Thursday, July 20, 2006

SME Week

I recall that during the 1970s, the buzzword of international funding organizations was "cooperatives" and most of the foreign-aid dollars coming into the country was alloted for the formation of electric cooperatives, farmers cooperatives, etc. In the 1980s, the new catchword then was "NGOs" (or non-governmental organizations) and most of the international money that poured into the country in the aftermath of the tremendous "goodwill" generated by the 1986 EDSA People Power went into NGO "capability building," trainings and seminars. Today, the favorite catchphrase of international donor institutions seem to be "SMEs" or Small and Medium Enterprises.

In the past few years, international donor organizations like the ADB, USAID, AusAID, JICA, KFW and UN (IFOD) have been sourcing money to fund the development of Filipino SMEs. This is so because in the aftermath of the 9/11 attack, America resolved to defeat terrorism by eradicating poverty in Third World countries since, as their theory goes, it is in these poverty-stricken communities where terrorists get their recruits. And one way to defeat poverty is by giving people sources of income and access to credit. If poor people are preoccupied with making money for themselves, then they will not be able to think of doing "shitty" things (to paraphrase President Bush). And if Filipinos are making enough money in their country, then they don't have to seek work in other countries.

The Arroyo administration has benefited politically from this foreign funding and has since translated it into government programs. One such program is "SULONG" which stands for SME Unified Lending Opportunities for National Growth. July 19 to 23 has been declared by MalacaƱang as SMED 'SULONG' Week and President Arroyo will lead its opening ceremonies scheduled today at the Market! Market! mall in The Fort.

Now on its third year, SULONG is the brainchild of then-DTI Secretary Mar Roxas. His idea was to improve credit access to SMEs and combining the financial resources of 7 GFIs (Government Financial Institutions) for a "unified" SME lending scheme. The 7 participating GFIs are the following: Land Bank of the Philippines (LBP), Development Bank of the Philippines (DBP), Philippine Export-Import Credit Agency (PhilExim), Social Security System (SSS), Quedan and Rural Credit Guarantee Corporation (QUEDANCOR), National Livelihood Support Fund (NLSF) and Small Business Guarantee and Finance Corporation (Small Business Corp.).

The over-all goal of SULONG is to release P72 billion in loans to SMEs over a three-year period (2003-2005) in the hope that by improving their access to credit, Filipino SMEs will grow into large enterprises. According to incumbent DTI Secretary Favila, they have surpassed their three-year goal; in 2003, P26.765 billion was released, in 2004 P27,050 billion and for the January-October 2005 period, over P25 billion in SME loans were already released or roughly P78 billion in all.

It is my hope that all these money being released to individual Filipino entrepreneurs will truly result in economic development and jobs for our people. SME development is truly our last best hope. We have already squandered billions of foreign-aid dollars by allocating it to the thousands of NGOs and cooperatives that sprouted in the 1970s and 1980s. Today, only a few hundred continue to exist. We have already seen that most group endeavors (like cooperatives and NGOs) fail because of the human factor (i.e. mismanagement, jealousy and distrust among members, etc.). Maybe this time around, if we give the money to individual enterprising Filipinos (who only have personal profit in mind), then the chances of success of SMEs might be better.

No comments: