IFC raising $12M for Philippine microfinance

After dipping its manicured fingers into Philippine private businesses, the International Finance Corp. (IFC) is preparing to test its expertise in microfinance.

It has already opened up a $5-million technical assistance (TA) facility for microfinance, and is holding talks with tthe Australian government and the Canadian International Development Agency (CIDA) for additional assistance.

"We want to bring that up to $12 million," Euan Marshall, IFC country coordinator for PEP in the Philippines, said.

While the private investment arm of the World Bank has launched an aggressive expansion into microfinance, Marshall explained that they will concentrate efforts on technical assistance rather than extending loans.

The IFC coordinator said they want to create a condition that allows for greater access to credit without themselves extending the financing. "We will not extend any financing, but bring in more technical assistance rather than equity."

Assistance would come in the form of training and capacity building for microentrepreneurs. Then open up avenues for credit with other institutions like commercial banks, rural banks, and other microfinance institutions (MFIs) as partners.

The main target is Mindanao, and then later the Visayan provinces.

The IFC assistance would like to identify the value-chain, the production or supply chain for which microentrepreneurs could adjust their economic activities. For example, the IFC were about to link foreign buyers of seaweed with microentrepreneurs that were enticed to shift into the market.

Meanwhile, Marshall said that they were studying microlending to agri-business. The IFC will also set up technical training for small businesses on how to deal with financial institutions.

"We are also looking at teaching business registration and technologies that may improve this. We are looking at technical assistance in areas of strengthening and improving sustainability of microbusinesses."

It had already started work on the small and medium enterprises (SMEs) in Mindanao, where it wants to create a healthy investment climate. It has also placed equity in the MicroEnterprise Bank, a microfinance-oriented bank based in Mindanao.