Speaking Out
By Ignacio R. Bunye
Aug 9, 2008
During her recent State of the Nation Address, President Arroyoreported on the dramatic growth of government lendings to micro-small-and-medium enterprises (MSMEs) since she assumed office in 2001.
By asset size, micro enterprises are businesses with total assets of
not more than P3 million. Small enterprises are businesses with over
P3 million but not exceeding P15 million. Medium enterprises are
those with assets over P15 million up to but not exceeding P 100
million.
In her book "Microfinance Handbook (Philippines)", newspaper columnist
and fellow Monetary Board Member Nelly Favis-Villafuerte talks of"microcredit".
"As distinguished from microfinance, microcredit is the extension of
small loans to entrepreneurs too poor to qualify for traditional bank
loans. Microcredit is a component of microfinance. Probably the most
important component of microfinance, " Ms. Villafuerte said.
National Poverty Commission Secretary Domingo Panganiban, reported
that under the national government's SME Lending Opportunities for
Growth (SULONG) program, cumulative lendings by participating
agencies as of March 2008 reached P126 billion, a more than
thirty-fold increase since 2001.
SULONG program participants include, among many others, Land Bank,
Peoples' Credit and Finance Corporation, the National Livelihood
Support Fund, The Development Bank of the Philippines and DSWD (thru
its Self Employment Assistance – Kaunlaran (SEA-K) project, Quendancor
and non-government organizations like Joey Concepcion's Go Negosyo.
The dramatic growth of MSME lendings can be attributed to President
Arroyo's initiatives, first, to cut the lending rate by government
institutions from 12 per cent to only 10 per cent per annum and,
second, to increase the minimum bank allocations for MSME lendings
from 8 per cent to ten per cent of total bank loans.
This latter initiative later became law on May 23, 2008 with the
enactment of the Magna Carta for MSMEs.
Earlier, President Arroyo tapped my good friend, Secretary Cerge
Remonde of the Presidential Management Staff, to oversee the MSME
program. Remonde's appointment has ensured that policy gaps and
implementation bottlenecks are immediately identified and
appropriate actions are recommended to the President.
The huge strides by the national government are being matched by the
banking industry.
All in all, the banking system granted a total of P344 billion in
loans to MSMEs in 2007, approximately one-fourth of the system's total
net loan portfolio.
The Bangko Sentral ng Pillipinas itself has been at the forefront of
the move to harness the potentials of the MSMEs which, according to
BSP Deputy Governor Nestor Espenilla, account for 99.6 percent of
all businesses, 70 percent of total jobs and 30 percent of the
country's gross domestic product, making MSMEs an important driver of
economic growth.
How the BSP played its crucial role in promoting MSME lendings will
be discussed in next week's column.
(To be continued..)
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