International Finance Corp. (IFC), the World Bank’s private sector investment arm, seeks to help perk up farmers and small agribusinesses in the Philippines through a partnership with thrift bank CARD SME Bank.
IFC and CARD SME signed a cooperation agreement to expand agricultural lending, to help improve farmers’ and small agribusinesses’ incomes and enable them to benefit from the Philippines’ economic growth.
“CARD SME Bank, the first Philippine bank to be tapped for IFC’s agri-finance program, sees great opportunities to help increase the incomes of farmers and agribusinesses,” said bank chair Jaime Aristotle Alip in a statement.
“The bank will be working to increase farmers’ access to credit and improve investments in the underserved agriculture sector,” he added.
“The partnership would allow agribusiness players, especially farmers, to grow their businesses and pursue other opportunities that would normally be beyond their reach,” said IFC resident representative Jesse Ang. “They can have better access to resources and agricultural inputs, which will improve their productivity and profitability, and increase their participation in the country’s economic development.”
IFC advised CARD SME Bank on expanding lending to micro, small and medium enterprises. In the first five months of 2013, the bank served more than 134,000 smaller businesses and disbursed loans exceeding P884 million.
Agriculture accounts for 36 percent of the country’s total employment and 11 percent of its gross domestic product, but farmers and agribusinesses received 4.65 percent of total lending by banks as of 2012, underscoring a need to improve access to credit for the agricultural sector. Poverty among farmers and fishermen is three times higher than that in other sectors.
The farm sector’s growth slowed to 2.9 percent in 2012 from 4.9 percent in 2007, thus highlighting the need for an agri-financing program.
IFC’s agri-finance program is supported by the Canadian government.
Based on its website, CARD SME Bank has P911 million in assets. It has a repayment rate of 99.2 percent on its lending program and a return on equity of 13.7 percent.