Category Archives: Social Enterprise

SMEs in the Philippines

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This is the second post in a three-part series on SMEs.

In an earlier post, I discussed another area of development – SMEs – that is both important for creating sustained growth, and has recently attracted interest from investors.  The Philippines is also placing a lot of emphasis on this area of development.

The Philippines is actually in good shape regarding SMEs, as it has an abundant labor pool.  The country has 800,000 registered businesses, of which ~7% are classified as either small (10-99 employees, $60K to $300K in assets) or medium (100-199 employees, $300K to $2M in assets).  Only 0.4% of the business earn above the $2M mark.  The remaining 92% are microenterprises, which have between 1 and 9 employees and earn less than $60K in assets.  These MSMEs (including microenterprises) account for 70% of the labor force and 30% of the output of the country.

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Hapinoy

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Here in the Philippines, the most common use for a microloan is a sari-sari store – otherwise known as a general or convenience store.  There are an estimated 700,000 of them here, and you can find one on just about every block in the country.  In 2007, an organization called Microventures Incorporated introduced its Hapinoy program, which is a coop of sari sari stores across the country.  By joining together, these stores can get leverage economies of scale to get volume discounts, competitive pricing, and more favorable terms for microloans.  The organization purchases products in bulk from Procter & Gamble and other large manufacturers, and distributes them to each Hapinoy store via a community store.  It is a hub-and-spoke model with a wholesale store serving different regions.  Here is a program that operates within the existing framework of the country, improving what exists, rather than trying to change it altogether. Continue reading →