MANILA, Philippines - The Rizal Microbank and the International Finance Corp. (IFC) have entered into an agreement to develop a micro-agri product, which will be launched in early 2015.
Rizal Microbank is a subsidiary of the Rizal Commercial Banking Corp. (RCBC) specializing in microfinancing, while the IFC is the private investment arm of the World Bank.
Lourdes Pineda, president of Rizal Microbank, said that the accord will result in more financing to Mindanao’s agricultural input suppliers, traders, processors, post-harvest facility providers and other small agribusinesses, which create jobs and reduce poverty in some of the Philippines’ poorest regions.
Pineda said that the agricultural sector of Mindanao has very strong potential for growth.
“While the IFC has global experience a unique advantage in accelerating the bank’s efforts to extend financing to different value chain players in agribusinesses and small enterprises in rural areas,†she said.
Product development and other technical issues will be undertaken this year, and the product launch is slated for early 2015.
Meanwhile, the IFC said that supporting agribusiness is crucial to the country’s economy. The sector employs one-third of the workforce – around 13 million people – but contributed only 11 percent of the country’s gross domestic product in 2012.
Agribusiness growth declined to 2.9 percent in 2012 from 4.9 percent in 2007, pushing three times more families into poverty in the agricultural sector compared with other sectors.
In a statement, IFC resident representative Jesse Ang said working with Rizal Microbank “is in line with the World Bank Group’s thrust to support agribusiness, particularly in regions where more jobs and livelihoods need to be created and economic growth has to be more inclusive.â€
Rizal Microbank is a thrift bank, which lends directly to micro-borrowers and small enterprises, in contrast to the wholesale lending to microfinance institutions offered by large commercial banks. In its four years of operation, the bank has disbursed more than one billion pesos in loans ranging from P50,000 to P1 million to around 12,000 clients.
IFC has invested $150 million in equity with RCBC to support the bank’s efforts to increase lending to small and medium enterprises, particularly those headed by women entrepreneurs. Funding from the Department of Foreign Affairs, Trade and Development of Canada supports IFC’s agri-finance program.
IFC is the largest global development institution focused exclusively on the private sector.
Working with private enterprises in more than 100 countries, we use our capital, expertise, and influence to help eliminate extreme poverty and promote shared prosperity.
So far, investments climbed to an all-time high of nearly $25 billion, leveraging the power of the private sector to create jobs and tackle the world’s most pressing development challenges.