For Enterprising Women of Savai'i, Loans Offer Rare OpportunityBy Ian Gill  

SAVAI'I, SAMOA (1 September 2003) - Starting up a small business in the Pacific is difficult, as land is communally held and cannot be used as collateral.

It is even more daunting on the volcanic, largely rural island of Savai'i which, though larger than Samoa's main island of Upola, has a smaller population of 45,000.

Yet an innovative Small Business Development Project, supported by a US$3.5 million ADB loan and under implementation since April 2002, is enabling women to play an important economic role in a male-dominated society and, in so doing, improving lives for their families.

The project includes a pilot component to provide loans of up to 5,000 Samoan tala (US$1,600 at rate of 3 tala to US$1) for microenterprises and a guarantee scheme for small business loans up to 20,000 tala. Both are run by nongovernment organizations (NGOs).

In the village of Falealupo, in the island's western corner that still bears the scars of a devastating cyclone in the early 1990s, Lologo Alusamoa is using her skill as a weaver of fine mats as collateral.

Squatting in a modest fale (house), Lologo is threading the fine strands of a pandanus leaf to make a high quality ie ole malo (ceremonial mat), a prized gift at Samoan weddings, funerals and investitures.

The quality - and price - of a fine mat depends on the time spent making it, generally 16, 20, or 25 weeks.

However, the buyers of such mats usually reside in the capital of Apia or overseas, while the weavers live in rural areas.

To bridge the gap, the NGO Women in Business Foundation (WIBF) acts as a go-between.

"Not only do we match buyer and seller, we also protect the interests of both parties," says Rosa Me, a senior project officer for WIBF.

"I check on the quality of the mat for the buyer and, if the weaver has been tired and the stitching is not as good as it should be, I ask her to do it again," says Rosa. "I also protect the weaver against a buyer who tries to reduce the price from the one they had agreed upon."

In this case, the price is 2,500 Samoan tala for a mat that takes 25 weeks to make and Rosa pays Lologo weekly instalments of 100 tala.

This is the only cash Lologo and her husband receive and enables them to vary the subsistence diet of home-grown crops for their seven children.

"This is my fifth fine mat," says Lologo. "From the sales of earlier mats, we bought a water tank (a highly desirable item in this rainfed area) and sheets of corrugated iron to re-roof our fale. We would also like a loan to carry out house improvements, including cementing the floor."

In addition to finance, WIBF provides business counseling that includes advice to save a little each month through the NGO for emergencies.

"Saving is relatively new concept in Samoa as people generally distribute money to the church and to their family obligations and spend the rest on themselves," says Rosa.

In another village, Samauga, in a fale with pigs and chickens running around, a husband and wife - Opeta and Maima Sooalo - are seeking a loan to take their microenterprise to another level.

The pair slice and deep-fry taro and bananas and sell them as "chips" in small plastic bags. Maima's biggest market are the students at two nearby schools, but she also sells through retail stores. After deducting costs of taro, bananas, cooking oil, salt and plastic bags, the profit is around 60%.

Sitting bare-chested on a mat, Opeta says he wants to expand and improve the kitchen to be able produce more chips, and also to venture into making panikeke (Samoan pancakes), a popular breakfast food and snack.

"There is only one neighbor selling pancakes and he usually runs out of supplies by mid morning. I think we have a niche, especially at weekends," he says.

But if his profit is so high, why does he need to borrow?

Sheepishly, Opeta explains that, as one the few villagers earning cash, he is frequently approached for "loans" in addition to his faalavelave (family obligations). However, few of the loans are repaid and he is cash-strapped.

More ambitious projects are backed by ADB's guarantee scheme for small business loans of up to 20,000 tala, run by an NGO, the Small Business Enterprise Center (SBEC).

In the village of Saipipi, Folole Tofa Poasa, a jovial woman, runs a large bakery that makes cakes and pastries. After starting in "a shack" eight years ago, Flo, helped by a loan, has a staff of 10.

She found her niche in wedding cakes - Samoans love elaborate cakes, the fancier the better - for no one was making them on Savai'i and people had to order them from Apia.

Flo builds cakes up to 50 tiers high with ornamental edibles such as Bibles - open or closed - for a largely Christian clientele.

The loan enabled her to import equipment such as ovens and mixers to mechanize manual tasks, as well as decorations and water fountains.

The monthly average of three to four orders soars in the popular wedding month of December, when she once made 11 cakes in a week.

Her stable income is from pastries and she has profited from adaptability.

"I once tried to sell New Zealand meat pies at 3 tala each, but sales were slow," recalls Flo. "So I adapted it for local tastes. I made a smaller, half-moon shaped pie, included some local ingredients, and priced them at 1 tala each - now we sell more than 200 a day."

With a profit margin of 60%, Flo has made money from day one. Though others are starting rival bakeries, Flo says she will keep ahead with ever more sophisticated cakes.

In just over a year, SBEC has processed over 170 loans and some lessons have already been learned.

"Many of the early loans were approved for people to get taxis or open retail shops. However, such ventures are difficult to sustain as they are in overcrowded fields," says Leota Laki Lamositele-Sio, the Apia-based manager of the ADB project.

"People like a business that pays cash every day but after a while they feel the competition and run the taxi for longer hours or keep the store open till late at night."

Says Anaseini Vatucawada, ADB's Senior Project Implementation Officer for the project, "We are encouraging SBEC to finance a greater variety of enterprises to include fields such as mechanical work, fishing, upholstery, sewing, cattle farming, boutique or catering."

The ADB project also includes policy components to encourage more private sector activity, for example, by working on ways to use land leases as collateral, establish a system for registering personal assets such as vehicles as securities, and promoting the setting up of a credit bureau.

One cultural obstacle for budding entrepreneurs is that Samoa's hierarchical society makes the concept of service difficult to understand for some.

"If you are a chief, or a chief's son or daughter, you are used to being served and it's hard to engage in an enterprise that is service oriented," notes Leota.

Nonetheless, for many women, a loan to start a small business can open up a brave new world.