Micro, Small and Medium Enterprises (MSMEs) need to be financially literate and ready to go digital to adapt to the changing business environment due to the pandemic.
“It is not enough for our MSMEs to barely survive the pandemic. What will drive success is the digital and financial agility to remain resilient and ultimately thrive, ”said Clare Cattleya G. Amador, Public Policy Manager at Facebook Philippines, at the Financial Education Virtual Expo organized by the central bank on Thursday.
MSMEs are important to the economy as they represent about 98% of all businesses in the country, according to data from the Ministry of Trade and Industry. These small businesses were among the hardest hit during the crisis.
Ms Amador said the increase in online transactions means that small businesses face challenges in using digital platforms.
“As the number of businesses and online transactions grows rapidly, the challenges around responsible online platform fees as well as consumer and seller protection are also increasing,” she said.
A Cisco Systems, Inc. study released in October found that 57% of small and medium-sized businesses in the Philippines that have gone digital have experienced a cyberattack in the past year.
George Omer Denis S. Quitoriano, professor at Ateneo de Manila University, said small business owners should set their personal and business goals for better financial management.
“There should be different treatment for the two because business goals have a more important aspect,” he said, noting that some small business owners tend to keep their personal and professional funds together.
Mr Quitoriano added that MSMEs should ensure that they manage their debt responsibly, as it should be used for business expansion and not for personal matters.
“It’s dangerous if we keep getting credit and just spend it. What’s scary is when we already get credit to pay off another credit,” he said.
To help support the MSME sector during the coronavirus pandemic, the central bank last year allowed banks to view MSME loans as an alternative to respecting reserves. Lending to the sector was also given a reduced credit risk weight. – LWT Noble