Small enterprises run by Filipino women stand to benefit from the International Finance Corp.’s (IFC) first-ever assistance to a nonbank financing institution in the country.
In a statement on Friday, the IFC said it extended a P500-million (about $ 10-million) loan to Esquire Financing Inc., the Philippines’ fourth-largest nonbank financing institution or lending company.
“Part of its ‘base of the pyramid’ program, this is the IFC’s first engagement with a nonbank financial institution in the Philippines. The funding will allow Esquire, a market leader in the unsecured small and medium enterprises (SME) loan segment, to grow its loan portfolio and better serve women-owned SMEs (WSMEs) during and after the pandemic, ”the World Bank (WB) Group’s lending arm for the private sector said.
“The entire proceeds of the loan will be earmarked for on-lending to WSMEs, which have been severely affected by COVID-19,” the IFC said.
“The investment is also supported by a performance-based incentive from the IFC as the implementing partner of Women Entrepreneurs Opportunity Facility — a partnership between the IFC and Goldman Sachs 10,000 Women — and the Women Entrepreneurs Finance Initiative,” it added.
Documents showed that the IFC approved this financing on April 15.
“By supporting a leading nonbank financial institution and base-of-pyramid financier amid a challenging environment, the IFC will contribute towards narrowing the financing gap in the country, especially through additional loans to women entrepreneurs impacted by the pandemic. We are optimistic that the IFC’s loan to Esquire will send a positive signal, strengthening confidence in the [nonbank financing] sector, an enabler of economic growth, ”said Jean Marc Arbogast, country manager of IFC Philippines.
“We welcome the IFC’s support at a critical time when long-term finance for non-bank financial institutions is scarce in the market. We differentiate ourselves from others [nonbank] and bank competitors by focusing exclusively on small businesses. The IFC’s loan will help us scale up our business and grow the WSME share of our client base to 67 percent over the next three years. This will allow us to promote market competitiveness, helping the country build back better, ”the IFC quoted Esquire Financing chair and chief executive Rajan Uttamchandani as saying.
The IFC noted that micro, small and medium enterprises (MSMEs) accounted for 99.5 percent of businesses in the Philippines, and 30 percent of MSMEs were owned by women although “limited access to finance deters their growth.”
The IFC said its base-of-pyramid program was aimed at “helping financial services providers deliver funding to small businesses, informal enterprises, and low-income households that have been hit the hardest by the lockdowns and economic slowdown caused by the COVID-19 pandemic. ”
An IFC report last year showed that the share of sales of women-owned businesses in the Philippines fell at a faster pace in 2020 alongside the harder times wrought by the pandemic-induced recession.
But the same IFC report had also shown that equipping Filipinas with digital skills and tools would allow them to capture a sizable chunk of Asean’s booming e-commerce industry in the next five to 10 years.
—BEN O. DE VERA
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