The National Government through the Ministry of Commerce, Industry, Labour and Immigration (MCILI) last week signed an MOU with a number of existing and potential entrepreneurs to expand into value added production.
The MOU outlines key recipient requirements and deliverables in the scheme including project implementation, reporting, acquittal of subventions and grant funding, training, monitoring and evaluation.
The requirements also include procurement process for payment of investment capital assets or equipment which shall be paid directly to the genuine suppliers. The MOU also prevents diversion of Funds for different businesses not approved while converting equipment into cash is prohibited.
This scheme is vital to enable Micro Small & Medium Enterprise (MSME) clients transform the DCGA re-direction policy to utilize funds on business prototypes while at the same time stimulate creativity, product innovation and import substitution under the value adding and downstream processing development program.
The MOU subvention grant agreement for value added projects totaled to $2,959,022. This would fund investment sector needs of 25 projects. Coconut value adding sector with 34%, cocoa sector 14%, kava 34%, youth entrepreneurship and innovation investment portfolio with 18%.
During the process, business proposals have been appraised and evaluated by the MSME technical and evaluation committee including on site consultations with potential and existing entrepreneurs.
Verification and feasibility assessment has been done through industrial development officers in the Provinces and Ministry officials.
The appraisal matrix to further determine viability of the business proposals include clear goals that link with entrepreneurial competencies to become successful in implementation of business ideas for better returns on investment.
Furthermore, clearly stated product key features and benefits indicating competitive advantage to withstand risks through better management, marketing, operations and production and financial projection plans.
Kava recipients will sign their MOU grant agreements shortly when the tender process completes. Indicative 56% of the 25 projects are located in the Provinces and 44% in Honiara.
An amount of $3 million under this value adding program with a budget of $7,001,225.00 has been already transferred to the Development Bank of Solomon Islands for the credit line facility which was launched in 2nd September 2021.
The credit line facility is cross sectoral and targeting agri-business, fisheries sector, tourism, agro-forestry, and value added and export oriented SMEs. It provides opportunity for women economic empowerment, youth entrepreneurship and innovation.
Start-ups and existing entrepreneurs are encouraged to utilize the financial product. It offers direct funding for potential start-ups or expansion on products, interest payment support and loan guarantee. Another product line is also planned to support contract markets in the value chain between producer and buyer. Threshold is $10,000.00 – $3 million with interest rate of 8%.
The rippling effects would gradually trigger a broadened economic base to connect and create market value chain for rural informal sectors in value adding and downstream processing.
Over short and medium terms support MSMEs as the engine for economic growth to create employment, income, self-reliance and better standard of living in the urban and rural areas during this COVID 19 pandemic and to keep the economy afloat.
Speaking during the signing of the subvention grants agreement, Permanent Secretary MCILI, Riley Mesepitu said the subvention grants are meant to cater for SMEs that are not qualified to access the credit line facility under DBSI.
Mesepitu revealed that the credit line facility under DBSI is for those SMEs that are engaged in exportation.
He explained that a guarantee scheme is also in place with the Central Bank of Solomon Islands (CBSI), the scheme is to provide security for small businesses to access loans from the financial institutions.
Mesepitu highlighted that recipients of the subvention grants will be monitored to ensure they are accountable for the grants they have received.
He further added that the monitoring system of the Ministry has been strengthened with the launching of the Micro, Small, and Medium Enterprises Management Database last month.
Mesepitu also revealed that the database will not only ensure recipients have maximized the resources they have received but it will trigger the Ministry to implement coaching and mentoring programs for recipients to ensure sustainability and diversification of business undertakings.
Riley Mesepitu further pointed out that the MSME MIS (Management Information System) will capture all SMEs in the country and based on that the Ministry will find out existing and address them accordingly. Also, it is critical for better planning and decision making.
He stressed that the subvention grant recipients are part of the effort to keep the economy afloat, and that their obligation to paying taxes must be embraced rather than being shunned at.
Deputy Secretary Technical, Eric George Ongoa also highlighted that women are important partners in economic development of the country. He congratulated four women entrepreneurs who are recipients of the subvention grants as well.
Mr. Ongoa encouraged more women to take up business opportunities. Both male and female entrepreneurs can work together and make use of the opportunities provided by the government through this subvention grant.
As it has been realized from historical reviews entrepreneurs emerge from different professions with different backgrounds and invest in various businesses. But they have similar characteristics.
Involving women, youths and all working aged citizens is very vital in the DCGA’s re-direction policy with strategy to create employment and income generation for recovery and transformation of the economy of Solomon Islands.
He said investment servicing cost with 12% on value adding program has been committed for financial literacy trainings, mentoring and technical supporting services during project implementation.
The MSME recipients that have signed MOU with MCILI also received their award letters from the ministry.