PCCI, AGFUND form new bank

MANILA, Philippines - Business group Philippine Chamber of Commerce and Industry (PCCI) and the Arab Gulf Program for Development (AGFUND) have signed a memorandum of agreement to create the IBDAA Microfinance Bank to give the poor access to financing for their small projects.

In a statement, PCCI said the agreement was signed by PCCI past president Miguel Varela and Prince Talal bin Abdul Aziz Al-Saud of the Kingdom of Saudi Arabia for AGFUND.

IBDAA, a brand from the Arab word ‘innovation’, serves as the conduit for AGFUND money for use in financial services to the poor in developing countries.

AGFUND is a non-profit regional development institution established in 1980 through the initiative of Prince Talal. Leaders of the Arab Gulf States constitute its membership and contribute to its budget to support human development efforts in developing countries, particularly women and children.

Varela said that while micro, small and medium enterprises (MSMEs) in the Philippines account for 91 percent of all businesses, the lack of access to financing has prevented them from achieving growth.

He noted that as of last year, only 20 percent of small businesses had access to capital from local banks.

“Most banks are reluctant to lend because of the high risks associated with MSMEs and their inability to comply with certain bank requirements such as loan collateral and financial records,” he said.