IFC loan to PH non-bank financial institution to benefit women entrepreneurs

MANILA, Philippines—Small enterprises run by Filipino women stand to benefit from the International Finance Corp.’s (IFC) first-ever assistance to a non-bank financing institution in the country.

In a statement on Friday (May 6), IFC said it extended a P500-million (about $10-million) loan to Esquire Financing Inc., which was the Philippines’ fourth-biggest non-bank financing institution.

“Part of its ‘base of the pyramid’ program, this is the IFC’s first engagement with a non-bank financial institution in the Philippines,” said the World Bank Group’s (WBG) lending arm for the private sector.

It said the loan would allow Esquire, which IFC described as a “market leader in the unsecured small and medium enterprises (SME) loan segment,” raise its loan portfolio and better serve women owned SMEs during and after the pandemic.

“The entire proceeds of the loan will be earmarked for on-lending to WSMEs, which have been severely affected by COVID-19,” IFC said.

“The investment is also supported by a performance-based incentive from the IFC as the implementing partner of Women Entrepreneurs Opportunity Facility (WEOF) -— a partnership between the IFC and Goldman Sachs 10,000 Women — and the Women Entrepreneurs Finance Initiative (We-Fi),” it added.

Documents showed that IFC approved this financing last April 15.

“By supporting a leading non-bank financial institution and base-of-pyramid financier amid a challenging environment, the IFC will contribute toward narrowing the financing gap in the country, especially through additional loans to women entrepreneurs impacted by the pandemic,” said Jean Marc Abrogast, IFC Philippines country manager.

“We are optimistic that the IFC’s loan to Esquire will send a positive signal, strengthening confidence in the [non-bank financing] sector, an enabler of economic growth,” Arbogast said.

“We welcome the IFC’s support at a critical time when long-term finance for non-bank financial institutions is scarce in the market. We differentiate ourselves from other [non-bank] and bank competitors by focusing exclusively on small businesses,” IFC quoted Esquire Financing chair and chief executive Rajan Uttamchandani as saying.

“The IFC’s loan will help us scale up our business and grow the WSME share of our client base to 67 percent over the next three years. This will allow us to promote market competitiveness, helping the country build back better,” Uttamchandani said.

IFC noted that micro, small and medium enterprises (MSMEs) accounted for 99.5 percent of businesses in the Philippines, and 30 percent of MSMEs were owned by women although “limited access to finance deters their growth.”

IFC said its base-of-pyramid program was aimed at “helping financial services providers deliver funding to small businesses, informal enterprises, and low-income households that have been hit the hardest by the lockdowns and economic slowdown caused by the COVID-19 pandemic.”

An IFC report last year showed that the share of sales of women-owned businesses in the Philippines fell at a faster pace in 2020 alongside the tougher times wrought by the pandemic-induced recession.

But the same IFC report had also shown that equipping Filipino women with digital skills and tools would allow them to capture a sizable chunk of Asean’s booming e-commerce industry in the next five to 10 years.

TSB