Lack of of funding to the National Development Bank

The Small to Medium Enterprise (SME) sector will be affected if the government does not give funding to the National Development Bank (NDB) soon to cater for loans.

That’s the blunt message from the NDB Managing Director, Mr. Moses Liu in a press conference today when highlighting that a total of K53million worth of loan is pending awaiting funds from the government to pay for over 500 customers in the SME sector who have applied for them.

“The current situation has been made worse by the fact that the government has not provided funds to NDB to lend to fully implement its SME Stimulus Package, which was launched at the end of 2012,” Mr Liu said.

On the first of January 2013 NDB reduced its lending interest rate to 6.5% to implement the government’s SME Stimulus Package to empower the growth of the local SME sector.

“The undertaking from the government is that it will provide K100million per year to support NDB to fund at this low rate; however, so far since 2013 to 2015 the bank received only K140million out of that K300million that it was supposed to provide to support this program.”

“Therefore, the government has unfortunately under funded NDB with K160million to date,” he said.

Meantime, it is now August and the government has not yet released the K50million to the Bank as appropriated in the 2015 National Budget.

“If the government does not provide adequate funding to implement the SME package then the Board and Management of NDB will be forced to review the lending interest rate in a view to revert back to the previous lending interest rate to sustain the operation of the Bank.”

The previous interest rates ranged from 10% up to 23% depending on the type of loan and security available.

In addition to this, projects like the, the SME loan, Stret Pasin Incubation Program and the full roll out of the People’s Mircobank Ltd operation will also be affected in the long run if funding is not released to the Bank.

“Therefore, I call upon the government through the Department of National Planning and Treasury, to immediately release the K50million appropriated in the 2015 budget to NDB to roll out these important projects to grow the SME sector,” Liu said.  Source: PNGFM