The last few months have seen both the public and private sectors accelerating Covid-19 vaccination drives across the country, and although a sense of optimism temporarily enveloped the country, the reimposed heightened quarantine restrictions in Metro Manila due to the Covid-19 Delta variant has brought about bouts of fear and hesitance, especially among businesses who have seen their darkest days this past year.

Last week, we celebrated the Micro, Small, and Medium Enterprise (MSME) week from August 2 to 6 and I think it is an opportune time to recognize the contributions of these small businesses in providing opportunities to restart and recover.

In September 2020, the United Nations Development Programme (UNDP) noted that during the second quarter of last year, the country’s Gross Domestic Product (GDP) sank by 16.5% as the Philippines experienced a recession due to the Covid-19 pandemic.  

Over a year later, bond credit rating company Moody’s Investor Services forecasts a 5.8% GDP growth for the Philippines, far below the 7% estimate it gave in January and the 6% to 7% target growth of the Philippine government, citing that the pandemic continues to pose an acute challenge for the economy.

Even with the gradual reopening of the economy and a majority of industries now being allowed to operate, there is still an urgent need to level off the impact of the pandemic on the sector, especially as MSMEs are said to be responsible for 35.7% of the country’s GDP.

In preparation for a more resilient post-pandemic world, government and financial institutions need to continuously provide support to MSMEs through policies and programs with long-term benefits.

Now how do we make a sector that comprises 99.5% of business establishments, contributes to 35.7% of GDP, and employs approximately 63% of the country’s workforce enjoy stronger, more equitable, and sustained recovery efforts?

Last October 2020, the Philippine Disaster Resilience Foundation (PDRF) and UNDP Philippines through SIKAP (Synergizing Recovery Initiatives, Knowledge, and Adaptation Practices for MSMEs) provided data-driven recommendations to the Inter-Agency Task Force (IATF) to help them create more effective policies and programs that are responsive to the immediate and long-term needs of MSMEs.

The recommendations include “fostering a level playing field to encourage participation by smaller enterprises” and “investing in capabilities of people, from lifelong learning to re-skilling and up-skilling of workers”. As we move towards a more digital economy, focusing on closing the digital gap, increasing technology uptake, and capacity building are among the few efforts that must be prioritized.

Bank support

Contributing to the fulfilment of these recommendations, the BPI reinforced existing programs and initiated new ones to help MSMEs recover and sustain their businesses.

For instance, BPI recently collaborated with the Department of Trade and Industry (DTI) to offer collateral-free loans to qualified small and medium enterprises to help them pivot towards sustainable recovery and growth.

Among the first batch of SMEs to avail of the new product are Laguna-based businesses Harito Food Products, Natures Dew Enterprises, and Ai She Footwear. These enterprises focus on food processing, retail trading, and footwear manufacturing, and have used the term loans to increase their working capital.

Through BPI Foundation, we capacitated this very important sector with digital learning sessions, via our Show Me, Teach Me (SMTM) program, which aims to equip micro and small entrepreneurs with practical knowledge on business resiliency and sustainability while continuing to grow their enterprises amid these trying times.

This year, in partnership with the DTI-Philippine Trade Training Center (PTTC) and with the help of key resource persons from BPI Direct BanKo, the microfinance arm of BPI, we’ve conducted webinars on online business recording, online accounting, cash flow management, debt management, and loan restructuring and rescheduling.

While there are many ongoing initiatives, there are still a number of opportunities waiting to be seized—whether it be in the form of financial education or the digitization of financial access—to help MSMEs get back on their feet.

For now, I take comfort in the fact that we are on track and that the road to recovery seems promising. Let’s continue to work hand-in-hand so we can soon turn this goal into a reality.