Cocofinance targets 2-digit lending growth

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Cocofinance, the development lending arm of United Coconut Planters Bank (UCPB) Group aims to grow its lending to coco farmers in double-digit terms this year, following a strong performance in 2015.

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The lender said loans to 17,981 small coconut farmers reached P609.8 million in 2015, reflecting a 9-percent rise from the P558.7 million in 2014.

It said coconut farmers took out loans to finance livelihood projects to augment their farm income.

Cocofinance President Edgardo Amistad said the goal this year is to expand new loans to coconut farmers by 16 percent to P710 million.

Coconut farmers could use more financing as they need to develop other sources of income to make ends meet, given the modest earnings from their farms, he said.

Cocofinance claimed it is the only lending firm in the country catering exclusively to coconut farmers.

The company was formed by UCPB and the Coconut Industry Investment Fund companies in 1994 to create an appropriate vehicle for channeling credit to coconut farmers, who, because of the small size and high risk of their enterprises, find it difficult to access finance from formal sources.

Over the 21 years since it commenced development lending in 1995, Cocofinance said it has provided P7.8 billion in loans, which benefitted 405,791 coconut farm households in 66 of the country’s 68 coconut-producing provinces.

Cocofinance uses coconut farmers and farm workers organizations, non-governmental organizations and rural financial institutions as loan conduits to reach far-flung coconut-producing areas.

Last year, the company accredited five cooperatives to its credit programs bringing the number of its countryside partners to 434, half of which are in Luzon, a third in the Visayas and the balance in Mindanao.

With its current network, Cocofinance can cover 20,300 coconut barangays, Amistad said.

He said Cocofinance undertakes development lending on a large scale, because it lends money out of its equity, unlike commercial banks which lend mainly deposits of the clients and are strictly regulated by the Bangko Sentral ng Pilipinas.

The key to managing higher risk in development lending is proper vetting and close monitoring of the countryside partners, Amistad said, pointing out the company posted a 99-percent collection rate in 2015.

Cocofinance’s equity of P975 million consists of P175 million in contributions from United Coconut Chemicals Inc. in 1994, P100 million from UCPB in 1997 and P700 million from the CIIF Oil Mills Group in 2003.

As of end-2015, the firm reported that it was able to expand the funds by 22 percent to P1.19 billion.

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