#MINDANAO
It has often been said that Micro Small and Medium Enterprises (MSMEs) form the backbone of the economy. MSMEs are firms employing 10 to 199 staff at any given time.
The latest figures from the Department of Trade and Industry and the Philippine Statistics Authority reveal the strength of this backbone, with 99 percent of the more than one million registered businesses employing almost 8.5 million individuals or 64 percent of the total Filipino workforce. This is further broken down to 32.46 percent from microbusinesses and 25.08 percent form small businesses. Taken together, MSMEs contribute almost 35.7 percent of economic value added.
This figure and contribution of MSMEs is clear in our major cities. In my view, however, these numbers and the resulting contribution are even higher in the smaller municipalities, where more informal or unregistered businesses are present. These represent many small stalls and shops where many rural Pinoys make their living, source daily essentials, buy afternoon snacks, and secure quick repairs for appliances, apparel, and footwear. Go to any municipal marketplace or transport terminal and you will see my point.
Thus, in smaller municipalities when you combine the formal and informal business sectors, you have the major part of the local economy. Take them out of the equation in small towns and you will have no real local economy to speak of. Moreover, in the case of many rural areas, a robust local economy means peace, development, and inclusion. The social importance of MSMEs is apparent.
The next question of course is a vital one. How can MSMEs expand their role in building the local economy? Can they absorb more of our young people entering the workforce? One of the keys is stronger MSMEs.
Specifically, we need to help our rural MSMEs grow, expand and scale up. This will encourage capital accumulation by local businesses for future expansion and resilience. This can also allow them to expand and absorb the thousands of Filipinos who enter the workforce every year.
How can we achieve this? I have four suggested steps.
A good first step is to access good credit. Without this, expansion cannot happen. Many MSMEs will consider expansion if they have access to financing. The rise of digital banks plays a big part in boosting their inclusion in the financial system since it allows them to apply for formal financing at lower interest, compared to the usually higher interest rates charged by informal lenders.
Another step is marketing support. This is where agencies such as the Department of Trade and Industry and the Agricultural Marketing Service of the Department of Agriculture will play a large role. The One town One product program, the online go local and other programs by online purchasing apps will go a long way to ensuring that our MSMEs have a broader market to serve. These two agencies are the key to encouraging scale and growth.
The third step is developing business skills. Recently the University of the Philippines Mindanao School of Management offered strategic planning expertise for local MSMEs. This knowledge will sharpen their own business skills and allow MSME owners to seek new markets and suppliers. Added skills foster long-term growth, engage innovation and give the business owner the confidence to expand. Our State Colleges and universities can adopt similar extension programs for local community-based businesses.
A fourth step to empower MSMEs is a practical and personal one: encourage your friends who are local MSME owners. Patronize their products. Encourage partnerships. Your personal encouragement goes a long way to build confidence.