Supply chain finance to cover 15% of MSME costs by 2024 — UnaCash

UnaCash Supply Chain Financing expects a rapid increase in use of supply chain finance (SCF) among Philippine micro, small, and medium enterprises (MSMEs), forecasting that this set of solutions will cover about 15% 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., a branch of The World Bank, which stated that the Philippine market is estimated to have over US$20 billion in “readily available SCF assets to be taken up by banks and NDTLs (non-bank lending institutions that do not take deposits).”

Considering that the country’s gross domestic product (GDP) is about US$394 billion (2021), and MSME accounts for about 40% of this indicator, SCF schemes are ready to take on about 13% of the annual MSME production, with a level of 15% (in terms of about 6% 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, and we are dedicated to cover operational expenses while making it as accessible as possible to business owners. UnaCash SCF is committed in enhancing the reach of its services and allocating proper channels to make disbursement more efficient for future partners,” said Joana Saplan-Mateo, head of product at UnaCash Supply Chain Financing.

UnaCash, an app with a bespoke array of financing solutions for the underbanked, recognizes the potential of the MSME sector in the Philippines, which comprises at least 99.51% of the country’s market.

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% (P44.9 million) during a very limited period.

Present results are gathered despite rising inflation in the Philippines, having grown to 8.7% as of January 2023, while a national GDP forecast of 6%-7% shows that the local market has a potential of leading economic growth in Asia-Pacific, due to the pent-up demand caused by the COVID-19 restrictions. This also involves the high degree of involvement on import-export relations and the promise of bringing in a powerful digital transformation of the national economy of US$ 100 billion by 2030, according to an Access Partnership report.

As an emerging national solution in the SCF market, UnaCash SCF identified the top industries in the local setting where SCF has penetrated its market distribution since the fourth quarter of 2022 to present: 29% for retail, 12.95% for construction, and a growing number of 8.93% for import and export trading industry. This secured collective growth in terms of successfully supporting the business continuity of these MSMEs.

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.

“UnaCash SCF aims to support the majority of businesses in the country, its service focusing on providing more accessible means to ensure that business continuity is possible, even in the midst of the rising rate of inflation. So far, we have a growing number of more than two hundred applicants, with approved applications of P85.6 million and counting,” Ms. Saplan-Mateo concluded.

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