MANILA, Philippines—Government financial institutions and nongovernment organizations are not exactly strangers to each other, but neither can they be called great friends.

That was the case with Development Bank of the Philippines and the Philippine Development Assistance Program, an NGO devoted to poverty alleviation.

PDAP was aware that DBP had been extending loans to small and medium-scale enterprises and development agencies, while the financial institution recognized PDAP as a competent nongovernment organization that had been making a difference in the fight against poverty.

But it was not until the two institutions got together in 2006 to support the development of the muscovado, organic rice and seaweeds industries that they forged a partnership that was destined to change the way NGOs and GFIs work together for a common purpose.

Perfect match

Through this partnership, partner organizations of PDAP get access to development loans of DBP that are coursed through its microfinance unit, assuring them of the extra capital they badly need to expand their enterprises.

It is a match made in heaven, says DBP microfinance unit head Romy Carandang, because DBP is able to fulfill its mandate to help spur development of vital industries in the countryside through loans at competitive rates while helping raise the incomes of communities that PDAP serves.

PDAP, meanwhile, is able to take a giant step closer to strengthening the capability of its supported organizations to expand their reach, particularly to the farmers’ groups who need the extra income.

And because PDAP has done its work in getting the business entities ready and able to take on the responsibility of paying the loans, DBP is able to get its money back to continue lending to other SMEs.

Carandang said DBP’s relationship with PDAP started in 2006 when it was invited to attend a number of meetings and discussions on the PRIME program and the industries that it covers.

“We observed during those meetings that PDAP was really working hard to promote the three commodities. And it so happened that we were also promoting a lending program on high value crops. So we had an immediate meeting of the minds,” Carandang said.

Not long after, DBP and PDAP sat down to discuss how they can partner on projects since the two institutions shared the same objectives—poverty alleviation, promotion of sustainable agriculture and the growth of high impact industries.

“Our unit is specifically involved in high risk, but high impact projects. We are there in areas where commercial banks do not want to enter into. It so happens that PDAP is also in those areas,” Carandang said.

The first fruit of those lengthy discussions is the extension early this year of a P5-million loan under the One Town One Product window to the Sitangkai Exports Corp., which is at the forefront of efforts to expand the profitable seaweed industry in Tawi-Tawi.

“The loan has been fully paid and we are now working on another loan for them,” Carandang said in an interview.

The Sitangkai loan was quickly followed by an P11.5-million development loan to the Sultan Kudarat Muscovado Farmers and Millers Cooperative, which has been instrumental in catapulting Sultan Kudarat among the top muscovado producing provinces in the Philippines.

Borrowers backed

In both instances, PDAP endorsed the borrowers for consideration by DBP, putting its reputation behind the capability of the two groups to put the money into good use.

Carandang said that because DBP is confident in PDAP, it did not hesitate to extend the loans. It was also encouraged by the fact that Sitexport and SKMFC did meet all the financial requirements and standards set by the bank.

“We use the same standards in evaluating the applications of the groups that PDAP endorses. And because these groups have already been prepared by PDAP, our evaluation process is shortened,” he explained.

Carandang noted that these groups already have the proper financial documents, including a business plan and cash flow analysis.

What’s more, there is a ready and growing demand for their products so the probability is high that these groups would have more than enough cash to pay their loans.

This makes DBP confident of lending more money to these growing enterprises, especially as the lending units have a marching order from DBP president Reynaldo David to go to underserved areas, especially those in Mindanao, to help spread economic development to the countryside.

Carandang said it was unfortunate that DBP and PDAP only got together in the latter part of the program to promote organic rice, muscovado and seaweeds, which is funded by the Canadian International Development Agency, for the two would have been able to do so much more.

Nevertheless, the two groups are confident that their relationship would only get stronger as they explore more groups and industries.

“We do have a common objective, which is to do something for our country. We do not even have a memorandum of agreement, just a meeting of minds and hearts,” Carandang said.