WOMEN’S MICROENTERPRISES

In this era of globalization and virtual mobility of money, ideas and people across borders, enterprises are in constant process of starting, expanding, then contracting and disappearing. More so with home-based microenterprises. But we know that these enterprises create jobs faster than they lose them. They create new ones to replace the ones that met their early exit from the scene due to loss of market, marginality and lack of competitiveness.

Their net contribution to the national production is very much positive, though their performance is unrecorded as they remain in the so-called shadow economy.

Microenterprises are actually home-based livelihoods run by the housewives or women in the family. They are economically active in the so called informal sector and, often, are exposed to risks and have very short life span because of lack of support systems. In the Philippines, 62 percent of Filipino women are active players in the informal sector, according to a report of the ESCAP of the United Nations. Even the overseas Filipino women workers who are already working abroad as wage earners, are also economically active as informal sector microentrepreneurs.

According to a Newsweek report, overseas Filipino workers send home to their families USD 6 to 7 billion a year, almost half of the national budget. Of these, majority of remittances come from Filipino women overseas workers.

Imagine the potentials, if the home-based microentrepreneurs together with their counterpart overseas Filipino women workers engaging in entrepreneurship, join hands to address the market opportunities. This could be a force that could jolt the lethargic nation into a new dawn of economic life.

Let us take a close look at the characteristics of these
microenterprises.

They start small, in the private milieu of the home and family, which is why they are generally unacknowledged, undocumented, their economic impact unmeasured. They come into existence without the benefit of formal study of the ins and outs of managing business. Often, the managers of these microenterprises run the business on trial and error. They have all the motivation, but lack the opportunity and the skill to make the business run for a very long time with meaningful success. But when they shed this makeshift form and take on greater stability and sustainability, to them are attributed a potency that makes them precursors of a country’s “engines of growth.”

If the national economy were a pyramid, with very large enterprises at the top, certainly the massive base is composed of microenterprises most likely driven by women. The setting of most of their birth, the motive forces which bring them into being, and their very paucity in starting capital and inadequacy in management, make them a natural challenge for women. But being the early form and starting point of small business, the type considered “engines of growth,” they have become equally crucial to an economy taking the road to development and progress.

By that token, the interest of the Asia Pacific Economic Cooperation (APEC) was drawn to it, and sometime in 1997 had a study made of women engaged in small and medium enterprises (SMEs) in the region-only to find there were no available data on the subject. The situation, understandably, was worse for microenterprises. It has not changed much since that time. But the study came out with interesting results. One reality which can be gleaned from available data is that microenterprises in the Philippines would probably be far outpacing small business and medium enterprises in number and scale of start-ups.

Women in the country’s work force had been increasing in the last decade. From nine million in 1995, they increased to 11 million in 1997, according to statistics collated by NCRFW (National Commission on the Role of Filipino Women) and Ibon, respectively.

In this respect, 1997 figures from the NSO (National Statistics Office) affirm that 44.7% of working women are engaged in small-scale entrepreneurial ventures. These women, according to Ibon (1997), operate their business usually without hired help and with very low level of technology, and that work for them takes 16 hours a day, which they divide between work at home and work in the business.

According to a study, these are the sidewalk vendors, small food shop operators, dressmakers, handicraft producers in cottage industries and retailers-traders. The overwhelming majority are operators of “sari-sari” stores-small, hole-in-the-wall type of retail vending of a large variety of household and consumer items.

Sidewalk vendors, street hawkers, and “sari-sari” store operators, being mostly undocumented and unregistered, comprise what in the Philippines are classified as “underground economy.” This type of business activity remain small in asset size and operation. Also, they draw their starting capital usually from personal savings, from proceeds of inheritance, or from family sources, or the neighborhood cutthroat.

On the other hand, cottage handicraft producers, food processors, and wearing apparel makers are what usually start as small, home-based, backyard or garage business types which, when they meet relative success, expand in operation and assets and qualify as what are termed as “small” business. When these expand further, they become “medium” business.

