PNG SME Risk Sharing Facility

completed

The Government of Papua New Guinea (“GoPNG”) has concluded that promoting and supporting the small and medium enterprise (“SME”) sector in the country would create more job opportunities, as well as diversify the country’s economy. PNG has one of the lowest SME densities in emerging markets, and only 1/3 to 1/2 of all SMEs are active businesses. PNG ranks 136 among 180 countries in the “Ease to Get Credit” category of IFC’s “Doing Business 2010” report, and SMEs feel these restrictions the most. The proposed transaction is a SME risk sharing facility (“RSF”) in PNG to broaden access to finance for the SME sector through a 50% risk sharing by IFC of Bank of South Pacific’s (“BSP”) SME loan portfolio. The RSF is an element of a larger joint initiative between IFC, IDA and GoPNG which aims at bolstering the country’s SME sector in light of increased economic activities in PNG. Apart from the RSF, this initiative also includes advisory services designed and financed by IDA for the GoPNG, for SME sector capacity building, and for SME capacity building for BSP.