The Asian Development Bank (ADB) has approved a landmark $9 million grant aimed at dismantling the financial barriers facing women entrepreneurs in Tonga. This initiative marks the ADB’s first finance sector project in the country specifically dedicated to supporting women-owned and women-led micro, small, and medium-sized enterprises (MSMEs).
Overcoming Collateral Hurdles
Women in Tonga have historically faced significant challenges in accessing capital. The primary obstacle has been a lack of acceptable collateral, largely due to restrictions on land ownership for women, alongside high rates of business informality.
It will unlock bank lending for women entrepreneurs to help them grow their businesses,” stated Aaron Batten, Regional Director of ADB’s Pacific Subregional Office.
A Multi-Pronged Approach
The newly established Women Entrepreneurs Leveraging Innovative Finance in Tonga Project aims to solve these issues through a combination of financial innovation and skills training:
- Risk-Sharing Facility: The project will create Tonga’s first facility of this kind, offering partial credit guarantees to banks. This reduces the risk for lenders and eases the collateral burden on women.
- Enablement Fund: This fund will offer grants designed to help informal businesses transition into “bankable” enterprises.
- Business Advisory Hub: A dedicated hub will provide tailored business development services (BDS), focusing on improving women’s financial literacy, digital skills, and business acumen.
Funding for the Future
The initiative is funded by the Asian Development Fund (ADF), ADB’s grant window for the region’s most vulnerable countries. The ADF has a strong track record; between 2021 and 2024 alone, it helped 384,000 people emerge from poverty and generated approximately 500,000 jobs across Asia and the Pacific.
