CCCI to bridge the gap between rural bankers and small vendors

CEBU, Philippines - The Cebu Chamber of Commerce and Industry (CCCI) is going to touch-base with the rural bankers and the small vendors to link the two sectors together and address the problem on  capitalization requirements from “informal” lenders.

CCCI president Prudencio Gesta announced yesterday that the chamber will lead an advocacy to eradicate the proliferation of 5/6 financing, which usually victimize small entrepreneurs or vendors with “bloated” interest rate charges.

Initially, CCCI will call the attention of the Rural Bank Association of the Philippines (RBAP-Cebu) to be one of the sectoral members of the chamber, for the organization to link with the Carbon Market Vendors Association.

“Rural banks now have money to lend. The micro-entrepreneurs, specifically the vendors, should be able to take advantage of this with minimal interest rate,” said Gesta.

Already, according to Gesta the RBAP-Cebu indicated its interest to be a member of the chamber, after which, CCCI will be able to formulate a mechanism to arrange credit facility for the Carbon Market Vendors Association and Tabo-an Market Vendors Group.

Gesta targets that within 90 days this plan will be materialized, while the problem of providing formal credit facility for the small businesses has continued to be one of the concerns among vendors.

The swelling liquidity of the banks today already benefited the Small and Medium Entrepreneurs (SMEs) in the country, as banks are now more aggressive in offering corporate loans for SMEs in the country.

“The problem now is how to connect the vendors to the banking sector. Thus, we are pushing for the interconnection of these two sectors. Rural bankers should be able to craft a good credit offering for the small business players, while high risk is seen to be minimized through the planned program.

On the other hand, the vendors will also be introduced to adopt the culture of sourcing their capital requirement from the legitimate sources like banks, to promote profitability and growth.

Part of the plan is for the RBAP-Cebu members and the vendors to come up with their internal agreement how they will be able to make a smooth processing and prompt release on the loans. On the other hand, vendors’ group will also be able to guarantee a lower risk level.

Gesta said the business sector in Cebu has recognized the need of micro businesses, like the side-walk vendors, wet market traders for capitalization requirement, and despite lending facilities offered by banks, micro entrepreneurs remain intimidated to avail of loan from the banks.

“They [vendors] have to correct their way of doing business. Although small, they should adopt a professional way of doing business—if they want to grow bigger,” said Gesta.

On the other hand, in an earlier interview with  Guillermo Luz, the private sector co-chairman for National Competitiveness Council (NCC), he said that unresolved gap between the financial institutions and the micro businesses, including the SMEs in providing financial access, can only be settled if the Philippines will be able to establish a good credit information system.

Gesta said although, the CCCI-led program to connect the rural bankers and the vendors is a local initiative, he hopes that the success of this program will encourage other rural bankers’ group and business groups in the country to address the concern of financial accessibility to micro entrepreneurs.

Luz explained that the problem of MSMEs in accessing capital, is not because of the lack of funds from both private and government financial institutions, but mainly because the Philippines has limited credit information system.          

The current credit information system used by banks and the entire financial institution in the country, is not “SME friendly,” saying “it keeps SMEs out of the loop.”

 â€œUnfortunately, in the Philippines, the credit information system is locked up in silo,” Guillermo said.

Unlike other countries, that the credit information system is open and that it has a consolidated credit information facility.

This means, that the Philippines still has to develop a unified credit information system, which will collate updated data from other entities, so that it would be easier for lenders to decide who to lend to, and most of all lessen the high risk of lending to MSME players. (FREEMAN)