The International Finance Corporation (IFC) is extending up to 750 million pesos (US$15 million) in debt financing to two of the Philippines’ largest microfinance institutions, CARD Bank and CARD SME Bank, to help keep businesses afloat and save jobs as the country grapples with the economic impact of the Covid-19 pandemic.
The investment aims to benefit over 60,000 companies, of which 44,000 are micro, small and medium enterprises (MSMEs) owned or led by women. The two institutions, which are part of the Center for Agriculture and Rural Development – Mutually Reinforcing Institutions Group (CARD MRI), have more than 120 branches and serve four million customers. Support from the Women Entrepreneurs Finance Initiative (We-Fi) in the form of performance-based incentives will help the banks reach pre-defined targets for lending to women-owned or -led small and medium-sized enterprises (SMEs).
Commenting on the IFC financing, CARD MRI founder and chairman emeritus Jaime Aristotle Alip notes how the Filipino women entrepreneurs are fighting to recover from the grave effects of the pandemic. “We are right behind them every step of the way. We believe that a poverty-free Philippines can be achieved by empowering these women to reach their full potential. Through this partnership with IFC, we can reach more women-owned and led MSMEs, and help them continue their journey towards a better future,” he says.
The funding will provide critical working capital to MSMEs, which have been especially disadvantaged by the pandemic due to the lack of funding buffers and capacity to restart operations during strict quarantine periods. MSMEs account for 99.5% of businesses in the Philippines. More than half of those businesses are led by women, and the largest share of companies operate in wholesale and retail, which have been particularly impacted by Covid-19.
The financing package is part of IFC’s US$8 billion global Covid-19 fast-track financing facility, aimed at helping businesses stay afloat during the ongoing public health crisis. The loans are being provided through IFC’s working capital solutions programme, a US$2 billion facility that provides funding to emerging-market banks to extend credit to help businesses shore up their working capital.
IFC regional industry director for financial institutions in Asia-Pacific Rosy Khanna points out “the success of women-owned businesses in the Philippines is critical to the success of the overall economy. Our investment will help provide the much-needed working capital at a crucial time for micro, small and medium sized businesses, helping them to sustain operations and save jobs so they are on a better footing for a successful post-crisis recovery.”
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. Women customers present a substantial growth opportunity for financial institutions and financial technology companies (fintechs). IFC says women own and lead roughly 9.7 million formal SMEs and 63.8 million micro-businesses in emerging markets, with a total estimated unmet credit demand of US$1.5 trillion.
The transaction builds on a relationship between IFC and CARD MRI that began in 2007, when IFC helped CARD MRI develop an SME lending platform. Since then, the two institutions have worked together on a series of initiatives, including agri-finance, digital risk management and the Binhi Crop Insurance Programme, which protects farmers from the adverse effects of natural disasters.
CARD MRI aims to empower socially and economically challenged women and families by providing access to financial, educational, social and health services. The group has 6.9 million clients and insures over 25 million people in the Philippines.