Kuya

As I go about my day, at some point I will hear the word “kuya.” I notice that it is used often to ask for assistance, to do a favor, to call attention. It is a term that suggests a friendly, polite familiarity between strangers.

I see parallels between the Pinoy’s regard for “kuyas” with the concept of “big brothers” in our Kapatid Angat Lahat program. We launched this initiative back in 2016, the idea being that big companies should integrate MSMEs into their value chain so that small enterprises can have a chance to scale up through mentoring, access to markets and access to resources; in short, access to the three M’s that are essential in successful entrepreneurship. It is much like it is in a traditional Filipino family, where the eldest child looks after the welfare of his younger brothers and sisters.

Last year, the concept was refined and became Kapatid Angat Lahat sa Agri Program in response to the administration’s call to revitalize the country’s agriculture industry and make it more inclusive and sustainable. To my mind, the big-brother concept is perfect for agriculture.

KALAP offers a structured approach to helping. MSMEs often struggle to stay afloat, and rarely if ever do they get to participate in the value chains of large corporations. And even if they do get to supply goods and services to large corporations, it is often at great risk. These small players are exposed to fluctuating commodity prices which affect their pricing and eventually, their bottom line.

In the successful big-brother models we’ve seen – such as Lionheart Farms in Palawan and Universal Leaf in Ilocos – there is a transfer of technology happening. And in the process, the farmers become more confident to scale up their production.

In big-brother relationships, the MSMEs are taught to adopt good business practices in things like accounting and quality control and, as the partnership grows, the MSMEs are taught how to increase production. They are also assisted in securing capital for this expansion, and by virtue of having a big company to vouch for them – and having been mentored in a sound business model to show to the banks – they are more likely to secure funding.

In this regard, the kuyas (big brothers) in banks and financial services will play a key role in drawing the MSMEs out of the informal sector. Yes, big-brother companies can come in all shapes and sizes; they need not be large manufacturing conglomerates. In fact, the big brothers in banks are important because for far too long, MSMEs stayed small  because of the inaccessibility of finance to small borrowers.

On the other side of the fence, it is quite understandable that small borrowers would not enjoy preferential treatment. Lenders will make more money from big borrowers using the same time and effort to lend to the small borrowers: that is a sad fact, but a fact nonetheless. Fortunately, there are already a few big-brother companies in this sector, and more are joining their fold.

Why should big companies care about MSMEs? Because they are an essential part of their operations and are important to their growth. If you are a manufacturer of consumer goods, you are not a player if you are not in the sari-sari stores. They are, literally, the last mile in your distribution chain, your direct link to the customer.

The big malls will also be the first to say that small entrepreneurs provide a fresh infusion of ideas; they draw traffic and some even become anchor attractions as they reflect local businesses. One explanation offered was that this is because MSMEs “do not operate within existing paradigms, and are not firmly attached to existing technologies and products.”

And because they are from the grassroots, they have their ear to the ground; they know the needs, the current cultural norms, the trends. In developed markets, market researchers closely follow specific people who are somehow – by virtue of their lifestyle or their circles – arbiters or weather vanes of future trends. Smart retailers know to look to MSMEs to see what’s happening on the ground.

But why should we care that MSMEs not just survive, but thrive?

MSMEs take the place of government in some places, especially the MSMEs that operate in the poorest, farthest communities where they offer vital public services, like communication or public transport through simple business operations like running “pisonet” computer shops or ferrying passengers through rural roads.

As far as employment goes, MSMEs, by their nature, tend to be the employers of the conventionally unemployable or the underemployed, such as stay-at-home mothers, out-of-school youths and unskilled workers. MSMEs also augment inadequate wages. Small farmers, for example, tend to have two or three jobs outside of farming; this is how we come to have the farmer-slash-trike driver-slash-construction worker.

We need MSMEs to grow, and we need to do it soon because they now find themselves competing in a world where several challenges are converging, not the least of which is increasingly global markets and digitalization.

That is why, in addition to the big brothers we have in the Philippines, we are now looking to find the “kuyas” in the ASEAN member-states. I was recently in Kuala Lumpur to sign an MOU with my fellow chair in the ASEAN Business Advisory Council, Tan Sri Nazir Razak of Malaysia, to explore agri cooperation and MSME development. Almost all our neighbors in the ASEAN have become agricultural powerhouses and I am sure we have a thing or two to share with them. This is only the beginning.

With KALAP and with all the programs that we have at Go Negosyo, the emphasis is on laying the legal and policy framework to truly help MSMEs, and are looking to even beyond our shores to grow them. That is why we have the three M’s: access to Money, Markets and Mentoring – give MSMEs the means to grow, a place to sell their goods and teach them how to do it.