South Pacific Project Facility (Phase III)

pending

The project South Pacific Project Facility (SPPF III), is a proposal for the second extension of the South Pacific Project Facility (the SPPF or the facility), for another five-year period: namely, from 2001 to 2005. SPPF is a technical assistance project established in 1990 by the IFC and with financial support from various donors. The mission of SPPF is to assist and accelerate the development of productive, self-sustaining small and medium-sized private sector enterprises (SMEs) in IFC''s Pacific Member Island Countries (PIMCs). In recognition of the facility''s important contribution to business development in the region, the first SPPF extension was approved in 1995 for a five-year period up to December 31, 2000.Under SPPF III, the facility will pursue the two-fold strategy: (i) to continue to provide direct investment assistance to entrepreneurs; and (ii) to broaden support to SMEs directly and indirectly by introducing, with the SME Department’s support, new products and services, utilizing e-business opportunities, thus creating a comprehensive system of small business promotion. To this end, the facility will deliver the following expanded program activities:A. Enterprise Level Support - through (i) assistance to enterprises in project preparation, in project structuring, and in raising financing; and (ii) broader technical assistance programs to help individual enterprises overcome internal capacity constraints for their development. B. Capacity-building Work and Indirect Assistance by (i) creating sustainable local capacity to deliver SME support services through the strengthening and further development of local agents, consultants, and institutional strengthening targeted at business and industry associations; (ii) promoting financial sector development, focusing on institutional strengthening of funding source and capacity building of financial institutions, through transfer of modern lending techniques (such as cash-flow based loan screening and evaluation systems, risk management and client tracking systems), introduction of new information management systems, and new financial products and services tailored to the SME needs; (iii) expanding access to information technology by engaging the private sector, donors, and investors in determining the best way to facilitate the use of the Internet-based technologies in accessing market and business information, and in delivering Internet promotion training; and (iv) cooperation and contribution to policy dialogue with donors, World Bank and IFC.IFC has taken the lead in designing, funding and managing SPPF. The facility is headed by a Regional Manager, who is a senior staff member seconded from the IFC. IFC provides general administrative and operational guidance (through the SME Department), funding support (through both SME and IFC Trust Funds Departments), technical inputs (through the Industry and Specialists Departments), resource management support (through the Human Resource Department) and back-office accounting (through both the World Bank and IFC Controllers Departments). In addition, the SME Department provides the link between SPPF and IFC, and coordinates SPPF''s operations with other regional development initiatives in the Bank Group. This relationship gives SPPF access to IFC''s unique expertise in small business development and ensures cross-fertilization, through transfer of knowledge and best practices, among the existing facilities and other SME programs in the Bank Group. The IFC’s ten Pacific Islands Member Countries (PIMCs) are relatively small, open economies with limited diversification and institutional capacity. They are vulnerable to external economic and environmental shocks, and have limited or non-existent access to global capital markets. Despite very high inflows of aid, economic performance in the PIMCs has been modest and varied considerably across the countries. The structure of PIMCs’ economies reflects domination of the public sector and the role of private sector has remained small. Apart from being crowded out by the government, the private sector has also been constrained by lack of human capacity, difficulties in obtaining secure access to land due to traditional land tenure practices, and difficulties in obtaining access to finance. In addition, the remoteness and isolation of the countries from major centers of trade and commerce makes it more difficult to compensate for the limited domestic markets. High transportation and infrastructure costs limit business opportunities. Through its activities for enterprise level support, capacity-building, and dissemination of best practices, SPPF will continue to work towards alleviating these constraints to private SMEs development. In addition, the facility will continue to build a sustainable local capacity to deliver the type of services SPPF would be providing.