Empowering MSMEs in Dinagat Island province

 

By Rose de la Cruz

 

Bangko Sentral ng Pilipinas is soon signing a memorandum of agreement with the local officials of the island province of Dinagat to establish the Dinagat Island Credit Surety Fund that would finance cooperatives, capital-short businessmen and micro small and medium enterprises (MSMEs).

 

BSP Monetary Board member Bruce Tolentino is flying to Dinagat to sign the MOA with Provincial Gov. Glenda Ecleo in the presence of stakeholders at the Provincial Guest Center, Capito Compound, Cuarinta, San Jose, Dinagat.

 

Initiated by BSP in August 2008, the Credit Surety Fund Program is a credit enhancement scheme designed to increase the creditworthiness of cooperatives, businessmen and micro, small and medium enterprises (MSMEs) that are encountering difficulties in getting access to bank credit due to lack of acceptable collaterals and credit information.

 

It is created by the pooling of cash contributions from participating cooperatives, local government units and partner institutions, which will then serve as security for loans extended by banks to MSMEs in lieu of acceptable collaterals.

 

The passage of Republic Act 10744 (or the CSF Cooperative Act) in 2016 institutionalized the Credit Surety Fund Program, granting the CSF a separate juridical personality as a special type of cooperative. Under this law, CSF Cooperatives will be regulated and supervised by the Cooperative Development Authority, being the country’s statutory regulator of cooperatives.

 

As of 28 August 2018, 16 cooperatives pledged to contribute an aggregate amount of P2.1 million to the Dinagat Islands CSF, while the provincial government has initially pledged P3.0 million. Development Bank of the Philippines and Land Bank of the Philippines are also expected to put up their counterpart contributions to the Dinagat Island CSF. Through this program, the participating cooperatives and their MSME members with viable business plans can obtain loans from banks even without collaterals. This will usher in more economic activities and will create more job opportunities that translate to increase in household income.

 

Two more CSFs are expected to be launched before the year ends. These are the CSFs in the Province of Ifugao and in the City of Tacurong, Sultan Kudarat.

 

Now on its 10th year, the CSF Program has been established in 32 provinces and 20 cities nationwide.

 

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