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Only 5% of microenterprises back to “normal” in first week of GCQ

SEDPI Rapid community assessment on the impact of COVID-19 Update 5

A measly 5% of microenterprises reported that they are back to “normal” operations when they opened for business after the enhanced community quarantine (ECQ) was lifted. Normal operations means robust market demand and stable supply chain.

Thirty-two percent of the microenterprises remain shut when general community quarantine (GCQ) was implemented starting May 1, an improvement from 57% the previous week. The remaining 63% reported that their livelihood weakend.

Three out of ten microenterprises expect robust demand for their products and services in the coming week. This market sentiment went down from half of them expecting better sales last week. Their confidence to access supply for their livelihood remain high at 80%, slightly down from 85% the previous week.

The research is part of a series of rapid community assessments that determines the economic impact of COVID-19 lockdown to microenterprises and the informal sector. SEDPI, a microfinance institution (MFI), performed the survey from May 4-8 with 4,578 respondents located in Agusan del Sur and Surigao del Sur.

Microenterprise outlook

During the first week of GCQ, 88% of microenterprises are confident to bounce back within two months if they have sufficient capital to restart their livelihoods. This is an improvement from 66% the previous week. The amount of financing needed to restart range between PhP3,000 to PhP9,000.

Financing options

All respondents are SEDPI members who accessed financial services such as loans, savings, insurance as well as financial literacy trainings. Ninety-five percent are women who have loans up to PhP20,000 payable in six months to finance their livelihoods such as sari-sari stores, carinderia, farmers, fisherfolks, dressmaking and vending. The loans bear an interest rate of 3.33% per month which is comparable to credit cards interest rates.

More and more of the members prefer to resume normal repayments without need for refinancing or restructuring when the community quarantine is lifted. This improved from 47% last April 24 back when ECQ was still implemented to 70% during the first week of GCQ. Conversely, those requesting for restructuring went down from 36% to 20%; and those needing refinancing went down from a high of 23% to 10%.

The shift in preferred financing options may be due to the short term nature of the loans that ranges from 3-6 months. Members are able to repay their loans quickly and could access repeat loans immediately. The cash assistance from the government may have also afforded microenterprises some elbow room in managing their finances, therefore there is less need for restructuring and refinancing.

MFIs as essential service amidst COVID

Based on data from the Bangko Sentral ng Pilipinas, microfinance is a PhP335 billion industry as of September 2019. There are currently around 159 rural banks, 3,881 credit cooperatives and 2,861 microfinance NGOs in the Philippines. SEDPI estimates that there are approximately 8 million low income households that access microfinance services in the Philippines.

The Inter Agency Task Force (IATF) classified MFIs as frontliners in the delivery of financial services to low income groups who find it difficult to open deposit accounts and access loans from commercial banks. This enabled MFIs to continue extending much needed financial services at the bottom of the pyramid.

MFIs are expected to face mass defaults from their borrowers and liquidity challenge due to the impact of COVID-19.

Government assistance

Almost all of SEDPI members were able to receive relief goods from the government. The relief goods were mostly rice, canned goods and soap that would fulfill the needs of households in one to four days.

During the rapid community assessment conducted on April 6, only 10% of members were able to receive the cash assistance program from the government. This improved to 48% on April 24, 60% on April 30 and 75% on May 8. Each household received PhP3,000 to PhP5,000.

Moving microenterprises forward amidst COVID-19

In the past three weeks, there were no reported suspect, probable nor confirmed case of COVID-19 among the respondents. This is a positive indicator that the quarantine measures are working and the government is succeeding in flattening the curve of infection.

As the government eases up community quarantines, the next task at hand is rebooting the economy. There should be priority extended to microenterprises since they are among the most vulnerable groups and are most in need of social protection and economic assistance.

SEDPI estimates that PhP40B economic assistance to microenterprises channeled through microfinance institutions will address their financing needs to jumpstart their livelihoods. This is based on 8 million estimated number of microenterprises and PhP5,000 economic assistance package.

The negative impact of the community quarantine to microenterprises is undeniable. The research shows a ray of hope that rebuilding and recovery may happen faster if the right support to microenterprises are provided at the right time.

Previous Updates:

Trend of microenterprise status


Anong assistance ang nakuha mo mula sa gobyerno?

May bibili ba agad sa produkto at serbisyo kapag nagbukas na ang negosyo?

May supply ka bang makukuha kapag ikaw nagsimula ulit sa iyong negosyo?

Gaano ka katagal makabangon kapag nagbukas na ulit ang negosyo mo?


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