PROJECT CASTER
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Read the Executive Summary here
Download the Launch Presentation here
The effects of the current COVID-19 pandemic on the economy and several businesses in the country was greatly felt since the implementation of “community quarantines” in an effort to curb the transmission of the disease and build up the capacity of our healthcare systems. As the country gradually eased the quarantine restrictions by June to December 2020, slight improvements in our economy was observed in terms of lower Gross Domestic Product (GDP) contraction and decline in unemployment rate. However, business recovery became more challenging for the micro, small, and medium enterprises (MSMEs) who were experiencing multitude of barriers to continue their operations or restart their business. Similarly, microfinance institutions who were financially supporting the MSMEs also experienced hurdles to recovery due to lower collection rates and higher portfolio risk exposure.
The Collective Action Secretariat to Enhance Resilience of MSMEs and MFIs or Project CASTER has identified various challenges and opportunities that the MSMEs have experienced during and after the implementation of community quarantines in key areas in the country. The two crucial opportunities that emerged during the pandemic are the accelerated adoption of e-commerce platforms among MSMEs and the expanded usage of digital payments to facilitate fund transfers. As physical interactions and mobility became heavily restricted during the community quarantines, digital alternatives have been greatly utilized by MSMEs to keep their businesses afloat.
Meanwhile, despite the opportunities presented by digital platforms on businesses, most MSMEs are still experiencing slow recovery of consumer demand, inadequate access to finance and affordable capital, barriers to digitalization, disruption of operations, and lack of resilience & risk management tools. These challenges continue to exist as the Philippines continues to be exposed to various threats such as natural calamities and the resurgence of greater transmission of COVID-19 due to new variants entering the country.
Despite the current efforts to respond to the needs of MSMEs and MFIs, sustainable and long-term solutions that affects multiple sectors within the MSME ecosystem must be mobilized. Project CASTER recommends the adoption of a structured, multi-stakeholder Collective Impact approach to address the challenges faced by MSMEs during and post-pandemic. This approach further ensures commitment from key stakeholders in the MSME and MFI ecosystems and allows for emergent solutions to be co-created, tested, implemented, and adapted by the stakeholders themselves.
Project CASTER has identified five key mutually reinforcing themes for collective impact namely, (1) scaling up digital adoption, (2) MSME resilience metrics, scorecard, and tracking, (3) resilient supply chain innovation and incubation, (4) recovery and resilience financing innovation, and (5) supporting pivot to resilient and sustainable business models. Various stakeholders have to come together in providing inputs and mobilizing resources to achieve our goal towards MSME recovery and resilience-building.
These solution themes and collective impact initiatives will be working with broader efforts by the national and local governments to enable recovery and resilience. These efforts include but are not limited to facilitating vaccine sourcing, public education and distribution, creating clear consumption and supply chain safety guidelines, providing significant demand stimulus, incentivizing informal sector to register formally, transitioning towards digital disbursement of most government pay-outs, establishing national digital payment platforms with seamless interoperability, fast-tracking the national ID project, and developing and implementing a national resilience strategy.
Affecting some of these changes in parallel with the suggested collective impact solution themes could go a significant way in helping MSMEs recover and become more resilient.