IFC assists RCBC unit in P1-B agri loan program

MANILA, Philippines - The International Finance Corp. (IFC), a member of the World Bank Group, will assist the Rizal Microbank, wholly-owned by Rizal Commercial Banking Corp. (RCBC), for its more than P1 billion agricultural loan program in Luzon and Mindanao.

In a statement, IFC said it would advise Rizal Microbank on better understanding the financing needs and risk profiles of agricultural suppliers, traders, and service providers.

IFC said the program would expand lending to smallholder farmers, creating jobs and reducing poverty in Mindanao.  

Rizal Microbank has disbursed 12,000 loans amounting to more than P1 billion to clients, including dealers of seeds, fertilizers, machinery and agrichemicals, farm-produce traders and processors, and post-harvest facility providers, in  Mindanao and southern Luzon in its four years of operation, with the loans ranging from P50,000 to P1 million.

IFC has a $150 million equity investment in the Davao-based thrift bank subsidiary of RCBC to help increase lending to small and medium enterprises, including those headed by women entrepreneurs.

Specifically, IFC would help Rizal Microbank improve its capacity and risk management so that it could make quicker and better decisions in approving loans for agricultural suppliers, traders and service providers.

The bank would later explore lending directly to farmers after gaining a better understanding of the risks involved.

“IFC will be working with Rizal Microbank to gain a better understanding of the financing need, repayment capacity, and risk profile of agricultural value-chain players so that the appropriate financial services can be offered to them,” IFC resident representative Jesse Ang said.

Ang said, “this will improve access to credit in the farming sector, where financing is very limited, and help create more jobs and lift people out of poverty.”

IFC’s agrifinance program focuses on raising the declining productivity of farms, which comprise a third of the country’s usable land and where one in three employed Filipinos earn a living.

Since banks have been allotting only five percent of their total loans to agriculture, the agrifinance program, which is supported by funding from Canada, aims to improve access to credit for farmers.

“IFC’s technical know-how will accelerate our efforts in increasing lending to agricultural players such as suppliers, traders, processors, and post-harvest facility providers. Most of them are small enterprises,” Rizal Microbank president Maria Lourdes Pineda said.

“Our bank sees great potential in Mindanao’s agricultural sector, which contributes significantly to the country’s total agricultural output,” Pineda said.

Mindanao is considered the Philippines’ food basket, particularly in terms of rice, corn, coconut, coffee, fruits, vegetables, and fisheries products.

The entire island contributes significantly to the corn feed, livestock, and poultry subsectors, which increase the gross value of the economy by 37 percent.

The Philippine agribusiness sector employed a third of the country’s workforce, or around 13 million people, but contributed only 11 percent of the country’s gross domestic product in 2012.

Agribusiness growth declined to 2.9 percent in 2012 from 4.9 percent in 2007, causing three times more families to join the ranks of the poor in the farming sector as compared with other sectors.     

IFC is the largest global development institution focused exclusively on the private sector. In FY13, IFC’s investments climbed to an all-time high of nearly $25 billion, leveraging the power of the private sector to create jobs and tackle the world’s most pressing development challenges.