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The World Bank Group’s private sector arm, International Finance Corp. (IFC), plans to issue up to P750 million ($ 15 million) in debt financing to two of the country’s largest microfinance institutions to help keep them afloat. companies in the midst of the economy and health crisis.
The IFC said in a statement Tuesday that the new loans would be made to Card Bank Inc. and Card SME Bank Inc .; both are part of the Center for Agriculture and Rural Development-Mutually Reinforcing Institutions (Card MRI) Group. According to the IFC, the Card MRI “aims to empower women and families with social and economic problems by providing them access to financial, educational, social and health services.” The group has 6.9 million clients and insures more than 25 million people in the Philippines, according to the IFC statement.
The P750 million investment aims to benefit more than 60,000 companies, 44,000 of which are micro, small and medium-sized enterprises (MSMEs) owned or run by women, the IFC said.
“This will provide critical working capital to MSMEs, which have been particularly disadvantaged by the pandemic due to a lack of funding reserves and the ability to restart operations during strict quarantine periods.”
MSMEs represent 99.5 percent of businesses in the Philippines. More than half of these companies are run by women. Most of the companies operate wholesale and retail, which have been particularly affected by the government’s blocking measures against the Covid-19 pandemic.
“Filipino businesswomen are struggling to recover from the severe effects of the pandemic; and we stand behind them every step of the way, ”Card MRI founder and president emeritus Jaime Aristóteles B. Alip said in the statement.
“We believe that a poverty-free Philippines can be achieved by empowering these women to reach their full potential,” said Alip. “Through this partnership with IFC, we can reach more women-led and women-led MSMEs and help them continue on their path to a better future.”
The financing package is part of IFC’s $ 8 billion global Covid-19 fast-track financing 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 transaction is IFC’s first investment in the Philippines as part of its “Banking on Women” business, 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 fintech companies, known as fintechs. 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.
“The transaction builds on a relationship between IFC and Card MRI that began in 2007 when IFC helped Card MRI develop a lending platform for SMEs,” said IFC. “Since then, the two institutions have worked together on a number of initiatives, including agrofinance, digital risk management and the ‘Seeds Crop insurance program, which protects farmers from the adverse effects of natural disasters ”.
“We are delighted to continue our long-standing relationship with Alip and the Card MRI Group,” said Rosy Khanna, IFC’s regional industry director for financial institutions-Asia Pacific, in the statement. “The success of women-owned businesses in the Philippines is critical to the success of the overall economy. Our investment will help provide much-needed working capital at a crucial time for micro, small and medium-sized businesses, helping them maintain their operations and save jobs so they are better placed for a successful post-crisis recovery. “
The Card Bank and the Card SME Bank have more than 120 branches and serve four million customers, according to the IFC. Its “Women Entrepreneurs Funding Initiative Support”, or We-Fi, in the form of performance-based incentives, will help banks meet predefined targets for lending to women-owned or women-led SMEs.
