Written by John Carlo Tria
It is becoming clear that strong local economies are a buffer against disruptions. The lower infection rates in many regions, and the opening up of these local economies are where seeds of economic recovery are growing. Nurturing local economies will enable the country’s economy to bounce back.
As government redoubles efforts to ramp up economic recovery, programs to push greater financial inclusion will help build the resilience in local economies that will be necessary to deal with current and future disruptions.
More financial inclusion will build resilience
Getting more pinoys, especially in the rural areas on these will strengthen their participation and inclusion. The increased capability to handle money will be vital as government rolls out “new thinking” agriculture programs under the Department of Agriculture that can further increase the 1.6% growth in the first half of the year, and deepen the impact and benefit of increased amounts made available for lending under new stimulus programs.
With this, the latest 300 million dollar Asian Development Bank Loan to boost reforms that will promote financial inclusion is welcome. This is on top of other loans to improve agricultural competitiveness. These reforms will be needed to get the poor, especially in the rural areas more on board formal financial systems, such as holding bank accounts that enable them to access small business loans and fintech products. Read more about it here: (https://mb.com.ph/2020/08/22/adb-commits-300-m-loan-for-financial-services/)
Many of the smaller rural banks and non-bank financial institutions, including credit cooperatives are our partners in the implementation of these vital programs. I look forward to the processes that can get more of these MSME oriented financial institutions bringing out more loan products that can assist this vital sector of our economy.
Likewise, it is in these micro and small businesses, that constitute the bulk of all enterprises where majority of employees are engaged, that the recovery of our economy, and its resilience to face continuing and upcoming disruptions will take root to address the economic impacts on jobs and incomes.
It is in the rural areas such as the Visayas and Mindanao where improved financial inclusion will be felt most profoundly, as this will boost the capability of many residents to expand food production, that will lead to lower food prices for the country, and stronger rural livelihoods. Getting financing and improving logistics will also capitalize on the many new farm to market roads that were built over the last few years.
As a response to recovery, this creates a critical opportunity for more returning residents like OFWs and families making their way home away from congested cities like Metro Manila and Cebu.
Culturally, more financial inclusion also strengthens social cohesion, a necessary element that builds peace, development and unified action in addressing not only the health aspects of the fight against the COVID 19 pandemic, but the important recovery and resilience against future disruptions.
Cover image by Shieneth Murro from Pexels.
Article first appeared in the Manila Bulletin website last August 24, 2020.