IFC invest up to US$4 million with NBS to boost access for small and medium enterprises


Under an agreement announced in early June, the International Finance Corporation (IFC) will invest up to US$4 million equivalent in Samoan Tala in the National Bank of Samoa (nbs) as part of efforts to boost access to finance for small and medium enterprises (SMEs).

The investment, in the form of an eight-year unfunded risk-sharing facility (RSF), underscores a commitment on the part of IFC and nbs to support a sector vital to the Samoan economy, particularly women-led businesses and SMEs focused on agriculture.

The RSF is expected to foster financial inclusion and help create thousands of jobs. IFC and nbs each will cover up to 50 percent of the principal losses in an up to US$8 million equivalent in Samoan Tala portfolio of SME loans to be originated by nbs.

IFC, a member of the World Bank Group, also sees this investment as marking an important milestone in its ongoing commitment to supporting Pacific Islands nations in their recovery from the economic impacts of the COVID-19 pandemic.

“This facility, the first of its kind in Samoa, complemented by IFC’s global expertise, will enable us to offer more support to these crucial businesses, and which in turn will be able to contribute even more to the broader economy,” said National Bank of Samoa Chief Executive Officer Sam Swann.

“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.”

Limited access to finance for SMEs in Samoa has significantly diminished their contribution to economic growth and job creation.

At the same time, commercial banks are likely to have become more risk averse amid an uncertain global economic outlook, resulting in tighter lending conditions for SMEs and compounding tough conditions for small firms already disproportionately affected by the pandemic.

IFC and nbs estimate that over the next five years, as many as 340 new loans will be extended to SMEs under this partnership, doubling the bank’s SME portfolio volume.

“The SME 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,” said Judith Green, IFC Country Manager for Australia, New Zealand, Papua New Guinea and the Pacific Islands.

“With this investment, IFC 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.”

This investment is aligned with Samoan and World Bank Group development plans to accelerate private sector growth. These include creating an enabling environment for business and increasing access to finance for small businesses.