Micro, small, and medium enterprises (MSMEs) have yet to fully recover from the impact of the COVID-19 pandemic as loans extended to the sector declined by 3.6 percent to P463.13 billion last year from P480.5 billion in 2020.
The Bangko Sentral ng Pilipinas (BSP) reported the sector’s overall compliance ratio of 5.41 percent last year also proved below the required 10 percent mandate under Republic Act No. 6977 as amended by RA 8289 and RA 9501 otherwise known as the Magna Carta for SMEs.
Statistics released by the central bank showed credit allocation to micro and small enterprises reached P178.14 billion, short of the mandated P685.68 billion or eight percent as it only accounted for a 2.08 percent compliance.
Likewise, funds allocated to medium enterprises amounted to P284.99 billion or higher than the required P171.42 billion for a compliance ratio of 3.33 percent, higher than the two percent threshold.
As the economy continues to open up, the lending portfolio of Philippine banks inched up by 1.9 percent to P8.57 trillion last year from P8.41 trillion in 2020.
MSMEs play a very important role contributing 35.7 percent of the total value added to the Philippine economy and accounts for 99.5 percent of the total establishments and employ 62.8 percent of the total labor force.
The sector unable to reach its full potential due to lack of access to credit especially now that banks are risk averse due to pandemic-induced uncertainties.