a half of a century. this is too long. if we lift our growth rate to say 5 percent per year we will double the size of our economy in 20 years and that is a huge 30 year difference. if we can even grow by 8 percent per year, we can do the same in only 12 years. so the difference can be a lifetime. • the second challenge is that we need to raise our investment to over 25 percent of gdp. that ratio currently stands at 18 percent of gdp. attracting foreign investment is not easy for small nations like fiji. other countries some of which are big and richer are competing fiercely for the same investment dollar. so our task is cut out for us. we can however be more successful if we also try to incite our local people to invest more in fiji. • the third challenge is that we need to narrow the widening gap between our exports and our imports. we can do this in two ways. we can increase our exports which are not doing too well. we can also decrease imports which are rising fuelled by the increase in oil prices. to raise exports government is implementing a new national export strategy. but this will take time. in the meantime, we must try to slow down the growth of imports. the reserve bank has therefore raised interest rates. the national budget has also introduced new revenue measures that will help reduce the rate of import growth. potential for small businesses and micro enterprises the good news is that small and micro businesses can help address all the three challenges that i have mentioned. they can help the country raise its growth rate. in developing countries in asia, small and micro businesses make up the bulk of their economies, some as high as 60 percent of gdp. for those of us that have visited some of these countries in asia, we can attest to the roadsides crowded with hawkers selling all kinds of wares. in fiji we are beginning to see small businesses springing up all over the place. this is very encouraging. but it is not enough and well below our true potential. in fiji we will be struggling for small businesses to make up 10 percent of the economy. the potential in these small businesses for us is therefore huge. this sector is the answer to our jobs that the formal sector cannot provide enough of. rough estimates put close to 60 percent of fiji ’ s labour force as being involved in various forms of business that fall under the heading of small and micro enterprises. small businesses do not always stay small. they

monetary policy. government ’ s reduction in deficit, as well as the higher fiscal and excise duties on certain commodities are expected to dampen import demand. as the largest component of our imports is that of mineral fuels, the consideration of alternative sources of energy is also an important step. these measures will assist in bringing about improvements in the balance of payments. vat & the poor finally, on the budget, a brief comment on vat. as we all know, public debate on the budget has been centered on the increase in vat. this measure was put in place to help reduce the debt and at the same time help fund government development plan and social obligations. the way the debate raged, one can be forgiven in believing that vat was the target and not poverty reduction. the arguments seem to suggest that lowering vat will solve the problems of poverty. we all know that this is not true. poverty is a wide ranging issue and solutions are complex and comprehensive. vat is of course paid by everybody including the poor. while the mitigating factors that the government has introduced will alleviate the burden on the poor, the more relevant question to me is : “ what is the most effective way to reduce poverty in fiji? ” and there are bound to be more than one solution. it would have to be a package. one of the most effective components of this package should be to provide income earnings opportunity to the unemployed and the poor. in this manner, they can walk out from poverty for good and more importantly they will do so with dignity and pride. this is where small businesses have their greatest impact. starting a small business will provide basic needs such as education, food, shelter and clothing. government can then use the revenue from vat to provide access to clean water, power, sanitation and roads. this is a most effective partnership to reduce poverty. at the same time, we can do a lot to avoid paying vat. we can encourage our people to better use the resources around us like land and the sea to provide food for our families. i know from my own experience, that leisure appears to be more important than work in many of our villages. as the small business owners have shown, hard work can provide lasting answers to addressing poverty and this should be stressed as well. the importance of the sme sector tonight, i am of course talking to the converted, either to those who already are in business or to us supporters. for small business owners that are here today