THE micro and small enterprise sector received nearly $654 million in loans from wholesale lending agencies and non-traditional government credit sources for the calendar year 2001, Government senator Aloun N’dombet Assamba has reported.

According to Assamba, this represents a 55.6 per cent increase over the previous year.

She said the total disbursement by the main retail institutions was approximately $800 million and it contributed to the creation and maintenance of over 16,000 jobs.

“Approximately $1 billion is available through the public and private sector programmes in the current financial year to provide credit to the micro and small enterprise sector, $450 million of which is for the micro sector alone,” Assamba said in her contribution to the 2002/03 state of the nation debate in the senate last Friday.

With regard to the Micro Investment Development Agency (MIDA), Senator Assamba said over its 10-year history, MIDA had disbursed a total of $730 million to the micro sector, creating 19,555 jobs. Young people in the vulnerable age group 18-30 years received approximately 30 per cent of the loans.

“In its 10 years, MIDA has raised $464.4 million, including a $100-million bond issue. This bond was oversubscribed. Over the bond’s seven years, subscribers received prompt interest payments and the bond was fully redeemed in April 2000,” she said.

Senator Assamba, who is also the junior minister for industry, commerce and technology, said while there was adequate liquidity in the private financial system, the reality was that “less than 10 per cent of the small and micro enterprises sector is successful in accessing funds from the formal credit institutions”.

She said a number of good programmes and institutions established over the years to facilitate the small business sector have run into problems largely because of poor repayment loans.

“To make a dent on this seemingly intractable problem, we have established the Credit Bureau under the Self-Start Fund. Through this bureau, the repayment records of all borrowers under Government-supported credit programmes will be provided to the various small business credit institutions who are members of the bureau,” she pointed out.

This, she indicated, would eliminate the possibility of a delinquent borrower defaulting on the obligation and then moving on to another credit institution to do the same.

The senator said there was now an agreement with three wholesalers — Trafalgar Development Bank, MIDA and Development Options — that no borrower who defaulted under one programme would receive a loan under another.

“Our strategic objective is to reform the borrowing culture in the small business sector, thus contributing to the refashioning of its image and the repositioning of the sector, which will make it attractive to the wider credit institutions,” she explained.

She stated that through the Credit Bureau, borrowers who displayed good repayment history, pride in having a triple A rating or equivalent from the bureau, high level of integrity and honesty, and pride in honouring credit obligations would be rewarded.

“It is our strategic vision that over time, the micro and small enterprise Credit Bureau will be merged with a national credit bureau involving the commercial banks,” Assamba said.