The government’s goal to achieve financial inclusion rests on the capability of the rural banking sector to spur countryside development.
Such holistic growth depends on rural banks’ continued dedication to invest in agriculture and agrarian reform projects. Thus, the recent accreditation given by the Bangko Sentral ng Pilipinas (BSP) to another set of rural banks, making them eligible institutions to receive financing from other banks in line with the provisions of Republic Act 10000 or the Agri-Agra Reform Credit Act of 2009, is another step in the right direction towards the fulfillment of this goal.
The central bank’s accreditation will not only expand the functions of rural banks now tagged as Accredited Rural Financial Institutions (ARFI), it will also allow them to increase their presence in poor communities and thereby, enhance the access of the rural agricultural sector to financial services and programs.
Based on the data of the Philippine Statistics Authority, the agricultural sector accounted for the 11% of the country’s gross domestic product in 2012 and employed 32% of the working population. With the improved access to financial services, the sector’s contribution could grow even more.
Aside from increasing market efficiency and promoting modernization in the countryside, the program, which augments agricultural productivity and investing in Agri-Agra, is also a step towards having food security for a growing population with a pressing poverty problem.
For most of Filipino families, putting food on the table trumps everything else and unless large crop yields are reached and more farmlands are distributed to farmers, many people will remain hungry and mired in poverty.
Large-scale monocrop agricultural industries alone cannot solve the problem. They are not the answer to poverty and unemployment. They are not sustainable enough to fuel economic growth.
On the contrary, the solution lies in small and medium agriculture investments. Higher yields prompted by the increase in investments will lead to higher incomes for farmers, better education for the children and more opportunities to engage in small-scale businesses that will benefit the whole community and improve non-farm rural employment.
Moreover, boosting agricultural productivity will reduce the risk and vulnerability of farmers and their families during time of contingencies. This is also critical considering that the country is often pounded by typhoons and other natural calamities.
Investments in agriculture will also lead to a host of environmental benefits including better agricultural and natural biodiversity, reduced greenhouse gas emissions, improved water retention, carbon sequestration and resilience to droughts and floods.
Ultimately, the agricultural sector needs sufficient funding to achieve significant growth. With more support coming from rural banks now accredited as ARFIs, the country’s goal of sustaining agricultural growth and promoting financial inclusion is becoming more attainable.