Reserve Bank of Fiji Governor Ariff Ali has expressed his firm endorsement for the introduction of peer-to-peer lending legislation, emphasizing its potential to enhance financial access for small and medium-sized enterprises (SMEs). He pointed out that this innovative funding model has already demonstrated its effectiveness in various regions, particularly in Asia, where businesses have relied on it even before the COVID-19 pandemic emerged.
During his remarks, Ali highlighted the crucial role of peer-to-peer lending platforms during the pandemic, noting how they became vital as traditional funding sources became scarce. “We feel that this is something that we should have implemented some time back,” he remarked, noting that businesses in Asia found significant support from these platforms, especially amidst the funding challenges posed by the pandemic.
Ali underscored the widening gap between larger corporations and smaller businesses regarding capital raising opportunities. Major firms have the option to secure loans from banks or turn to the stock market, avenues that are often unattainable for smaller enterprises due to stringent requirements. “The large corporations today can go and borrow either from the banks or they can go to the stock market,” he explained, emphasizing the formidable barriers for smaller firms to engage in such activities.
The proposed legislation aims to specifically address these disparities by providing a framework tailored for small and medium enterprises which often struggle with conventional financing criteria. Ali asserted that similar peer-to-peer lending initiatives have successfully existed in various countries for this reason, adding, “What we want to do with this law is specifically target small and medium businesses.”
The Reserve Bank of Fiji is hopeful that an effectively regulated peer-to-peer lending framework can broaden access to finance, bolster entrepreneurship, and enhance economic resilience, particularly during challenging financial times. By addressing the funding gap faced by SMEs, such legislation could pave the way for a more equitable financial landscape and foster a vibrant entrepreneurial ecosystem in Fiji.
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