Caption: NDB MD Moses Liu
By MATTHEW VARI
RESPONDING to queries on the success of the government’s push to encourage the growth in the SME (Small to Medium Enterprise)- National Development Bank Managing Director Moses Liu said that the response to the drive had increase the banks lending demand beyond what they could give.
From an injection of finance by government into the state owned lending institution, to the reduction in the interest rate charged on loans, Mr Liu stated that the dilemma they were faced with was one that is positive to their task in creating business opportunities for citizens.
“NDB was selected to be the government vehicle to implement the SME stimulus package as of the 1st of January 2013 after the passing of the legislation through the government system in May 2012,” Liu said.
“What was to happen was that NDB was to reduce the lending interest rate, which was at from 18 percent down to 6.5 percent.”
“Demand is very high and for four years now we just cannot fund 40 percent of the loan requests.”
“We do not have enough funds, and we are always short by 40 percent, so the problem is a compounding one, but it is a good problem.”
He said since the drive to build that SME sector, the bank has readjusted its business goals from a profit based one to one that is more service oriented.
“We had to forego our profit motive and replace that with providing a service that was affordable for the majority of our people to give them the opportunity to participate in this SME stimulus package,” he said.
“The government has stood by its decision to support NDB, and they have done that the last three to three years with K240 million, which shows the government’s determination to encourage a broad-based growth to integrate the rural sector of the country.”
“It is working because from the K240 million that was given to the bank, most of the money has been lent out.”
He pointed out that as a condition for their loans, startup businesses are to set up savings accounts for the various business projects undertaken to encourage more saving.
“We have opened up a prerequisite for businesses to open up saving accounts,” he added.
“One of the prevailing problems in Papua New Guinea is that people do not know how to save, because a culture of saving accumulates wealth.”
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