NO less than 43 cooperatives from fruit-producing Davao del Norte and gold-rich Compostela Valley trekked to the Bangko Sentral ng Pilipinas last Friday for the signing of a memorandum of agreement that will hopefully provide more impetus for the growth of the countryside.
The two provinces broke the national record in terms of the number of cooperatives that will join the Credit Surety Fund, a program that is designed to promote growth and lay the ground work for the expansion of the country’s micro, small and medium enterprises.
“Under the Credit Surety Fund, a bank no longer requires collaterals from MSME borrowers,” BSP governor Armando M. Tetangco, Jr. said, adding that the bank receives a surety cover that will guarantee the payment of the loan.
This means that Mang Jose, a 45-year old fruit processor in Davao del Norte, will no longer have to look for collateral before he can borrow from the bank in order to expand his processing business. For as long as he is not a credit risk, his cooperative can vouch for his credit and the bank can grant him his loan without any collateral at all.
And in case Mang Jose defaults on his loan payment, the bank can always collect the unpaid amount from the CSF. It may not be an ideal situation both government and cooperatives involved in the CSF Program, but it is an assurance to the bank that their risk is protected.
“And since risk management shifts to the CSF, it is imperative that management exercises due diligence to ensure that the surety covers are made available only for borrowers with established track records for debt payments,” he said.
As of Wednesday last week, a total of P6.9 million has been pooled by member cooperatives for the Program. “Compostela Valley cooperatives have pooled P3.3 million while the Davao del Norte cooperative have pooled P3.6 million for the funds,” BSP department of loans and credit deputy director Reysan Gantuangco told Edge Davao.
Under the terms of the CSF program, the cooperatives will put up capital for the fund, to be matched by the local government. Gantuangco said the government of Davao del Norte has committed to invest P1 million in the fund for now, but they expect to increase that amount to P4 million in the future.
“This is an opportune time for the BSP to introduce the CSF as it reinforces our efforts to provide more economic stimulus in the countryside,” Compostela Valley governor Arturo T. Uy said.
Based on his province’s experience, Uy said microfinance is able to increase the income of the MSMEs, reduce their vulnerability to external shocks and enable the cooperatives to become economic agents of change.
Uy said for this year they have invested P2.2 million for all the eleven municipalities of Comval. The amount is further broken down into P200,000 for each municipality and P100,000 for each qualified active cooperative.
Tetangco outlined the key factors for the success of the CDF program: borrowers should pay their loans, cooperatives should approve only members with good credit standing while banks should process loans faster and provide better loan terms to MSMEs.
“Employment is not easy to come by at this time when the global economy continues to be in crisis and the viable option is to support more MSMEs which can generate jobs down to the countryside,” Tetangco said.
“If properly managed by the cooperatives and strongly supported by the local government, the Credit Surety Fund program can truly make a difference in uplifting the lives of Filipinos, particularly those in the marginalized sectors,” Tetangco said. [Lovely A. Carillo]
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