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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 complements and adds value to the government’s ongoing efforts to support informal sector businesses recover from COVID-19”, said Matin Karimli, the ILO Director for Pacific Islands Countries. He further added that this was also 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 five 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 third COVID-19 assistance package committing T$9.2m provided from the 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.

The signing of this MoU also marks international Micro, Small, and Medium Enterprises (MSME) day on 27 June 2021 and Cooperatives Day on 3 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 the lead agency for a UN Multi-Partner Trust Fund (MPTF) COVID-19 Informal Economies Recovery Project will also mobilize support from United Nations Educational, Scientific and Cultural Organization (UNESCO), United Nations Development Programme (UNDP) and the International Fund for Agricultural Development (IFAD).

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