Atin Ito First Filipino Community Newspaper in Ontario
Growth, must be inclusive to be sustainable. One way of sustaining inclusive economic growth is to support micro-small-and-medium-enterprises (MSMEs), which comprise 99.5 percent of business enterprises and employ more than 60 percent of our workforce.
The many success stories of MSMEs, especially the micro entrepreneurs, tell how perseverance, resilience, hard work and the support of microfinance has expanded their businesses – and improved their lives. The success stories are many and truly inspiring – both for other entrepreneurs and the microfinance institutions. Two examples come to mind: From an initial loan of ₱4,000 for a “rolling sari-sari store,” the business of a husband-and-wife in North Luzon now includes a softdrink distributorship and a fuel station; and from a ₱4,000 loan 22 years ago for a barbecue and candied pili nut business, after many loan cycles, a woman-entrepreneur in Bicol now has six branches selling the candied nut.
We can have more successful MSMEs with the availability of microfinance which is offered by microfinance banks, rural and thrift banks, non-government organizations (NGOs), and cooperatives. Microfinance targets the marginalized, is market-oriented and founded on sound credit principles.
Not only will the successful entrepreneurs be able to give their families better lives, they will also create jobs to support business expansion, and bring progress to a community in a far-flung area.
The BSP’s Financial Inclusion Dashboard as of the first quarter of 2023 showed that there are 138 microfinance-oriented banks with 1.87 million borrowers and loans disbursed amounting to ₱27.1 billion. Outside the banking system, there are cooperatives with 9.7 million member-depositors and ₱284.4 billion in outstanding loans.
The updated data from the Microfinance Council of the Philippines, Inc. (MCPI), says its 29-member microfinance NGOs have 8.37 million active clients and a ₱76.58 billion loan portfolio as of June 2023.
To boost microfinance, Dr. Jaime Aristotle B. Alip, founder of the Center for Agriculture and Rural Development Mutually Reinforcing Institutions (CARD MRI) proposed “expanding the government’s credit guarantee program to cover the business loans of MSMEs and priority sectors, like agriculture; piloting credit guarantee programs at the level of local governments; and encouraging banks to grow their MSME and microfinance lending programs by providing incentives.”
The growth of MSMEs and their transition into the formal economy needs more support from the government. The private sector could help provide financing, build infrastructure, and pursue partnerships to promote socio-economic activities in the countryside. Consumers could help by buying local and supporting small businesses.
We could all do our part to ensure that growth is shared by everyone.
With help from the government and commercial financial institutions, MFIs could channel much-needed financing for MSMEs in far-flung areas and underserved communities. And microfinance institutions also do more than give financial assistance, it also conducts training to develop other skills such as financial literacy and organizational development.
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Credit belongs to: www.mb.com.ph
