Missing piece to inclusive growth: MSME development
Sen Bam Aquino INQUIRER.net file photo
The Go Negosyo Act may not be at the top of our minds right now with all the details of the pork barrel scam capturing our attention. But allow me to explore other worthwhile news.
It was only 10 years ago when it was normal to see a headline declaring the Philippines as the sick man of Asia.
These days, headlines about our country in recent years include: the next economic tiger, the new breakout nation, Asia’s rising star.
But we still have a long way to go.
Many of our countrymen are still deep in poverty without access to basic services. Our unemployment and underemployment numbers remain high and unacceptable. And just one natural calamity can bring those recently graduated out of poverty back to extreme need.
In my years as a social development worker and social entrepreneur, we have seen two specific ways that can lift people out of poverty: trabaho at negosyo, or jobs and enterprise.
Take the case of the Kalasag farmers of San Jose, Nueva Ecija. Composed of farmers from Barangays Kaliwanagan and San Agustin, they now directly supply onions to Jollibee, the country’s biggest fast food chain.
It was not easy at the beginning. Production was inconsistent and they had a hard time selling their onions to markets. They had to deal with different kinds of traders for a fair price even if they had no background in negotiating or accounting.
In 2008, their lives changed for the better when they partnered with Catholic Relief Services (or CRS) for training in financing, running a business, and modern farming techniques. CRS as a non-government organization served the role of a social entrepreneur that organized the farmers while teaching them the building blocks for a start-up business.
After that, about 60 farmers from Kaliwanagan and San Agustin (Kalasag) established the Kalasag Farmers Producers Cooperative. With the help of the local government, they were given the opportunity to directly sell their harvest to Jollibee’s commissary. Soon after, national government agencies such as the Department of Agriculture, and the Department of Trade and Industry plus the microfinance organization Aski contributed their own expertise as well.
From 2008 to 2009, the Kalasag farmers sold 60,000 kilos of onions. Their output rose to 236,000 kilos in 2010 and 245,000 kilos the following year.
Now, some of these farmers have their own motorcycles or tricycles, and houses made of concrete. Some of their children have now graduated from college.
When the Kalasag farmers had access to the 3 Ms of Market, Mentorship, and Money, they were able to start a sustainable business and generate jobs. The first M or Market was access to Jollibee as the direct buyer of their onions. The second M or Mentorship was through the capacity-building programs of CRS who mentored the farmers especially when difficult problems arose. The third M or Money was access to financing: first as seed capital via Jollibee Foundation, then second as microfinance via Aski that helped ensure financial sustainability for the Cooperative.
Going around the country talking to many entrepreneurs and farmers, we can say that variations of this proven model also work in other provinces with our office supporting sustainable inclusive business pilots with cacao and coffee communities. Jollibee has even led the way by gathering other corporations and non-government organizations into a nationwide Farmer Entrepreneurship Program.
So the next question is: How might we take these pockets of success to scale?
This is why we authored and sponsored the Go Negosyo Act. This piece of legislation aims to help Filipinos build more businesses and generate more jobs.
Micro, small, and medium enterprises (or MSMEs) account for 99 percent of all the businesses in the Philippines and they generate 66 percent of all jobs. Linking them to larger markets with the right support systems is the missing piece that will ensure our better-than-expected growth that will benefit everyone.
Building on pro-MSME laws such as the Barangay Micro Business Enterprise Act and the Magna Carta for MSMEs, the Go Negosyo Act mandates the Department of Trade and Industry (or DTI) to work with local government units to establish Negosyo Centers in all provinces, cities and municipalities.
Negosyo Centers will serve as government’s frontline service providers to ensure that entrepreneurs have access to the three Ms of Market, Mentorship, and Money plus other already-existing support programs for start-up businesses.
This will also mean that ease of doing business does not only include one-stop registration services with government but also all other equally important components of running a business—from finding financiers and markets to developing products and services. The ultimate goal is to have Negosyo Centers that actually talk to each other and connect key partners from one province to another and even to opportunities abroad.
More than just being a physical space for DTI to serve entrepreneurs, the Negosyo Center shall be the catalyst for collaboration among community members including the academe, local government units, the microfinance institutions, government financial institutions and commercial banks, farmer and fisherfolk groups, civil society organizations, and big business.
Much like the experience of the Kalasag farmers, this will not be easy at the beginning, but nothing worthwhile ever is. Other countries like Taiwan, Japan, and Korea have shown solid comprehensive programs for MSME Development, so learning from our neighbors’ experiences will hopefully ease any difficulty curve.
Growth needs to be felt in more places in the Philippines and not just in the malls and skyscrapers of Makati and Ortigas. In the end, the push for inclusive growth, for jobs and income opportunities for our countrymen, is more than just an economic strategy; it is a moral imperative and the foundation for a more equitable and just society.
For this to work, we need one more M: Mindset. We need to change the mindset of our community members to be more entrepreneurial, as in the case of the Kalasag Farmers. We need to change the mindset of government to act as service providers and not just as permit-givers. We need to change the mindset of entrepreneurs and big business to shift from just looking for the lowest price and most convenient purchase to recognizing that they have a role in developing communities, much like Jollibee.
Many naysayers will say that the Filipino mind is set in a mendicant mentality but in my many years as a social entrepreneur, I have seen that with the right programs, support systems, and opportunities, a poor Filipino can become a successful entrepreneur with renewed dignity and able to provide for his or her family.
The Go Negosyo Act is our attempt at scaling the already-existing success stories of thousands of Filipino micro entrepreneurs who have succeeded with minimal government support. With government as partner and enabler, we want to see these thousands become millions.
(The author is the principal author of the Go Negosyo Law. He also chairs the Senate Committee on Trade, Commerce and Entrepreneurship.)
