Smedsep deploys experts for fiscal training program

The German Technical Cooperation (GTZ), through its Small and Medium Enterprise Development for Sustainable Employment Program (Smedsep) has dispatched another financial management expert group from Germany to coach bankers to adopt effective credit risk management system.

GTZ, together with InWEnt Capacity Building International, held a four-day Training of Trainers (TOTs) at the Cebu Marco Polo Hotel that concluded yesterday, supporting the Smedsep's goal to institutionalize SME Finance Trainings and contribute to the solution on lack of SME access to formal credit.

About 26 trainings coming from the banking industry, especially members of the Rural Bankers Association of the Philippines (RBAP), academe, consulting organizations and other sectors from Visayas and Mindanao were taught on how to effectively handle credit risk.

Dante Portula, GTZ MSME (Micro, Small and Medium Enterprises) finance adviser said while there is a great need to help the rural bankers on effective credit risk management, and acquire expertise in providing financial assistance to smaller scale businesses, more activities of this kind, particularly on TOT program will be held next year.

According to Portula the Training of Trainers (TOTs) next year, will be anchored on a Training Service Provider (TSP) institution to build local training capacity.

"The goal is for TSP to regularly offer SME Finance training to the Philippine banking industry on a sustainable manner. Graduates of the TOTs will eventually become a certified trainer pool of the TSP," Portula said.

In October this year, GTZ has organized an international expert mission that strengthened the TSP concept to institutionalize SME Finance Trainings. GTZ and InWEnt will engage both international and local banking experts to further develop local training capacity.

The capacity building solution being provided by the German Development Corp is expected to raise more awareness among bankers on the profitability of SME credit products. Another German organization, KFW Development Bank through the Small Business Corporation (SBC), has a ready credit fund to support an increased demand for SME credit. KFW is also providing technical assistance to SBC to improve services to its accredited banks.

Rey Naranja, Deputy Regional Coordinator of InWEnt, said his office is closely cooperating with other German organizations to further synergize the German development efforts in the Philippines.

SMEDSEP is advocating a cash flow-based approach to SME lending. Under the approach, the viability of a proposed business is given more weight in assessing loan applications than the collateral presented.

"More banks are appreciating the use of other collateral-substitutes, aside from the traditional real estate", Portula stressed.

SMEDSEP is being implemented jointly by the GTZ, DTI and SBC with its focus program area in the Visayas. Cooperation with the private sector like the RBAP and Chamber of Thrift Banks are also active. Other SMEDSEP initiatives include harmonization of local SMED plans, LGU streamlining of business licensing procedures, business development services, training of SME workforce and Local and Regional Economic Development (LRED).