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Women entrepreneurs in the Philippines are seen as benefiting from the new loans that World Bank Group member institutions will issue to two of the largest microfinance institutions in the country.
In a statement Tuesday, the International Finance Corporation (IFC) announced its plan to issue up to P750 million in debt financing to CARD Bank Inc. and CARD SME Bank Inc., which are part of the Center for Agriculture and Rural Development – Mutually Group of Reinforcement Institutions (CARD MRI).
The loan is expected to help keep businesses afloat and save jobs as the Philippines grapples with the economic impacts of the 2019 coronavirus disease (Covid-19) pandemic, according to the IFC.
He said the investment aims to benefit more than 60,000 companies, 44,000 of which are micro, small and medium-sized enterprises (MIPYMES) owned or led by women. The banks have more than 120 branches and serve 4 million customers.
IFC added that support from the Women Entrepreneurs Financing Initiative (We-Fi) in the form of performance-based incentives will help banks meet predefined targets for lending to women-owned or led SMEs.
We-Fi is a collaborative partnership between the 14 governments that have made
contributions, six multilateral development banks acting as implementing partners, and other public and private stakeholders. It was formally established in October 2017 as a Financial Intermediary Fund organized by the World Bank (WB).
The WB member explained that the financing will provide critical working capital for MSMEs, which have been particularly disadvantaged by the pandemic due to the lack of funding reserves and the ability to restart operations during periods of strict quarantine.
“MSMEs represent 99.5 percent of companies in the Philippines. More than half of these businesses are run by women, and most of the companies operate wholesale and retail, which have been particularly affected by Covid-19 ”, he highlighted.
IFC said the funding package is part of IFC’s P8 billion global Covid-19 fast-track funding mechanism, aimed at helping companies stay afloat during the current public health crisis. The loans are made through IFC’s Working Capital Solutions Program, a $ 2 billion facility that provides financing to emerging market banks to extend credit and help companies shore up their working capital.
The institution added that the transaction is its first investment in the Philippines as part of its Banking on Women business program, which provides financing and expertise to financial institutions to help them profitably finance women-owned businesses.
“Clients represent a substantial growth opportunity for financial institutions and financial technology companies, known as fintechs (financial technology). Women own and run approximately 9.7 million formal SMEs and 63.8 million microenterprises in emerging markets, with an estimated total unmet credit demand of $ 1.5 trillion, ”he noted.
IFC said the transaction builds on its relationship with CARD MRI. In 2017, IFC helped CARD MRI develop a lending platform for SMEs. Since then, the two institutions have worked together on a number of initiatives, including agriculture, digital risk management, and the Binhi Crop Insurance Program, which protects farmers from the adverse effects of natural disasters.
“We are delighted to continue our long-standing relationship with Dr. Alip and the CARD MRI Group,” said Rosy Khanna, regional industry director for Asia Pacific Financial Institutions at IFC.
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