PNG: A ‘cold, clear’ business opportunity
Fefem Makana Merchants, a family-run enterprise in Port Moresby, transformed from an informal business into a successful structured business entity with the support of a local business advisor.
Inspired by her children’s observation, Iga Vagi saw a market gap: micro-businesses selling cold water in the sweltering climate of Port Moresby needed a means to keep their products cool.
With this idea in mind, Iga and her family invested in an ice machine and a second-hand vehicle to deliver ice to local vendors. However, it soon became apparent that the demand extended beyond roadside vendors. To address this broader market, Iga formalized her business by registering it and planning an expansion beyond Port Moresby.
Iga explains, “We thought it would be a good idea to take our ice to the highway villages in Central Province, linked to Port Moresby by road. The problem was that our vehicle was unreliable, and we couldn’t afford another, so we were stuck and unable to grow our business.”
Despite the clear demand, this significant logistical challenge was stalling their growth. Her plan to unlock the business potential was to apply for a Business Link Pacific (BLP) Support Grant, which she could use as equity for a bank loan to purchase a new vehicle. Making contact with BLP, Iga was connected with Asing Bogomos of Melton Consulting, an SME advisor in the BLP Network.
To become a BLP approved partner, business advisors in the BLP Network go through a competency-based assessment process that ensures that advisors provide good quality services to SMEs and understand the particular challenges faced by the SMEs in the Pacific Islands.
Asing guided Iga through the application and verification process for both grant and loan and helped compile the required documentation. Iga comments, “The financial application processes are challenging, and I simply didn’t have the necessary business skills or confidence; without Asing’s assistance, I may not have seen the process through.”
A significant hurdle for SMEs is creating a coherent business plan. With Asing’s help, Iga was able to do this. This plan was instrumental in securing the loan from Kina Bank, as it demonstrated the business’s potential and credibility.
Iga says, “A major benefit of the application process was having Melton Consulting’s assistance to develop my business plan. This really helped to clarify how I wanted the business to grow, not just next year but in the years to come.” With the BLP Grant used as collateral and a new and clear business plan, Fefem Makana Merchants was ready to access formal finance for the first time, expand their market and improve their operations.
“Seeing that my business had received support from BLP and that we also had a relationship with Melton Consulting meant Kinabank took our proposal seriously. We now had the capital and documentation we needed to apply for a loan.”
With the new vehicle, Fefem Makana Merchants experienced a substantial increase in sales. “Alongside our 50+ informal customers, in the first two months after purchasing the vehicle, we made five new customers who each ordered 20 bags of ice. We have now secured partnerships with five trade stores in neighbouring Central Highland villages to distribute and resell our ice. This is a significant milestone for Fefem.”
The reliable transportation allowed them to expand their market to include fishermen, informal markets, and sporting events requiring ice baths. “We can now go direct to our customers rather than customers coming to us.” The business’s success has spurred further growth plans, and the irony is not lost on Iga.
“What started as a throwaway comment from my children that we need ice in our drinks has become our main income source. Despite not having a background in business at all, I feel much more confident and in a much better position to access finance in future, and I will use Melton Consulting to assist with this when the need arises.”
Asing adds, “It is particularly hard to be a woman in business in PNG, so it has been very satisfying to be able to use my knowledge and skills to smooth the way for Iga. It’s exciting seeing the difference the new vehicle makes to her business, and to Iga personally.”
BLP facilitates access to business advisory services and financial support. To start your journey with BLP, you can self-assess your needs by using the free online tools available to help small- and medium-sized businesses diagnose areas in their businesses that an advisor could improve.
The first step can be the online Business Health Check. You can also check your business’s resilience to respond to crises or climate change challenges on the Business Continuity Planner and the Climate Action Sensor. If you prefer to meet a local BLP representative in person to discuss your business, get in touch with our local partners to arrange a face-to-face Diagnostic.