Skilled labor, finance, data support are key for micro, small, and medium-sized enterprise development in Samoa

Formalization of small businesses, reskilling and upskilling of workers, integration of digital tools and technology, economic diversification, and increasing access to new and innovative financing can create a fertile environment for these businesses to thrive and contribute to inclusive and sustainable growth, according to the Asia Small and Medium-Sized Enterprise Monitor 2023. The report, which focuses on the Pacific economies looks at how small businesses can contribute to resilient growth.

Source: Internet

In Samoa, MSMEs comprise over 96% of all enterprises. As of the end of 2022, 33.9% of MSMEs were in wholesale and retail trade, followed by transportation and communications (25.8%) and other services (26.3%), with many working in tourism-related businesses. There are no data available on those employed by MSMEs and their contribution to the gross domestic product (GDP). However, continuing emigration would worsen domestic employment condition, and reduce MSME output in the country.

“A skilled labor shortage is a critical challenge for private sector businesses, including MSMEs in Samoa,” said  ADB’s Pacific Subregional Office Regional Director Aaron Batten. “Since borders reopened in 2022, tourism has rebounded strongly, contributing to the economic recovery in Samoa. Remittances helped the recovery as well. However, the emigration to Australia and New Zealand has been increasing as workers sought jobs and higher wages. Ensuring skilled and semi-skilled workers is critical for domestic business.”

Finance is also key to boost MSME dynamism. In Samoa, commercial bank lending to MSMEs rose during the COVID-19 pandemic, backed by government financial assistance to businesses, including MSMEs. MSME loans increased by 29.8% in 2020 and by 7.8% in 2021. MSME loans outstanding accounted for 43.7% of total commercial bank loans and 23.7% of GDP as of the end of 2022, both highest over the past decade. 

Samoa’s MSME Development Policy and Strategy 2020 is the benchmark policy framework for inclusive growth. It sets strategic goals for regulatory framework development, business advisory, access to finance, enabling infrastructure, skilled labor, and entrepreneurship and innovation. The Central Bank of Samoa also promotes financial inclusion. The National Financial Inclusion Strategy 2017–2020 set six strategic priorities—focusing on access to finance; underserved segments such as women, youth, and MSMEs; digital financial services; inclusive insurance; consumer protection; and partnerships and institutional coordination. To monitor policy performance and promote evidence-based policy design, developing regularly updated data on MSMEs will be critical.