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IFC Helps Philippine Bank Improve Access to Credit for Small Agribusinesses in Mindanao

Manila, the Philippines, April 14, 2014 —IFC, a member of the World Bank Group, will advise Rizal Microbank on better understanding the financing needs and risk profiles of agricultural suppliers, traders, and service providers with the aim of expanding lending to smallholder farmers, create jobs and reduce poverty in the Philippine island of Mindanao.  
Rizal Microbank has disbursed 12,000 loans amounting to more than 1 billion Philippine pesos to clients including dealers of seeds, fertilizers, machinery and agrichemicals, farm-produce traders and processors, and post-harvest facility providers, in  Mindanao and southern Luzon in its four years of operation, with the loans ranging from 50,000 to 1 million pesos. The Davao-based thrift bank is a subsidiary of Rizal Commercial Banking Corp., a leading Philippine lender in which IFC has invested $150 million in equity to help increase lending to small and medium enterprises, including those headed by women entrepreneurs.
IFC will help Rizal Microbank improve its capacity and risk management so that it can make quicker and better decisions in approving loans for agricultural suppliers, traders and service providers. The bank will later explore lending directly to farmers after gaining a better understanding of the risks involved.
“IFC will be working with Rizal Microbank to gain a better understanding of the financing need, repayment capacity, and risk profile of agricultural value-chain players so that the appropriate financial services can be offered to them,” said IFC Resident Representative Jesse Ang. “This will improve access to credit in the farming sector, where financing is very limited, and help create more jobs and lift people out of poverty.”
IFC’s agrifinance program focuses on raising the declining productivity of farms, which comprise a third of the country’s usable land and a third of the Philippines’ working population. Since banks have been allotting only 5 percent of their total loans to agriculture, the agrifinance program, which is supported by funding from Canada, aims to improve access to credit for farmers.
“IFC’s technical know-how will accelerate our efforts in increasing lending to agricultural players such as suppliers, traders, processors, and post-harvest facility providers. Most of them are small enterprises,” said Maria Lourdes S. Pineda, President of Rizal Microbank. “Our bank sees great potential in Mindanao’s agricultural sector, which contributes significantly to the country’s total agricultural output.”
Mindanao is considered the Philippines’ agricultural basin, particularly in terms of rice, corn, coconut, coffee, fruits, vegetables, and fisheries products. The entire island contributes significantly to the corn feed, livestock, and poultry subsectors, which increase the gross value of the economy by 37 percent.
The Philippine agribusiness sector employed a third of the country’s workforce, or around 13 million people, but contributed only 11 percent of the country’s gross domestic product in 2012. Agribusiness growth declined to 2.9 percent in 2012 from 4.9 percent in 2007.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. Working with private enterprises in more than 100 countries, we use our capital, expertise, and influence to help eliminate extreme poverty and promote shared prosperity. In FY13, our investments climbed to an all-time high of nearly $25 billion, leveraging the power of the private sector to create jobs and tackle the world’s most pressing development challenges. For more information, visit www.ifc.org .
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