Small Business Development Project — Samoa's Loan-Guarantee and Business-Advisory Scheme for Micro and Small Enterprises

In the early 2000s, over 80% of Samoan businesses had five or fewer employees, and customary communal ownership of roughly 80% of the country's land meant most small operators lacked collateral banks would accept. Following 1996 economic reforms that recognised the private sector as the engine of growth, the Asian Development Bank approved a $3.5m Special Fund loan on 21 November 2000, the Small Business Development Project, alongside a $500,000 technical assistance grant.

The loan had four components: expanding a small-business loan guarantee scheme administered by the Small Business Enterprises Centre (SBEC) through four commercial banks and the Development Bank of Samoa; a pilot microfinance facility run with the Ministry of Women, Community and Social Development and Women in Business Development Incorporated; business advisory and training services; and policy and legislative reform to improve the small-business environment. A further $400,000 was earmarked for a venture capital fund.

By FY2006 the guarantee scheme had issued 538 guarantees (91% of its five-year target) worth ST7.1m (82% of target); after the project was extended, it reached 838 guarantees worth ST11.6m, covering ST15.8m in loans, by FY2008. In the microfinance facility's final year of operation, the Ministry of Women channelled loans to 655 women borrowers.

Despite these volumes, ADB's Project Performance Evaluation Report — based on a survey of 300 beneficiaries — rated the project's overall performance only 'partly successful': partly relevant, less effective, less efficient and less likely sustainable. The venture capital fund and a planned credit bureau proved not commercially viable in Samoa's small market and were effectively dropped, while Women in Business Development Incorporated finished with 23% of its loan balances in arrears.

An independent 2009 evaluation of SBEC commissioned by New Zealand's aid programme reached a similarly mixed verdict: a client survey found a genuine positive socio-economic impact on beneficiary livelihoods, but also noted that roughly a quarter of clients were in arrears and that a caseload exceeding 200 clients per business advisor was undermining the mentoring SBEC was meant to provide — corroborating, from an independent source, ADB's own 'partly successful' rating.

Read the full analysis: https://www.mfat.govt.nz/assets/Aid-Prog-docs/Evaluations/2009/Social-and-Economic-Impact-Assessment-of-Samoa-Small-Business-Enterprise-Centre.pdf