Supply chain finance (SCF) solutions provider expects a rapid increase in use of SCF among micro, small, and medium enterprises (MSMEs), forecasting that this set of solutions will cover about 15 percent of the cost of the entire volume of goods and services produced by the sector by 2024.
The forecast follows the examination of the Philippines Supply Chain Finance Market Development Report by International Finance Corp. which said the Philippine market is estimated to have over $20 billion in readily available SCF assets to be taken up by banks and non-bank lending institutions that do not take deposits
Considering that the country’s gross domestic product (GDP) is about $394 billion (2021), and MSMEs account for about 40 percent of this indicator, SCF schemes are ready to take on about 13 percent of the annual MSME production, with a level of 15 percent (in terms of about 6 percent of GDP in 2021) as a very realistic benchmark for SCF companies for the next year, given the high demand for the service and the expected rapid growth in its supply in the local market.
“Supply chain financing is steadily growing its presence in the country as short-term loans have proven to be effective to support small and medium scale businesses,” said Joana Saplan-Mateo, head of Product of UnaCash Supply Chain Financing.
Through SCF, business owners will ensure operational expenses will be covered, despite rising inflation and the lingering effects brought by the pandemic to the economy.
Saplan-Mateo said SCF recognizes the potential of the MSME sector in the local market and has penetrated retail, construction, and import and export trading industries since the fourth quarter of 2022, showing promising results. UnaCash SCF have a growing number of more than 200 applicants, with approved applications of P85.6 million and counting.
Through one of its services, UnaCash Supply Chain Financing, a revolving credit line and bridged financing facility readily addresses the gap between supplier and the market’s demands.
This led to successfully addressing the disruption in supply chain turnover beginning in the fourth quarter of 2022, having secured a disbursement target of 64 percent (P44.9 million) during a very limited period.
UnaCash SCF said the top industries in the local setting where SCF has penetrated its market distribution since the fourth quarter of 2022 to present: 29 percent for retail, 12.95 percent for construction, and lastly, a growing number of 8.93 percent for import and export trading industry.
UnaCash SCF also sees great potential in introducing supply chain financing in growing industries such as health and medical, manufacturing, IT solutions, e-commerce, and agriculture. Irma Isip
