The lack of access to microfinancing is still considered one of the main problems facing rural communities today, as most of them are forced to resort to “5-6” lenders or loan sharks to finance their small businesses.
Thus it is viewed that a rural bank-OFW partnership towards delivering microfinance funding will not only provide rural communities with a safer and more viable funding option but also boost economic growth in the countryside.
Based on the Central Visayas Regional Development Plan for 2011 to 2016 of the National Economic and Development Authority (NEDA), rural banks can partner with OFW communities to promote microfinance as an area for savings and investments. A ready and sustainable market awaits for these investments, as the NEDA cited the lack of access to microfinance credit and utilization for farmers, fisher folk and small-medium enterprise in the region.
Part of the initiatives to improve utilization of credit facilities by farmers, fisher folks and SMEs shall be the conduct of extensive information campaigns on credit and financing programs being implemented by the government and private financing institutions.
To improve their creditworthiness, NEDA said the government should also provide financing institutions with marketing assistance so they will have a better capacity to repay their loans.
Other local projects designed to develop the countryside include the “Bayaning Bayanihan”—a partnership between rural banks and the Economic Resource Center for Overseas Filipinos or Ercof. The program creates special bank products like savings, investments and loans to farmers and fisher folks and micro-entrepreneurs.
Another undertaking between the rural banking industry and Ercof is the “Balik-Barrio Bayani Project,” which is conducted in partnership with Smart Telecommunications Inc. and SEEDFinance Corp. Under this project, MFIs like rural banks shall design deposit, capital build-up and loan products for OFWs and their families that will include the provision of business development services for OFW-owned businesses.
Meanwhile, multilateral funding institutions have also joined the fray in helping improve access to financial services in the Philippines and the rest of Asia. Manila-based Asian Development Bank, for one, in partnership with a multinational bank, will come up with a program than involves lending $150 million through MFIs in the Asian region from 2013 to 2018.
Through these partnerships, rural banks and OFW communities will provide a constant source of financing urgently needed to bankroll development in rural areas, an undertaking that would make economic growth in the countryside inevitable.
Published in The Manila Times, 09 May 2013