Technology, innovative thinking are essential – Espenilla
The Bangko Sentral ng Pilipinas (BSP) urged credit executives to help promote financial inclusion in the country by giving attention to the financial needs of small enterprises.
The central bank also pointed out that technology and innovative thinking are essential to improving the coverage of the unserved segments of the target communities by credit providers.
“The BSP is eager to push boundaries until it reaches the peripheries and the grassroots through financial inclusion. We, in the BSP, need to bring central banking operations closer to the people,” central bank Governor Nestor Espenilla Jr. said in his keynote speech during the Credit Management Association of the Philippines (CMAP) general membership meeting held in Makati City on Friday.
“[But] the BSP cannot do this alone. Achieving this national objective requires our concerted efforts… CMAP, let me bring to your attention the MSME sector,” he added.
Espenilla said the MSMEs or micro, small and medium enterprises, account for 99.5 percent of the country’s total establishments and employ about 61.6 percent of the Filipino workforce.
Of the total number of MSME workers, 54.7 percent are employed by the micro and small enterprises, which represent a broad range of industries, including 60 percent of the country’s exporters.
“And yet, despite the sector’s potential as an enabler and typical engine of development, MSMEs consistently cites access to finance as a challenge. This is in part due to the lack of comprehensive credit information on the sector,” he added.
The Bangko Sentral governor said asymmetry in the credit information on the MSMEs results in the entire segments being subject to higher risk premiums or even outright exclusion.
In turn, MSME borrowers either face higher borrowing costs or are forced to turn to informal lenders for their financing requirements, he added.
With this, he urged industry leaders to be mindful of the financial constraints faced by the MSMES and to help prevent further proliferation of informal lending practices.
“Technology and innovative thinking are essential. Embrace the leverage on fintech to better serve the unserved and led them into organized value chains… To instill responsible lending and borrowing behavior to credit providers and consumers,” he concluded.