Cabinet has approved the commencement of consultations on a stand-alone legislation for new financing alternatives such as small offers and crowdfunding for Micro, Small and Medium Enterprises.
In a statement, Prime Minister Sitiveni Rabuka said SMEs in Fiji make up about 95 percent of all businesses and less than 20 per cent have access to credit from formal lending institutions.
Rabuka said while Government support and commercial bank loan products are available, there is a need to explore alternative financing opportunities to help support MSME development in Fiji.
The two additional practical alternative sources of finance for the MSMEs in Fiji, are small offers and crowdfunding.
Small offers refer to a means to allow small businesses (offeror) to raise a limited amount of either debt or equity from defined types of investors without the need for onerous and costly disclosures such as a prospectus, which is required under the Companies Act.
These investors include high income earners, and those that have links with the offeror in some way. Such offers cannot be advertised to the public.
Limiting the size and breadth of the offering provides appropriate investor protection.
Crowdfunding provides a way of raising money on an approved online platform to fund MSMEs.
There are four basic types of crowdfunding platforms which include donation-based, reward-based, debt based (also known as peer-to-peer lending) and equity crowdfunding.
The development of a small offers and crowdfunding market in Fiji has the potential to drive MSME growth by efficiently mobilising and channelling savings towards growing businesses in important industries.
Expanding alternative financing opportunities will also enhance opportunities for women-owned and women-led MSMEs, supporting progress towards gender parity in access to finance in Fiji.
A working group led by the Minister for Trade, Manoa Kamikamica, will undertake consultations on the new legislation.