When government programs work
For this column, I want to share with readers the performance of a small fund, the Industrial Guarantee and Loan Fund (IGLF), which has quietly but consistently served the MSME sector over 65 years now. The story of IGLF shows that there are government programs that work, as long as it is managed professionally and kept free from as much political interference as possible.
BRIEF HISTORY
A few years after World War II, during the trying period of rehabilitation, the Philippines signed an Economic and Technical Cooperation Agreement with the United States of America (US). The IGLF was established through a Counterpart Project Agreement entered by and between the Philippine Council for United States Aid and the Mutual Security Agreement.
It was created for the purpose of providing assistance to local enterprises engaged in export-oriented activities like mining and manufacturing. Specifically, the purpose of the IGLF was: “To encourage and assist in the establishment, expansion and refinancing of small and medium-size industrial, mining and other enterprises, but with emphasis on smallscale industries.”
Administration of IGLF was a function of the former Central Bank of the Philippines and was transferred to the Development Bank of the Philippines effective August 1990. The IGLF under the Development Bank of the Philippines encouraged MSME loan availments in the countryside, promoted industry dispersal and pushed for more value-adding enterprises. Moreover, it aligned with the MSME Development Plans of the country. It established the IGLF Grant for Research and Promotion to support the technical assistance, developmental, promotion and capacity building needs of MSMEs.
IGLF has also been a major fund contributor to the Credit Surety Fund, a credit enhancement scheme conceptualized by the Bangko Sentral ng Pilipinas which aims to improve the bankability and credit worthiness of capital-short micro, small and medium entrepreneurs. The goal is to open up lending opportunities to entrepreneurs deemed unbankable for lack of collateral. In fact, while BSP won a Governance Award for its credit surety fund initiatives, IGLF has been instrumental in making this happen not just in the funding side but also in its strategic formation and training needs.
Now, in its 65th year of existence, the IGLF has built a solid track record of helping Filipino entrepreneurs.
QUICK REVIEW OF OPERATIONS
IGLF’s performance continues to indicate favorable management of resources. It has paid out all its foreign obligations to the World Bank and with only the Asian Development Bank having a remaining balance of P305 million. IGLF has grown the government’s