PHL microfinance loans reach Php 10.4 B

By Joann Santiago

MANILA, Dec. 3 (PNA) — Microfinance loan portfolio in the Philippines continue to rise with the end-June 2015 level reaching Php 10.4 billion, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said.

In his speech during the awarding ceremony of the 2015 Outstanding Microentrepreneurs, the central bank chief said total borrowers to date reached 1.27 million.

To date, there are about 173 banks engaged in microfinance.

In the same period in 2014, there were about 1.13 million total borrowers with loan portfolio amounting to Php 9.1 billion.

Tetangco said sustained rise of domestic microfinance continued to benefit the people, with some event making their mark not just in the domestic market but overseas.

“They are outstanding because they succeed even in the face of many challenges, because they inspire, because they contribute to their community,” he said.

The continued increase of microfinance loan portfolio and borrowers in the Philippines is not new in line with the government’s bid to include more people in the formal financial system.

The Philippine Statistics Authority (PSA) defines MSMEs as businesses with fewer than 200 employees.

Republic Act 9501, or the Magna Carta for MSMEs, defines MSMEs as “any business activity or enterprise engaged in industry, agribusiness and/or services, whether single proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entity’s office, plant and equipment are situated.”

Philippines SMEs have capitalization of up to Php 100 million. It accounts for about 99.6 percent of businesses in the country and employs around four million to date.

Despite of this, the industry only contributes about one third on domestic output due to industry players’ limited funding access because of lack of acceptable collaterals, lack of knowledge on credit sources and processes, fear of dealing with banks and numerous documentation requirements.

The Magna Carta for SMEs mandates all BSP-authorized lending institutions to set aside at least eight percent of their total loan portfolio for micro and small enterprises and at least two percent for medium enterprises.

As of last June, direct loans to micro and small enterprises reached Php 187.52 billion, which was extended to 1.51 million borrowers.

The amount accounts to about 4.37 percent compliance on the mandatory lending to micro and small businesses.

Loans extended to medium enterprises during the same period totaled to Php 240.03 billion, benefited 45,099 businesses and represents a 5.59 percent compliance to the required allocation for the sector.

Banks that do not comply to the law are penalized and proceeds of the penalty are remitted to the Bureau of the Treasury (BTr).

From July to December 2014, total penalties remitted to the BTr amounted to Php 16.89 million, 90 percent of which was given to the National MSME Development Council to finance programs that would further push development of the sector.

Meanwhile, a Mindanao-based public school teacher turned nata de coco manufacturer Lydia Malot of Davao City was awarded as the 2015 Citi Microentrepreneurship Awards (CMA) national winner.

She supplies nata de coco to large canned food and juice producers in the country and will soon be exporting to other Asian countries.

The other winners are Ester Shiela Vitto from Luzon and who, along with her husband, manufacture sandals and slippers using old tires; Jordan Inalisan (Visayas) who has a special pastillas and other delicacies from Carigara, Leyte; and Maternidad Salili (Mindanao) who manufactures coil spring for some of the country’s biggest manufacturing companies.

Also, mushroom and organic rice grower Victoria Bantilan of Negros Occidental and fish breeder and knife fish trader Laarni Ditablan of Binangonan, Rizal were given special awards. (PNA)