SYDNEY, AUSTRALIA (25 October 2023) — Reskilling and upskilling of workers is one of the key measures that can help micro, small, and medium-sized enterprises (MSMEs) thrive and contribute to an inclusive and sustainable growth in Fiji, according to the Asia Small and Medium-Sized Enterprise Monitor 2023. The report by the Asian Development Bank (ADB), which focuses on the Pacific economies, looks at how small businesses can contribute to resilient growth.
In Fiji, MSMEs accounted for 82.4% of all enterprises in 2020. They absorbed 28.3% of the labor force and were responsible for just 6.3% of the country’s gross value added, whose productivity was below pre-pandemic levels. Services dominate MSMEs—covering transportation, wholesale and retail trade, and accommodation and food. Although data from 2021 onward remain unavailable, an increase of MSME productivity was expected to increase post-pandemic due to the recovery in tourism.
“Creating jobs remains a critical challenge for Fiji’s MSMEs,” said ADB’s Pacific Subregional Office Regional Director Aaron Batten. “The recent brain drain also made it increasingly difficult for MSMEs to find employees for their operations. And many employees work in the informal sector—thus unaccounted for in the data.”
Promoting business formalization is crucial for the government needs to incentivize MSMEs to join or return to the formal sector by designing business development support measures that will both add value and improve revenue conditions.
Finance is also a critical engine for business growth. MSME access to bank credit remains small in 2022, accounting for 10.9% of total bank lending and 7.7% of gross domestic product in Fiji. With subsidized loans and credit guarantees during the pandemic, bank loans to MSMEs increased sharply in 2021 to record levels. While the number of MSME borrowers increased, it has yet to return to 2015 levels, suggesting many did not survive the pandemic or reopen businesses afterwards.
Fiji has an MSME development policy administered by a central coordinating agency, MSME Fiji, which was created in 2019. The Reserve Bank of Fiji also leads implementation of the 2022–2023 national financial inclusion strategy, which includes MSME financing as one major target. To help build more resilient and inclusive growth, Fiji needs to develop more youth and women entrepreneurs, encourage digitalization, help MSMEs join global markets or export, create alternative financing options,including digital finance platforms and nonbank and market-based financing, as well as develop the legal reforms that encourage MSME formalization and ensure the availability of skilled labor.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.