THE International Finance Corporation, has partnered with Tonga Development Bank to support MSMEs and boost jobs in Tonga.
Tonga’s economy faced major setbacks – the Hunga Tonga–Hunga Ha’apai eruption which caused a tourism-damaging tsunami, and the COVID-19 outbreak in 2022..
These shocks and gaps in financial access have limited MSME growth, economic recovery, and job creation.
“TDB stands ready to offer increased support to our nation’s vibrant entrepreneurs,” said Kaho ‘o Vailahi ‘Ofa, TDB Chief Executive Officer.
“We are delighted to enter this new partnership with IFC, which follows our successful collaboration to introduce the ‘Ave Pa’anga Pau remittance service.”
IFC – which is part of the World Bank – will give TDB up to $USD3 million through its Small Loan Guarantee Program, supported by IDA and WEOF, to help expand SME lending.
IFC will also provide technical support to boost TDB’s capacity for underserved MSMEs.
“Tongan MSMEs face numerous constraints on their access to finance, stifling their potential contributions to the economy,” said Allen Forlemu, IFC’s Acting Regional Vice President for Asia and the Pacific.
“With this investment, IFC aims to help close the financing gap and promote the growth of small businesses.
“By improving access to finance, this project will catalyse MSME development, support job creation, and help reduce unemployment in Tonga.”
The risk-sharing facility aims to boost the economy by increasing MSME access to finance, including women-owned and tourism businesses.
It is expected to support job creation within SMEs through supply chains and to stimulate economic activity.