ADFIAP offers technical, financial assistance, presents triple bottom line principle

Filipino entrepreneurs interested in sustainable development-oriented businesses can access information and funding sources through an international organization of financial institutions based right here in the Philippines.

Few Filipinos know about it but the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) has been providing technical and financial assistance to countries in the region for the past 30 years. And the good thing about it is that ADFIAP is not only headquartered in Makati City, the country’s finance and business capital; it’s also operating under the leadership of Filipinos.

Established on October 1, 1976 under the auspices of the Asian Development Bank (which remains a special member), ADFIAP is composed of 70 members most of which are state-owned development banks in 35 countries across Asia and the Pacific region, from Samoa to Turkey.

ADFIAP has some privately-owned member development banks in its fold. One of them is Planters Development Bank or Plantersbank whose chairman and chief executive officer, Jesus P. Tambunting, is also current chairman of the association. He is assisted by a Filipino secretariat headed by Octavio B. Peralta, the association’s secretary-general.

The other members of ADFIAP in the Philippines are the Development Bank of the Philippines, the Philippine Export-Import Credit Agency (PhilEXIM), RCBC Savings Bank, and Queen City Development Bank of Iloilo.

"ADFIAP is the focal point of all development banks and other development-oriented institutions engaged in the financing of development in the region," according to Tambunting, an ambassador to the Court of St. James (United Kingdom) during the time of President Fidel V. Ramos. "ADFIAP was born out of a keen desire of development banks to bond and share the task of improving the financing of development through mutual cooperation and assistance among its members as well as with other associations and organizations with which it shares common development objectives."

Asked to define the function of development banks and how this differs from those of regular commercial banks, Tambunting said development financing institutions (DFIs) take up the slack left by the commercial banks, which specialize mainly in short-term financing; DFIs specialize in long-term financing.

"We marshal resources to cover areas that are unserved or under-served," he said, pointing out that one focus area for DFIs is the country’s SME (small and medium enterprise) sector, which comprise the bulk of registered businesses in the country and as such, constitute the backbone of the national economy.

ADFIAP also wants to focus on infrastructure where projects can have a high impact on national development but where there is a big need for financing that not even the state-owned DFIs are serving adequately.

Aside from lending money, development banks provide technical advice to ensure the success of the projects that they are financing. Such advice comes in the form of training and consulting services in production, marketing and financial planning. "For example, if there are marketing studies that development banks feel their clients need, we gladly provide these to them. We even match our clients with other markets," Peralta said.

DFIs also adhere to the principle of the "triple bottom line," meaning, enterprises that they support should not only turn a profit but also benefit people and communities as well as preserve and protect the environment within which such enterprises operate.

The triple bottom line (referring to environmental, social and financial bottom lines) approach evolved with the rise of new issues and challenges in the world economic order and environment. In response to these changes, ADFIAP adopted a triangular operational framework that defines the triple bottom line as good governance resulting from the confluence of environmental governance standards-setting, social banking and finance capability-building for SMEs.

In accordance with such operational framework, ADFIAP embarked on a number of projects with other international partners for the benefit of its member-banks and their client base. These projects include:

1. The Environmental Governance Standards for Development Financing Institutions in Asia (EGS), an 18-month undertaking under ADFIAP’s "Greening of DFIs" project that is supported by 346,446 euro-grant from the European Union aimed at developing and applying environmental standards to member-DFI operations. This EGS consists of: an Environmental Performance Monitoring Program (EPM) comprising environmental management policies, tools and instruments to enable DFIs to manage internal functions and operations (i.e., reduce electric power use and implement solid waste management in operations), and an Environmental Rating Standards for Loan Appraisal and Project Finance (ERS) as a set of concrete measures for integrating environmental issues in established risk assessment procedures in lending to borrower-clients.

2. The Sustainable Finance for DFIs Project, a German-funded undertaking that consists of a series of workshops for lending officers of ADFIAP member-banks. The workshops train lending officers in the triple bottom-line approach to sustainable development, particularly in providing financial capital and risk management products that promote and do not harm economic prosperity, environmental protection and social justice.

3. The SME Finance Initiative Project (SME/FI), a knowledge and business network that puts together development banks and other specialized financial institutions to dialogue and address specific issues in financing SMEs. The projects has three main components:

a) The CEO Forum - the dialogue cum business networking event where chief executives meet and learn from their own experiences as well as from experts of other organizations worldwide.

b) The SME/FI Portal - the project’s official website that is envisioned to be the "Knowledge Net on SME Finance" and will contain relevant resources (readings, training events, experts, etc.) on the subject.

c) The SME Training and Advisory Center - which provides the required training programs and technical assistance on SME finance to assist members in strengthening their capabilities in SME banking.