USAID launches P1-B PH MSME digital transformation

USAID, the principal US government agency to extend assistance to countries, launched a P1 billion digitalization program that aims to digitally transform 30,000 small micro and medium enterprises (MSMEs) over a five-year period.

US Ambassador to the Philippines MaryKay Carlson announced the $18 million (P1 billion) fund during the public launch of the USAID Strengthening Private Enterprise for the Digital Economy (SPEED) on Wednesday, Jan. 11, 2023.

“SPEED signals the US government's strong commitment to supporting the Philippine government's vision of a digital Philippines,” said Carlson.

USAID SPEED is a new project that will enable Philippines MSMEs to participate safely, reliably, and competitively in the country’s emerging e-commerce ecosystem.

The five-year project aims to help build an inclusive, market-driven, growth-expanded, and private sector-led digital economy for the Philippines where e-commerce sales is expected to reach $25 billion by 2025 from $22.95 billion in 2023.

“Our goal is to transform that least at least 30,000 SMEs across the country, their operational efficiency, productivity and sales, and by expanding their opportunities to grow into more mature and bigger enterprises,” said Carlson.

In five years, Carlson said, “We plan to create a robust digital ecosystem, where digital payments and logistics networks are pervasive and interoperable, allowing enterprises and customers nationwide to conduct seamless e commerce transactions.”

Carlson also announced the launch of the Philippine e Commerce Alliance, a broad-based private sector led coalition of business organizations technology companies and business on onto enterprises that will advocate for E commerce development, including policy reforms and self-regulation best practices that will enable the establishment of an inclusive digital economy in the Philippines.

Under the SPEED project, USAID will continue to work with the Philippine government and private sector partners, including technology experts and innovators to create an efficient and interoperable logistics and digital payments ecosystem and to assist in the establishment of domestic and cross border trade processes to promote inclusive business development and increase SME participation in global value chains.

The SPEED will assist the DTI to achieve its goal on the onboarding 1000s of SMEs into the various digital platforms. The USAID will also assist the Bangko Sentral ng Pilipinas to reach its target of 50 percent e payment transactions in 2023 and higher e payments uptake in the succeeding years.

In addition, the US agency will explore collaboration with other government agencies such as the Department of Agriculture to expand agribusiness ecommerce and help address challenges in agriculture supply chains.

“We will strengthen partnerships with the private sector to drive innovation and create market-oriented solutions to unlock the vast potential of the digital economy,” she added.

The US Ambassador further asked everyone present to work together to realize the vision of a future where digital technology increases productivity, encourages innovation promotes inclusive growth. catalyzes economic development, creates job opportunities and empowers all including, and especially the most vulnerable as friends, partners and allies.

Meantime, DTI Secretary Alfredo E. Pascual said the Nueva Viscaya Agricultural Terminal Inc. (NVAT) has been identified as pilot site in the implementation of end-to-end e-commerce platform under the USAID SPEED.

In a speech at the public launch, Pascual expressed hope that USAID SPEED include NVAT for technical support toward digitalized supply chains and efficient logistics from farm to fork.

“NVAT serves bulk of the Cagayan Valley Region's vegetable requirements, as well as Luzon and Metro Manila,” Pascual pointed out.

With SPEED, Pascual said USAID can be DTI’s partner in empowering small and medium enterprises through digital transformation.

He said that one of DTI’s strategic actions is to upgrade, upskill, and upsize MSMEs. Key in DTI’s support to scale MSMEs is to help them overcome constraints to their access to technology.

“We aim to enable MSMEs to embrace digital transformation. This way, I believe DTI and SPEED’s directions to enhance SME capacities align,” he said.

Pascual explained that when digitalized, micro small and medium enterprises (MSMEs) can operate more efficiently, reduce costs, reach bigger markets, and earn more profits. For example, digital systems of enterprises can accumulate cashflow data on sales, use enterprise data for credit scoring, and provide access to cashflow-based credit. “But digitalizing SMEs is different from digitalizing enterprises of other sizes. And this is where the appropriateness of SPEED’s initiatives becomes relevant,” he added.

To further support MSMEs’ digitalization, DTI is working with the Department of Information and Communications Technology to build a free e-commerce platform.

“This should help MSMEs pivot from offline to online. And it may serve business-to-business(B2B) and business-to-consumer (B2C)functions for MSMEs,” said Pascual.