PFIs are partner entities such as commercial banks, thrift and development banks, rural banks, non-government organizations (NGOs), and cooperatives.
The amount was extended by the German Federal Government in cooperation with the Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) GmbH, also known as the German Technical Cooperation Agency.
"We want to extend our parnership with more rural banks especially in the SME relending market," said Benel P. Lagua, SB Corp. president, during formal signing ceremonies between GTZ, InWent (Internationale Weiterbildung Und Entwickling GmbH), the Rural Bankers Association of the Philippines (RBAP), and SB Corp.
Rural banks are in the best position to assist the country’s SME sector since they are located in places where the SMEs are. Its infrastructure is also best suited for lending for both SMEs and microentrepreneurs.
Meanwhile, the undertaking between foreign funding and development entities, government and the private financial sector is part of efforts by the Small and Medium Enterprise Development (SMED) Council to open more financial opportunities for the country’s SME sector, which comprises more than 90 percent of the country’s businesses.
The SME-oriented national program is also getting technical and financial support from the Canadian International Development Agency (CIDA).
The recent partnership comprises Phase II of the SMEDSEP, which is focusing on the Visayas and Mindanao regions.
"It is capability development for sustainability," Lagua added.
The design is a two-to three-year program that is sustainable, with financing from the German government, technical cooperation from GTZ, and specific skills training from InWent.
The RBAP has been in the business of assisting SMEs as well as microentrepreneurs. It is assisted, among others, by the United States Agency for International Development (USAID) through the Microenterprise Access to Banking Services (MABS) program.
Some of the components of the SMEDSEP are: development of the DTI-GTZ Handbook on Best Practices on Business Registration; partnering with local government units in the Visayas and Mindanao; building up the capacity of the local private sector; preparing a monitoring instrument to assess the impact of its supported-training courses to employment and SME growth; funding for environment and aqua-culture; and anchor rural and thrift banks to provide customized coaching on SME credit appraisal and loan procedures.