Banks urged to ease access to farm funding
Incoming central bank governor Nestor Espenilla Jr. is urging banks and financial institutions to harness opportunities in agrifinance to help drive financial inclusion.
At the Bangko Sentral ng Pilipinas- Asian Development Bank Conference on Financing Agriculture Value Chains in the Philippines Wednesday, Espenilla noted the agriculture sector’s lack of access to financing, which is one of the factors that has hampered its growth.
Access to finance is a key driver of economic recovery, he said as he urged institutions to improve financial services for agriculture.
Espenilla said agriculture remains the primary source of income for 31 percent of the workforce and that 32 percent of the country comprises rural agricultural land.
However, the sector’s share to the country’s gross domestic product lags behind other sectors declining from 10.5 percent int 2013 to only 9.7 there are fundamental constraints hampering the sector’s potential for growth,” Espenilla said.
Espenilla cited data from the Agricultural Credit Policy Council (ACPC), which showed that 53 percent of farmers in the country obtain their loans from informal sources.
“My hope is that the banks and other financial institutions will see the ACPC figures as an invitation to study the agricultural sector closer and to recognize the business opportunities and growth potential that they can offer,” Espenilla said.
Espenilla highlighted the private sector’s role to provide adequate financial services to the agriculture sector.
He emphasized that both the private and public sector need to work together to improve the availability of agricultural finance to promote sustainable supply chains.
“On our part, the BSP’s efforts in building an inclusive financial system resulted in improved access to a wide range of financial products and services that empowers individuals to seize economic opportunities,” Espenilla said.
Catering to the unserved and underserved markets to achieve financial inclusion will be one of his priorities when he formally takes the reins of the BSP.
“Our approach has been to develop enabling policies and regulations that encourage financial institutions to reach unserved and underserved markets in a sustainable manner,” he said.
Espenilla will officially assume the top BSP post beginning July with his platform, “Continuity Plus Plus.”
“The plus plus is built on that and it is built on promoting greater financial inclusion, achieving more consumer protection so that the financial system is truly relevant to all and that no one left is left behind,” Espenilla said.