Venture capital for SMEs
The Development Bank of the Philippines has a different idea of people empowerment. It’s not involving people in politics. It’s helping them help themselves make a living.
The DBP will lend them a hand in the form of venture capital.
Reynaldo G. David, DBP president and chief executive officer, told Malaya Business Insight in an interview that the bank is completing a study on venture capital for the rural areas.
He said he and his board of directors are thinking of an initial P500 million for the purpose.
Anybody who can show capability to engage in small business is qualified to get 25 per cent in venture capital from the DBP. That means if the small business has paid capital of P100,000, the DBP will put in P25,000 in equity, not loans. The small businessmen and the DBP become partners.
David said while the money is available to everyone willing to do business, he has a particular preference for overseas Filipino workers.
He said he has long noticed that the money of the OFWs is largely spent on consumption. “They do not invest. They do not realize that everyday that passes, they come close to retirement,” David said.
The possibility is when they retire, they come home to stay in new homes built partly on loans but are not completely paid. They have no savings.
They have to be taught how to make money from their hard-earned money, David said.
On top of his mind is what he calls “bulilit” (small) filling stations in remote areas with one or two pumps.
He said the DBP has been discussing the subject with Petron which will provide the diesel and gasoline engine fuel.
Initially, he said, the DBP will appropriate P500 million for the venture capital project. He admits that the sum is small but explained that he has to see how the project will jell. But he said he is sure it will jell.
Rural Philippines, he said, is motorized mostly by tricycles. But their drivers travel long distances to filling stations. That, he said, is a cost. In some cases, he said, drivers of tricycles, jeepneys and old model cars buy fuel by the bottle. He explained that there are enterprising people in the barrios who retail fuel which is kept in barrels.
The “bulilit” filling stations may even be the watering hole of barrio folks, especially in the evening. That would create a demand for food and drinks. “That is ancillary business,” David said.
“This is one of many multiplier effects we are hoping will be achieved,” David said.
David explained that the DBP’s partners in the venture capital project will have very simple responsibilities. For example, he said, they will have to show the DBP their capabilities in terms of experience and willingness to learn. David explained that the bottom lines are profits, job creation and tax revenues.
Every month, a representative of the DBP will sit down with small businessmen given venture capital to discuss problems, find solutions and suggest how things are to be done.
Of course, he said, the fuel is expensive but the users save fuel – meaning money – going to filling stations which are most of the time about 10 or so kilometers away from the barrios.
The projects qualified for venture capital are so varied they can include family health centers which may be provided with more basic medical equipment such as stethoscopes and small flashlight for the eyes, ears and noses.
The operators will collect a fee from the patients. The service has a social impact that may make people healthy, David said.
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