Saving SEMEs – Manila Bulletin

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Ignacio R. Bunye

Independent micro-entrepreneurs (SEMEs) in the Philippines continue to bear the brunt of the COVID-19 pandemic. As the country remains at high risk amid the recent spate of coronavirus cases, SEMEs are struggling to maintain operations due to tighter quarantine restrictions and even abrupt changes in guidelines. Given these challenges, it would not be surprising for SEME to sound the alarm bells, signaling a desperate cry for help.

In an article titled “Impact of COVID-19 on Micro, Small, and Medium-Sized Enterprises Under Lockdown: Evidence from a Rapid Investigation in the Philippines,” published by the Asian Development Bank Institute in February 2021, researchers said said that “most MSMEs immediately lacked the funds to maintain their businesses after the lockdown. The magnitude of the working capital shortage was most severe in small businesses.

At the time of the survey, the study found that there were 43.8% of microenterprises, 23.2% of small and 3.9% of medium-sized enterprises with no money or savings. In addition, 61.4% of medium-sized enterprises, 53.1% of small and 37.8% of micro-enterprises indicated that they would run out of funds within a month.

Given this scenario, BPI Direct BanKo, the microfinance arm of BPI, recently signed a memorandum of understanding with the International Finance Corporation (IFC) to identify opportunities to improve and expand the products and services it provides. offers to independent micro-entrepreneurs.

BPI Direct BanKo President Jérôme Minglana said that microenterprises contribute enormously to the local economy, accounting for 89% of businesses and 30% of jobs. However, they have been disproportionately affected by COVID-19 due to factors such as lack of financing options and heavy reliance on domestic demand.

With this landmark partnership, IFC will support BPI Direct BanKo in the development of additional lending products, the digitization of existing processes and services, and the development of additional credit rating cards.

“The difficulties of accessing credit for micro-entrepreneurs and granting credit to lenders like BanKo have been further exacerbated by the pandemic,” Minglana said.

But instead of being discouraged by these developments, Minglana said that BanKo is even more motivated to provide financial products and services to the unbanked and underbanked by innovating and partnering with IFC, who is also an avid supporter. supporter of micro-entrepreneurs and businesswomen.

“We are confident that IFC’s technical expertise and global experience will help BPI Direct BanKo develop and implement relevant products and services that will benefit Philippine SMEs in the short and long term,” he said. he declares.

Financial inclusion

Under the agreement, the partnership would also help advance the digitization of banking and further promote financial inclusion in the Philippines.

Under this plan, SEME will be able to access a range of products and services more easily, with the added benefit of new digital processes that will be introduced. This will be part of a new loan growth strategy for BPI Direct BanKo which will not rely heavily on physical office expansion. The project is also supported by the Australian and Japanese governments, as well as the Women Entrepreneurs Finance Initiative (We-Fi).

Jean-Marc Arbogast, IFC Country Director for the Philippines, also said women have been disproportionately affected by the pandemic, as more than half of the country’s MSMEs are headed by women.

IFC looks forward to a larger rural footprint for BanKo through capacity building in risk assessment and digital lending, a catalyst for inclusive recovery from the pandemic.

BPI Direct BanKo plans not only to expand its products and services and make them easily accessible to SMEs, but also to develop an enhanced credit scoring model using IFC’s global knowledge and experience. This strengthened model will allow BPI Direct BanKo to make more informed and strategic decisions regarding credit risk and, ultimately, to offer SMEs better access to financial services.

With more innovative partnerships like this one in the banking sector, there will be fewer SMEs ringing the call for deliverance, and more microentrepreneurs will thrive, with optimistic expectations for better days to come.

How the bank changed during the pandemic

In a recent interview conducted by veteran journalist Roby Alampay, Bank of the Philippine Islands (BPI) Chairman and CEO Jose Teodoro “TG” K. Limcaoco said this about how the pandemic has affected the banking industry:

“Obviously people are so comfortable with digital now…. Second, because of the pandemic, people now have a greater awareness to save and save smartly, to invest. (Third,) people look for value for what they do… that’s why we have to offer the best products or the best service. And fourth, today’s customers are more willing to engage, to talk, and to make their feelings known, and we need to understand that.

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