Trade and Industry Secretary Ramon Lopez said that the government planned to allot a total of P50 billion in the remaining years of the Duterte administration for the development of micro, small, and medium-sized enterprises (MSMEs).
Lopez said on the sidelines of a business launch on Tuesday that a big chunk of the budget would likely go to a financing program aimed at MSMEs, which otherwise would have fallen victim to usurious lenders or loan sharks.
The program, called Pondo sa Pagbabago at Pag-asenso (P3), eyes the 30 poorest provinces in the country, allowing MSMEs in those locations to have better access to finance, thus reducing their cost of borrowing.
Part of the budget will also be set aside for shared service facilities and international trade promotion.
This comes as the sector, despite comprising the majority of businesses today, only contributes up to 35 percent to the economy, a figure which Lopez wants to eventually raise to at least 55 percent.
Under the P3 Program, a microenterprise can borrow between P5,000 and P100,000 depending on its business need and repayment capacity with no collateral requirement.
Interest rate and service fees, all in, do not exceed 2.5 percent monthly, which is a huge relief from the 20 percent monthly rate under the “5-6” loan system, DTI said.
Small Business Corporation (SB Corp.), DTI’s microfinancing arm, accredits partner institutions such as nonbank microfinance institutions (MFIs), cooperatives and associations to serve as conduit for the P3 funds.
As of November this year, P3 has helped a total of 16,210 mi-croentrepreneurs with four national microfinance institutions (MFIs) and 90 local conduits assisting in delivering the micro-loans in the countryside. Fourty-five MFIs are in the pipeline. A total of P485.41 million has been released to partner conduits and P307.80 million released to microfinance borrowers.