Philippines: Trade Dep’t to Short-list Five Microfinance Firms for P1-billion Le...
Philippines, December, 28 2016 -
The Department of Trade and Industry (DTI) will work with five leading microfinance institutions (MFIs) to allocate an initial P1 billion to micro, small and medium-sized enterprises (MSMEs), a measure intended to discourage them from tapping usurious lenders.
DTI Secretary Ramon M. Lopez told reporters that the government will select the top five microfinance institutions in the country, using their already established network to channel the funds into areas that most need it.
“We are studying now the top five microfinance institutions who have the widest networks,” he said in a media briefing on Dec. 20.
“CARD MRI is identified as one,” he said, referring to CARD Mutually Reinforcing Institutions. “They are number one, the second to fifth are still being identified. We’re still doing our homework. Anyway the money isn’t here yet,” he said.
“We’re going to channel it through MFIs because they have a network of collection. Immediately, we can issue loans.”
Apart from tapping microfinance institutions, Mr. Lopez said that the department will also look into “well-run” cooperatives.
“When we say well-run, they really have this lending system and collection, they have huge funds, and we are creating a separate program for this to support more borrowing.”
In November, Mr. Lopez said that the government is planning to release a pool of funds next year that will be lent to MSMEs, providing them an accessible alternative to usurers.
State-owned Small Business (SB) Corp., which falls under the trade department, will be responsible for distributing the funds to conduct institutions like MFIs and cooperatives.
The initial P1 billion budget, which is expected to increase in the coming years, will be available in February. The plan is to eventually fund the program up to P18 billion, or P1 billion for every region.
No specific timetable has been set yet for the increase in the budget, since the government will “have to see the success of this first.”
“We will tell the MFIs to address to the poorest provinces and municipalities. The funds should reach those places so that the marginalized can feel the assistance extended by the government.”
According to Mr. Lopez, nearly all the funds will be reserved for micro firms. Around 10% of the borrowers will be from the category of small and medium-sized firms, borrowing between P100,000 to P200,000 while the remaining “will go to the very small borrowers, the P5,000 and P10,000 type.”