Asian Development Bank applauds Solomon Islands for passing the Secured Transactions Act, which makes it easier for its people to access business loans from commercial banks.
ADB supported the drafting of the bill which was prepared following extensive local consultations."Secured transactions covered by the new law are loans backed by movable assets such as boats, cars, or farm equipment to help people secure a loan to help start or grow a business," says ADB's Senior Private Sector Development Specialist Winfried Wicklein.
Access to finance is a major constraint to economic growth in Solomon Islands. The law will effectively lower lending risks and bring down transactions costs.
"As a general rule, borrowers can expect better loan terms such as larger amounts, longer tenor, and lower interest rates if their loans are backed by collaterals," says Mr Wicklein.
The law is part of a larger regional effort by ADB to improve access to finance. Other ADB-supported secured transactions reform initiatives are being implemented in Marshall Islands, Palau, Samoa, Timor Leste, Tonga, and Vanuatu. Rural and microfinance related efforts are underway in Papua New Guinea, Samoa, Timor Leste, and Vanuatu.
ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 67 members - 48 from the region. In 2007, it approved $10.1 billion of loans, $673 million of grant projects, and technical assistance amounting to $243 million.