which are crucial to job creation and an important driver of economic growth.”

The R.S.F. is expected to help foster financial inclusion while also supporting the creation of thousands of jobs. I.F.C. and N.B.S. each will cover up to 50 per cent of the principal losses up to USD$8 million – equivalent in Samoan Tala – portfolio of S.M.E. loans to be originated by N.B.S. And the I.F.C. also sees this investment as marking an important milestone in its ongoing commitment to supporting Pacific Island countries in their economic recovery from the COVID-19 pandemic.

The I.F.C. Country Manager for Australia, New Zealand Papua New Guinea and the Pacific Islands, Judith Green said enabling access to finance for local S.M.E. business is critical to supporting Samoa's economic recovery. 

“The S.M.E. sector is a key component of the Samoan economy, providing jobs and making a significant contribution to growth. Hence, ensuring these businesses have access to finance is also fundamental to supporting Samoa’s economic recovery from the devastating impact of the COVID-19 pandemic,” she said. “With this investment, I.F.C. and the National Bank of Samoa are not only supporting Samoa’s economic recovery by addressing unmet demand for access to finance, particularly among women-run businesses, but importantly, we are also enabling more women to participate in the workforce.”

Limited access to finance for S.M.E.s in Samoa has diminished their contribution to growth and job creation, inhibiting the nation’s economic recovery from the impacts of the COVID-19 pandemic. At the same time, commercial banks are likely to have become more risk-averse amid an uncertain global economic outlook, resulting in tightening lending conditions for S.M.E.s and compounding tough conditions for small firms already disproportionately affected by the pandemic. I.F.C. and the N.B.S. estimate that over the next five years, as many as 340 new loans will be extended to S.M.E.s under this partnership, doubling the Samoan bank’s S.M.E. portfolio volume. 

This investment is aligned with the development plans of Samoa and the World Bank Group, of which the I.F.C. is a member, to accelerate private sector growth. These include creating an enabling environment for businesses and increasing access to finance for small businesses.