IFC launches technical assistance initiative for SMEs

The International Finance Corp.(IFC), the World Bank’s private sector financing arm, launched yesterday IFC-Asenso, Assistance to Small and Medium Enterprises, or Asensong Sigurado para sa Negosyo.

The IFC-managed multi donor initiative aims to support the growth of small and medium enterprises in the Philippines, especially Mindanao.

President Arroyo attended the event and witnessed the signing of the agreement establishing the new initiative at Malacañang.

IFC-Asenso has a four year mandate with an initial funding commitment of $5 million from IFC.

Additional donor funding is being sought from donor agencies that have interest in supporting the growth of small and medium enterprises in the Philippines.

"The Australian government, through AusAID and the Canadian government’s Canada International Development Agency are seriously considering funding IFC-Asenso," IFC country manager Vipul Bhagat said yesterday.

For his part, Trade and Industry Secretary Peter Favila said the facility will enhance the DTI’s existing program for the SME sector.

"The overall objective of IFC-Asenso is to improve the business environment for SMEs by increasing access to finance, promote responsible business practices and creating sector-specific opportunities for sustainable SME growths," said Favila.

The DTI already assists SMEs in terms of financing, marketing, product development, technological intervention, training and entrepreneurship programs and advocacy.

The SME sector, Favila noted, represents 99.6 percent of alll registered firms in the country and employ 70 percent of the total labor force.

However, Favila acknowledged, that for the SME sector to reach its full potential, it needs more help especially financial support.

Small and medium enterprise development is a critical part of IFC’s strategy in the Philippines, prompting this new initiative.

"Combining IFC-Asenso’s grant-funded technical assistance with IFC’s investment capability gives us a powerful tool to support smaller companies," Bhagat said.

"These businesses create jobs and opportunities that are so important to poverty reduction."

IFC-Asenso will place a heavy emphasis on supporting access to finance, improving the business enabling environment, and facilitating links between local smaller companies and those with larger market reach in the agribusiness sector.

"Strengthening the links in the supply chain between large companies and their local communities is fundamental to increasing business growth for small and medium enterprises and ensuring local economic participation," said Chris Richards, general manager of IFC-Asenso and IFC-PENSA.

IFC-Asenso services will be geared toward local businesses with 10 to 300 employees. These companies typically have the agility to adjust to the volatile economic, political, and business climate of the Philippines, yet are not well served by existing markets and institutions. The program will not provide direct financing, but rather will build carefully targeted technical assistance and capacity building initiatives that draw on IFC links with the business community, the World Bank Group, donors, non-governmental organizations and other partners.

IFC-Asenso will have offices in Manila, Davao and Mindanao.