IFC OKs P750 million loan support to microfinancing institutions

MANILA, Philippines — The International Finance Corp. (IFC), the private sector arm of the World Bank Group, is extending a P750-million ($15 million) loan to two of the country’s largest microfinance institutions.

IFC yesterday said debt financing would be extended to CARD Bank Inc. and CARD SME Bank Inc. which are part of the Center for Agriculture and Rural Development – Mutually Reinforcing Institutions Group (CARD MRI).

These banks serve over four million customers across a network of more than 120 branches.

Around 60,000 micro, small, and medium enterprises (MSMEs) stand to benefit from this investment by way of having additional working capital to restart or continue their operations amid the pandemic.

The financing package is part of IFC’s $8-billion global COVID-19 fast-track financing facility aimed at helping businesses stay afloat during the ongoing public health crisis.

The loans will come from IFC’s Working Capital Solutions Program, a $2-billion facility that provides funding to emerging market banks to extend credit to help businesses shore up their working capital.

This 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 agrifinance, digital risk management and the Binhi Crop Insurance Program, which protects farmers from the adverse effects of natural disasters.

Among the components of IFC’s investments in these banks is to increase lending for businesses owned by women. Out of the total number of businesses served by the banks, 44,000 are owned or led by women.

With funding and advisory support from the IFC Women Entrepreneurs Finance Initiative (We-Fi) program, CARD Bank Inc. and CARD SME Bank Inc. will be guided on how pre-defined targets for lending to women-owned businesses can be reached.

MSMEs account for 99.5 percent of businesses in the Philippines, with the largest share of companies operating in wholesale and retail, which have been severely impacted by community quarantine.

More than half of such businesses that remain vulnerable to the pandemic are run by women.

“The success of women-owned businesses in the Philippines is critical to the success of the overall economy,” said Rosy Khanna, regional industry director for financial institutions at IFC.

“Our investment will help provide 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.”