To give a delineation among these entities, the Small and Medium Enterprise Development Council (SMEDC) had set ranges according to asset size and employment size. A small enterprise is understood as one with an asset of Php 1.5 million to Php 15 million, with 10 to 99 employees. One with an asset above Php 15 million to Php 60 million, with 100 to 199 employees, is considered medium enterprise.

These ranges were amended in January 2003 by an SMEDC Resolution approved by its chairman, Trade Secretary Mar Roxas. A business activity with a value of up to Php 3 million is to be categorized as micro, while that with Php 3 million to Php 15 million as small, and that with Php 15 million to Php 100 million as medium.

Any enterprise with total assets of more than Php 100 million is to be classified as large enterprise.

Perhaps lending legitimacy to what has been generally put aside as “underground,” Congress passed an Act (Republic Act No. 9178), which gave acknowledgment to the economic contribution of microenterprises, and expressed the need to “promote the establishment of Barangay Micro Business Enterprises (BMBEs)” in the country’s communities. The Act was signed into law by President Gloria Macapagal-Arroyo on November 13, 2002.

More importantly, the law set in motion an incentives and promotions program for microenterprises that directly addresses the problems encountered by this type of business: namely, funding sources, technical and institutional support services.

Aside from tax exemption incentives, the law set up a
mechanism of credit delivery designed to help micro entrepreneurs financially. Government financing institutions (GFIs) were enjoined to set up a special credit window, through which they can wholesale funds for this business type to private financial institutions and community-based credit cooperatives, non-government organizations (NGOs) and people organizations (POs).

These second-level institutions will in turn directly offer
credit support to local microenterprises.

The GFIs involved in the credit delivery system are the Land Bank of the Philippines, the Small Business Guarantee and Finance Corporation (SBGFC), and the People’s Credit and Finance Corporation. The GSIS (Government Service Insurance System) would likewise set up a special credit window to serve the financing needs along this aim of its members.

To shore up credit to be extended by these GFIs, a guarantee system will be provided by the SBGFC and QUEDANCOR (Quedan and Rural Credit Guarantee Corporation).

At the same time, the government also moved to strengthen small and medium business activities. The Department of Trade and Industry, through Secretary Mar Roxas, launched recently an SME unified lending program, which envisions an annual credit package of Php 30 billion for small and medium enterprises starting this year.

Geared to counteract unemployment downtrends, a Php 10 billion window for soft loans available to SMEs was opened by Pres. Arroyo.

The interest rates of 9 percent, 11.25 percent and 12.75 percent for short-term, medium-term and three-year-term loans, respectively, should be a shot in the arm for small and medium business establishments in the National Capital Region, Central Luzon and Southern Tagalog.

Aside from real estate, other collaterals allowed are post-dated checks, assignment of life insurance and guarantee cover, the corporate guarantee or assignment of lease rights to the bank (in case of franchise), or assignment of letters of credit, purchase orders or sales invoices (in case of products for export).

All made up for export

Women micro and small entrepreneurs should find these developments, working in tandem with self-propelled initiatives, as auguring a fine future for their pet undertakings.

In our search for fresh ideas for economic growth, perhaps we should not look farther than the very community where our population is based. From there, business can spring, starting with old ideas but given fresh look, focusing on the obvious rather than some fantastic entrepreneurial dreams still beyond our reach. It is heartening to know that the government is putting in all the structures and changes to nurture an entrepreneurship culture that could transform impossibilities into workable and manageable microenterprises.

Imagine if the unused money and capital plus market exposure of our overseas Filipino women are linked with locally-struggling, but growing microenterprises, the possibilities are great for women joint ventures making great leap into the global marketplace.

Motivation, opportunity and skill. These are three ingredients that make up a successful enterprise. For microenterprises, motivation is there, but still very much lacking in opportunity and skill. These are gaps we should all work together to fill, for in the long haul, the measures and means to fill these are in our midst.