The International Finance Corporation (IFC) has announced a partnership with Tonga Development Bank (TDB) aimed at supporting micro, small, and medium enterprises (MSMEs) and enhancing job opportunities in Tonga. This initiative comes in the wake of significant challenges that the Tongan economy has faced, including the devastating Hunga Tonga–Hunga Ha’apai eruption, which triggered a tsunami that severely impacted tourism, alongside the effects of the COVID-19 pandemic in 2022.
These crises have created hurdles for the growth and recovery of MSMEs, restricting access to crucial financial resources. Kaho ‘o Vailahi ‘Ofa, the Chief Executive Officer of TDB, expressed optimism about the new partnership, stating, “TDB stands ready to offer increased support to our nation’s vibrant entrepreneurs.” He noted that this collaboration follows their successful ventures, including the introduction of the ‘Ave Pa’anga Pau remittance service.
Through this partnership, the IFC, a member of the World Bank Group, will provide TDB with financing of up to $3 million through its Small Loan Guarantee Program, which is backed by the International Development Association (IDA) and the Women Entrepreneurs Opportunity Facility (WEOF). This funding aims to enhance lending capabilities for SMEs while also offering technical assistance to strengthen TDB’s support for underserved MSMEs.
Allen Forlemu, the Acting Regional Vice President for Asia and the Pacific at IFC, highlighted the pressing challenges Tongan MSMEs face in securing financing, which curtails their economic contributions. He stated, “With this investment, IFC aims to help close the financing gap and promote the growth of small businesses.” The initiative intends to elevate access to finance for various sectors, including women-owned enterprises and those in tourism, thereby catalyzing MSME development, creating jobs, and reducing unemployment in Tonga.
In summary, this partnership signifies a hopeful step towards economic recovery and resilience for Tonga. By amplifying financial access for MSMEs, the project is expected to stimulate economic activities, strengthen supply chains, and bolster job creation in the islands.
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