Academe, Private Banks, Government join SMEDSEP to Intensify Access of SMEs to Credit  

Quezon City, June 6, 2007. The University of the Philippines through the Institute for Small Scale Industries (UP-ISSI) signs an Agreement today with the German Development Cooperation - Small and Medium Enterprise Development for Sustainable Employment Program (GTZ-SMEDSEP) to institutionalize SME finance trainings for rural banks and thrift banks in the Philippines. Supporting this initiative to further intensify lending to the small and- medium-sized enterprises are the Small Business Corporation (SBC), the Rural Bankers Association of the Philippines (RBAP) and the Chamber of Thrift Banks (CTB).

This alliance is a manifestation of commitment by various sectors to further contribute towards addressing SME’s lack of access to financial services particularly credit. This is consistent to the efforts of the Philippine government to do the same under the SME Development Plan.    Under this partnership, SMEDSEP will pass on to UP-ISSI the technologies on the provision of credit by rural banks and thrift banks to the SME sector. A particular technology at hand is the use of information-based lending approach as a substitute to the traditional collateral-based lending of banks. This technology is expected to encourage more banks to intensify lending to SMEs on the basis of business viability thereby making collateral requirements only secondary consideration in providing loans. SMEDSEP, on the process of handing over the technologies, shall implement a series of trainer’s training to capacitate a pool of accredited trainers. The university is expected to commence the roll out of the training program on September this year. Visayan banks, being the program area of SMEDSEP, shall be the main target of the training program.

From right: Benel Lagua, SBCorp. President and COO; Ruperto Alonzo, UP-ISSI Director; Sergio Cao, UP Diliman Chancellor; Martina Vahlhaus, GTZ-SMEDSEP Manager; Dante Portula, GTZ-SMEDSEP Finance Adviser; Sonia Aguino, UP-ISSI Deputy Director. Other signatory (not in the photo) is Emmanuel Guina, RBAP Executive Director.

Other banks in the country shall follow as the capacity of UP-ISSI increases. 

SBC on its part is ready to support the banks by providing more funds for relending. Aside from its regular loan products, SBC is also managing  wholesale funds for the German Development Bank (KfW) especially catering for long term loans of SMEs.

The RBAP and CTB shall also help UP-ISSI in the marketing of the credit technologies to its member banks. At the later stage of implementing this fee-based training program, UP-ISSI will also come out with coaching services to assist the banks in the implementation of these credit technologies.

As of this writing, an international SME finance expert commissioned by SMEDSEP is providing technical assistance to the university in launching the training of trainers and also planning for the initial roll out of the trainings to the banks. More short-term experts shall be provided by SMEDSEP as the partnership progresses.      

The Small and Medium Enterprise Development for Sustainable Employment Program (SMEDSEP),  is a development cooperation project between the Republic of the Philippines and the Federal Republic of Germany. It aims to improve the business and investment climate for Small and Medium Enterprises (SMEs) in the Philippines, especially in the Visayas. It contributes to the efforts of the Philippine Government in improving the framework conditions for private sector development in the country. SMEDSEP is implemented in partnership of the Department of Trade and Industry (DTI) at national, regional and provincial levels and the German Technical Cooperation (GTZ).

GTZ is an international cooperation enterprise for sustainable development with worldwide operations owned by the German Government. For 30 years, it has been providing viable, forward looking solutions for political, economic, ecological and social development in a globalized world. GTZ supports complex reform and change processes, often working under difficult conditions. GTZ`s major approach to promote change is developing the capacities of partner organizations and people. The joint projects and programs are designed as results and impact oriented with the German contribution provided in many cases by the German Federal Ministry for Economic Cooperation and Development (BMZ).

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