EVEN when it's just commanding 12 per cent of economic activity, the small and medium enterprises (SME) sector is still largely untapped.
The potential to growth further, Reserve Bank of Fiji governor Barry Whiteside said, was huge considering that in other similar developing countries, SMEs command up to 90 per cent of economic activity.
Mr Whiteside made the comments at the launching of the ANZ SME sector credit scheme on Thursday evening.
The scheme is in line with the government's SME credit guarantee scheme.
Under the $3million scheme, the government will guarantee 50 per cent of SME loans. The limit is $50,000 per business.
Mr Whiteside said commercial bank lending to private sector businesses stood at just over $2billion.
Of this total, the 15 largest business loans from each of Fiji's four commercial banks make up close to 60 per cent, while lending to micro businesses and SMEs account for just 8 per cent or around $160million
This means that if this guarantee is to be fully utilised, based on ANZ's 1 per cent bad loan rate for SMEs, lending institutions would have to almost double their loans to SMEs.
They would have to loan another $140m to the sector to take total loans to $300m ù the 1 per cent bad loan rate (based on ANZ's rate) would be $3m, which the government guarantees.
Mr Whiteside said commercial banks have already given around $10m in loans under the SME Credit Guarantee Scheme since the facility was introduced in January this year.
"With an interest rate pegged at no greater than 10 per cent per annum this should greatly assist businesses," the governor said.
The governor hopes that within five years, the share of SME loans would double to around 16 per cent of total lending.