The 3Ms for MSMEs

It has often been said that the MSMEs sector in this country accounts for 99 percent of the country’s total businesses. It employs as much as 66 percent of the country’s workforce. This sector is supposedly the engine growth but in total value they only account for a third of the country’s GDP. If fully harnessed, there will be an explosion of wealth. That’s why if inclusive growth is to be attained, it should be through making these MSMEs successful.

“Inclusive Growth – you probably heard it from a government program or during the State of the Nation Address of the President. But Inclusive Growth has grown from being a slogan to being a true imperative for the country,” stressed Senator Bam Aquino recently.

“Inclusive Growth must be the true, palpable revolution in the Philippines. And the key to this Inclusive Growth in our country is the success of our MSME sector. Our MSME sector will provide jobs that many of our countrymen need and will support our local economy,” he said.

Aquino cited 3Ms that should make MSMEs successful. Based on his experience in social enterprise as cofounder of Hapinoy Program in 2007, he said the 3Ms stand for Money, Mentorship, and Market.

For Money, there is a need to establish microfinance partnerships to offer the MSMEs loans to allow them to grow, earn, save, and even invest in new businesses.

The second is M stands for Mentorship. After the MSMEs are linked to fund sources, they need to develop the skills to handle money through financial literacy seminars and standard business training programs.

“But what we found was the importance of our second M, which is mentorship,” he said.

Alongside developing business and entrepreneurial skills, Aquino included personal and family development modules to their training. It was this coupling of personal development and business skills development that gave rise to a true transformation of the MSMEs, who are mostly mothers.

“These able entrepreneurs were ready to take on opportunities to grow their businesses and take charge of improving their lives. They were ready for the third and final M – Market,” he said.

This is where the program of linking these micro enterprises to suppliers and distributors in their area and equipped them to manage their own customers.

“Supporting these microentrepreneurs with the 3Ms empowered them to build sustainable and profitable businesses,” he said.

Now, as a senator and chairman of the committee on trade and entrepreneurship, Aquino was able to pass laws that circled around the 3Ms to support MSMEs.

The Microfinance NGOs Act has recently been ratified and is now just awaiting the President’s signature. This will be the senator’s 6th law.

This piece of legislation

was drafted in coordination with and in support of microfinance NGOs that provide a variety of non-collateralized loans to low-income households.

The Microfinance NGOs Act will encourage microfinance institutions to transition to becoming microfinance NGOs that provide more than just loans or financial assistance but also provide training programs and seminars to enhance the entrepreneurial skills and financial literacy of their borrowers.

Another measure the Senate is currently taking up and is now in the period of individual amendments is the Credit Surety Fund Cooperative Act. This is another measure under Money and is a measure that will support small and medium enterprises in accessing credit.

This targets the missing middle – maybe something applicable to the SMEs here. SMEs with loan requirements that range from R500,000 to R5 million will be catered to by the Credit Surety Fund Cooperative Act.

“This is what we perceive to be missing in our financing landscape,” he said.

When it comes to micro, we have the cooperatives and the microfinance institutions. When it comes to the medium and large, our banks are actually quite willing to provide loans.

But this small enterprise space that we perceive to still be a missing middle will, hopefully, be catered to through the Credit Surety Fund Cooperative Act.

Under Mentorship, Aquino cited the Republic Act Number 10679 or the Youth Entrepreneurship Act, which was signed into law last August 27.

“This is our bet on the youth because it includes financial literacy and entrepreneurial training in basic education – grooming young Filipinos to become the successful entrepreneurs and social entrepreneurs of the future,” he said. .

This measure also has provisions on enabling promising young entrepreneurs with grants and financing as we put our faith in the youth to generate jobs, not only for themselves but also for the people in their community.

The last M, which is Market, is the passage of Philippine Competition Act.

“We realized there was a need to establish ground rules in doing business in the Philippines for startups and for MSMEs to have better chances of getting a piece of the market share. We need to ensure that businesses are competing in the market through innovation, through quality, and through price and not simply using size and muscle to impose barriers to entry,” Aquino said.

The Philippine Competition Act, 25-years in the making and signed into law last July 21, 2015, will set ground rules to create a fair business environment and penalize abuse in dominant position and anticompetitive behavior to level the playing field for our SMEs. This is the most difficult law that our office has passed. This is a landmark law and I’m very happy to know that you will be discussing this later today.(BCM)