Funding challenges hampering MSMEs
Access to funds remains one of the primary challenges for micro, small, and medium enterprises (MSMEs) in the country, the chief of the Bangko Sentral ng Pilipinas (BSP) said.
The MSME sector, central bank Governor Nestor Espenilla Jr. said in a speech on Monday, accounts for 99.6 percent of domestic enterprises and generates 61.6 percent of employment.
“Thus, developing, empowering, building the capacities of MSMEs and including them in the financial system, fuels the foundation of our economy as the engine for broad-based growth,” he said.
However, Espenilla said that MSME development still faced challenges despite efforts such as the Department of Trade and Industry’s (DTI) Negosyo Centers, which serve as “one-stop-shops” for MSME registration, business development and advisory services, and market exposure, among others.
“These challenges include lack of access to resources such as technology, skilled labor, and information. Today, however, we shall focus on the particular issue of financial access,” he pointed out.
In particular, the Bangko Sentral chief said that MSMEs were unable to reach their full potential because of the difficulty of securing funds. Only 6.6 percent and 9.8 percent of total loans in the banking system and total businesses comprise investments in MSMEs, he added.
“This low level of investment in MSMEs translates to capital constraints compelling MSMEs to resort to internal savings or earnings,” Espenilla said.
Citing a World Bank report, he said that 81.2 percent of Philippine enterprises relied mostly on internal funds to finance investments and only 10.1 percent used bank financing.
In response, the central bank governor announced that the BSP had forged a partnership to expand the Negosyo Center Financial Ecosystem, “which will leverage on the existing strengths, expertise and initiatives of our agencies and institutions so that we could, collectively deliver a responsive and holistic approach to MSME financing.”
The Bangko Sentral, DTI, Microfinance Council of the Philippines Inc., and Alliance of Philippine Partners for Enterprise Development Inc. signed a memorandum of agreement on Monday to make financial services more accessible to MSMEs served by Negosyo Centers.
The partnership will institutionalize information sharing and formalize relationships between financial institutions and over 900 Negosyo Centers nationwide.
The information will include available products, branch locations and key contact persons that Negosyo Centers can use to refer MSMEs to appropriate financing windows.
The agreement also covers the development of a financial education program for MSMEs.
The post Funding challenges hampering MSMEs appeared first on The Manila Times Online.