The International Finance Corporation (IFC), part of the World Bank Group, has partnered with Tonga Development Bank (TDB) to support the growth of micro, small, and medium enterprises (MSMEs) and create jobs in Tonga. The partnership comes as Tonga continues to recover from major economic shocks, including the Hunga Tonga–Hunga Ha’apai volcanic eruption and the COVID-19 pandemic, which severely impacted tourism and strained local businesses. Limited access to financial services has further constrained MSMEs’ ability to contribute to economic recovery.
Under the partnership, IFC will provide TDB with an unfunded risk-sharing facility of up to USD 3 million equivalent in Tongan pa’anga through its Small Loan Guarantee Program. This financing, supported by the International Development Association’s Private Sector Window and the Women Entrepreneurs Opportunity Facility, will enable TDB to expand its SME lending. In addition, IFC will provide technical assistance to strengthen TDB’s capacity to serve underserved MSMEs.
The risk-sharing facility aims to expand access to finance for MSMEs across Tonga, including women-owned businesses and enterprises in the tourism sector. By facilitating increased lending, the initiative is expected to stimulate job creation both directly within SMEs and indirectly through supply chains and broader economic activity.
TDB Chief Executive Officer Kaho ‘o Vailahi ‘Ofa highlighted the bank’s readiness to support local entrepreneurs and expressed enthusiasm for the partnership with IFC, which builds on previous collaborations such as the ‘Ave Pa’anga Pau remittance service. Allen Forlemu, IFC’s Acting Regional Vice President for Asia and the Pacific, emphasized that improving access to finance will help close existing gaps, catalyze MSME development, support employment, and reduce unemployment in Tonga.
The partnership underscores IFC’s broader mission to leverage private sector solutions to promote economic development in emerging markets. Through initiatives such as the IDA Private Sector Window and WEOF, IFC seeks to de-risk investments in fragile economies and expand opportunities for women entrepreneurs, fostering inclusive growth. Tonga Development Bank will implement the program while continuing its mission to advance Tonga’s economic and social development through prudent banking services.
