Informal economy

Strengthening & Promoting Business Development Services (BDS) for COVID-19 Recovery in Tonga

The Tongan Ministry of Trade and Economic Development (MTED) and the International Labour Organization (ILO) signed a Memorandum of Understanding (MoU), allowing for mutual participation in the planning and implementation of the activities that will enable micro and small enterprise, particularly the informal sector to access business training, advisory services and mentoring.

Press release | Tonga | 01 July 2021
The Tongan Ministry of Trade and Economic Development (MTED) and the International Labour Organization (ILO) has signed a Memorandum of Understanding (MoU), allowing for mutual participation in the planning and implementation of the activities that will enable micro and small enterprise, particularly the informal sector to access business training, advisory services and mentoring.

“The agreed activities under this MoU compliments and adds value to government’s ongoing efforts to support informal sector businesses recover from COVID-19”, said Matin Karimli, the ILO Director for the Pacific Islands Countries. He further added that this was also a follow-up support to action the recommendations of the government led and ILO supported Rapid Assessment (RA) on the impact of COVID-19 in Tonga.

The RA revealed that two third of informal businesses indicated partial operation across the sectors - agriculture (62%), manufacturing (70%) and service (61%). The same RA also found that the impact on employee households having more than 5 members in the family was more severe in the informal businesses (80-85%) compared to formal businesses (50-55%).

In April 2021, the Government of Tonga announced its 3rd COVID-19 assistance package committing T$9.2M provided from Government budget and contributions from donor partners. The assistance included an Informal Business Support Fund, available to individuals that are currently conducting informal business activities.

“For the Informal Business Support Fund we received approximately an overwhelming 6,873 applications from the informal businesses. The RA had captured approximately 2,000 informal sector businesses”, said Ms Distaquaine Tu’ihalamaka the Chief Executive Officer of the MTED. The ILO technical staff will work in collaboration with MTED officials to target recipients of the grant, starting with creative industries and agriculture informal sector business owners. Technical assistance will be provided for capacity building, quality assurance, development of written and digital resources to support training, advisory and mentoring and MSME policy development.

The signing of this MoU also marks international Micro, Small and Medium Enterprises (MSME) day on 27th June 2021 and Cooperatives Day on 3rd July 2021. Many of the informal sector businesses fall in the micro and small category and cooperatives are very popular in the rural areas.

The ILO as lead agency for a UN Multi Partner Trust Fund (MPTF) COVID-19 Informal Economies Recovery Project will also mobilise support from United Nations Educational, Scientific and Cultural Organisation (UNESCO), United Nations Development Programme (UNDP) and the International Fund for Agricultural Development (IFAD). More information on the project ca be found at https://pacific.un.org/index.php/en/131555-un-mptf-informal- economies-recovery

For more information please contact Tevita Lautaha of MTED or  Edward Bernard  of ILO.