Micro and small firms need more bank financing
Micro and small firms need more bank financing Published : Monday, January 23, 2012 00:00 Article Views : 276 Written by : RAADEE S. SAUSA REPORTER BANKS, particularly thrift, rural and cooperative banks. can provide more financing support to micro, small and medium enterprises (MSMEs) especially those located in the provinces. An Asian Development Bank (ADB) SME financing survey indicated that the universal and commercial banks (UKBs) remain as the primary source of MSME funds, accounting for over 72 percent of the total amount lent to the sector. Niny Khor, an economist in the Economics and Research Department of the ADB, said that UKBs released about P6 billion in 2010 to MSMEs in direct loans, seven times higher than the average of thrift banks. This even as thrift, rural and cooperative banks have managed to increase their market share to 27 percent during the year, from just 16 percent more than a decade ago. “There is still room to grow for SME financing, especially in the micro-small segments,” she said in a forum. Khor said that while there was a significant increase in bank branches in the last ten years, these were distributed unevenly across the Philippines and most concentrated in the National Capital Region (Metro Manila). In 2007 alone, there were 2,689 banks that served MSMEs and people in Metro Manila; 1,210 in Calabarzon (Calamba, Laguna, Batangas, Rizal and Quezon or Region4A); and 885 in Central Luzon (Region 3). These were much higher compared to only 24 banks in the Autonomous Region and Muslim Mindanao, and 119 to 543 banks in the other regions. According to the SME financing survey, banks lend to MSMEs because of their perceived profitability, their existing relations with large clients. and because of intense competition for retail customers and from large corporations. In the same forum, Khor cited the need to design better policies aimed to enhance MSMEs in the country. “Helping small business is also inclusive in gender. In our data, we also found that about 60 percent of all Philippine enterprises are run by women,” she added.
