DTI urged to consider blended finance for social enterprises

MANILA, Philippines — The Department of Trade and Industry (DTI) should consider implementing blended finance to make it easier for social enterprises which contribute to achieving sustainable development goals (SDGs) get access to capital and grow.

Given the huge number of social enterprises in the country and the challenges faced by these enterprises to get capital to help them grow, United Nations Development Program (UNDP) Philippines resident representative Titon Mitra said the government should consider blended finance as a form of support they could give to enterprises which create a social impact.

Under this setup, he said banks could extend some capital to the social enterprise, while the government could provide a loan guarantee.

“If DTI looked at that possibility, that will make capital much more accessible to these enterprises,” he said.

He said banks still find it risky to lend to social enterprises, even to those which are not starting from scratch and have actually got their businesses up and running.

While some social enterprises already have their operations going, they still need some capital to grow their business.

Mitra said social enterprises have a big potential to thrive in the Philippines given the country’s strong culture of creativity, young population and the sheer number of these enterprises.

While there are 164,000 social enterprises in the country, he said only about 10 percent are expected to succeed, become viable and bankable businesses with real growth.

To help social enterprises become viable to banks and investors and contribute to the Philippines’ attainment of the SDGs, the UNDP, Australian government and non-profit Philippine Development Foundation are implementing the Innovation for Social Impact Partnership (ISIP) program.

Under the three-year ISIP program which received the equivalent of P107 million worth of funding from the Australian government, the three parties aim to help 20 to 48 social enterprises scale up their businesses and be considered as bankable investments by providing technical assistance.

The first batch of 10 social enterprises out of 280 applicants selected to take part of the program includes Bambuhay (bamboo products), Cleaning Lady (cleaning service for condos), Coffee for Peace (coffee), FAME (tracking and monitoring system for fisherfolk), Hiraya Water (smart water management solutions), Gaz Lite (liquefied petroleum gas canister with single burner table top cook stove), SolarSolutions (training and research and development services for renewable energy), Taxumo (tax payment and filing software) UPROOT (social farms) and Virtualahan (digital skills training for people with disabilities).

These 10 social enterprises presented their pitch to impact investors, creditors, bankers and business leaders during the demo day held last week.

“We hope that investors will be able to see them as eminently bankable and recognize the unique and scalable solutions that they offer,” Mitra said.