Non-bank financing eyed to help MSMEs

CEBU, Philippines —  To help lessen the unemployment rate in the city, the Cebu City Council has requested the non-bank financing institutions such as microcredit and pawnshops to extend affordable loan assistance to micro and small enterprises so they can rebuild their businesses as soon as possible.

A resolution authored by Councilor Raul Alcoseba asking non-bank lending institutions to help SMEs was recently approved by the City Council.

“Non-bank financing institutions are particularly useful to micro and the small enterprises which would have difficulty accessing bank finance considering these challenging times,” said Alcoseba.

According to worldbank.org, these non-bank financial institutions provide services that are not necessarily suited to banks, serve as competition to banks, and specialize in sectors or groups.

Alcoseba said many micro, small and medium enterprises (MSMEs) in the city are still struggling to start or maintain their businesses and hire back their employees considering the effect of the pandemic regulations and the lack of financial capacity.

Last year, the Asian Development Bank (ADB) noted that non-bank financing such as microcredit and pawnshops could play a bigger role in helping MSMEs with financing requirements.

As reported earlier, Central Visayas is among the six regions in the country where unemployment rate is at double digit based on the 2020 Annual Preliminary Estimates of Labor Force Survey (LFS) of the Philippine Statistics Authority.

According to the report, the unemployment rate in Central Visayas was at 10.3 percent. The other five regions are Ilocos (13.4%), Central Luzon (13.1%), National Capital Region (11.7%), CALABARZON (11.6%), and Cordillera Administrative Region (10.4%).

The 10.3 percent unemployment rate in 2020 was higher compared to the 5.2 percent in 2019. On the other hand, the region’s employment rate was 89.7 percent in 2020. It was also down compared to the 94.8 percent in 2019. — FPL (FREEMAN)