Government’s Role in Promoting Social Entrepreneurship

Message from Rolando G. Tungpalan, NEDA Deputy Director-General

Dean Tony La Viña, Prof. Lisa Dacanay, distinguished guests, partners in development, good afternoon.

Let me first congratulate you on the occasion of the first anniversary of the Institute. I am honored to celebrate this milestone with you.

We live at a point in history marked by unprecedented economic and geopolitical challenges – the global economic crisis, climate change, the rise of Brazil, Russia, India and China as new global powers, and the looming threat of a nuclear North Korea, Iran, and Al Qaeda. But in the midst of these gargantuan challenges, we are yet to find a decisive solution to a phenomenon that has confronted civilizations, nations, families, and individuals for several generations.

I’m talking about poverty, a curse that continues to plague billions of people around the world. It is said that Asia alone is home to some 1.9 billion people who live on less than 2 dollars a day, or about two-thirds of the world’s poor. The current crisis has likewise added at least 60 million to the world’s poor.

In the Philippines, our poverty incidence is still high at 26.9 percent, equivalent to roughly 22 million Filipinos.

There have been several notable efforts in fighting poverty. Goal 1 of the Millennium Development Goals calls for the eradication of extreme poverty and hunger. The Medium-Term Philippine Development Plan or MTPDP, the Philippines’ blueprint of growth, likewise envisions a nation where only a small proportion of the population is considered poor. However, the global crisis has made the fight against poverty much more difficult. That’s why government is accelerating and intensifying the implementation of key provisions in the MTPDP to maximize growth and protect the most vulnerable, and to make growth equitable and sustainable.

Poverty reduction strategies in the Philippines are anchored on at least three things. First is the promotion of micro, small and medium enterprises, which plays an important role in wealth creation and job generation, since roughly 90 percent of Filipinos are employed in MSMEs. The MTPDP calls for the development of an entrepreneurial culture by improving access to information on business opportunities, available raw materials, skills and entrepreneurship training, prospective fund sources and access to the latest technologies. It also envisions a school curriculum that incorporates entrepreneurship education. Similarly, it stresses the need to enhance employment and livelihood opportunities of poor Filipinos through entrepreneurship and microfinance.

Microfinance is a good way of supporting entrepreneurs. It provides poor borrowers with access to sustainable livelihood through zero or very low interest loans. Government financing is available through DTI, People’s Credit and Finance Corporation, Landbank, and DBP, among others. There are also specific government microfinancing programs, notably the Livelihood Credit Assistance Program, and the SME Unified Lending Opportunities for National Growth or SULONG program, among others.

Moreover, government, in partnership with the private sector, provides entrepreneurial and livelihood training to prospective entrepreneurs. We are also stepping up efforts to lower the costs of starting up businesses, particularly the cost of permits, licenses and other documentary requirements. Databases like the Community-based Monitoring System and the National Targeting Mechanism have likewise been set-up to assist aid institutions and other organizations in targeting priority areas for their social entrepreneurship initiatives.

The second anchor in our fight against poverty is rural development. 70 percent of the poor in this country are in rural communities. Rapid urbanization has also made it more difficult to integrate with the rest of the population since they lack the necessary skills to thrive in an environment that is urban.

We, meaning government, the private sector and the donor community, need to be more active in very poor provinces across the country. As you know, we have a list of 20 priority provinces that government is focusing on.

The third anchor, I believe, is social enterprises. Social enterprises integrate social development bottom line with the financial profit bottom line and as such, challenges the traditional model of a private enterprise. It is unique in the sense that it aims to create wealth, not for just one person or family, but also for the public at large, especially the marginalized sectors of society. And rather than just providing grants to finance development programs, social enterprises are driven by business models that ensure the sustainability and achievement of socio-economic objectives.

I believe that social entrepreneurship is a movement that shows much promise, especially in a continent where majority of its residents are considered poor.

The success of social entrepreneurship showcases how the free market, despite for years being maligned by many influential commentators and policymakers, can make a profound impact on the lives of the poor. When used properly, capitalism can serve as a powerful weapon in our decades-old war against poverty and under development.

In the Philippines, as you know and I hope you understand, government is committed to providing an enabling environment for social entrepreneurs to flourish. As earlier noted, we are stepping up efforts to promote micro, small and medium enterprises and provide avenues to finance their activities.

Government also mobilizes official development assistance in addition to its regular programs to help build an enabling environment. The Philippines-Australia Community Assistance Program or PACAP, for instance, has supported through grants a number of social enterprises. For our part, government provides technical inputs in the evaluation of project proposals of proponents.

One of the projects supported by PACAP is the Organic Rice Production Project in Agusan del Sur, which aims to establish an organic rice seed production center, mechanize production of organic fertilizer, develop a palay trading center and address the community’s need for quality but inexpensive rice between harvest seasons. Aside from the innovative and developmental features of this project, it is also economically viable, as shown by several parameters such as cash flow and internal rate of return. We believe that this is likewise a good social enterprise model.

This isn’t the first time that government has supported such initiatives. Several social enterprises have also been set-up through the Japanese-funded Kennedy Round 2/Productivity Enhancement Program, with the support of government agencies such as NEDA and the Department of Agriculture.

Through these initiatives, government, in partnership with donors such as Ausaid and the Japanese government, hopes to jumpstart and accelerate the development of social entrepreneurs who can make a huge impact in their communities, as well as in other places where their best practices can be replicated. There are many success stories, but much more needs to be done.

To bridge the MDG financing gap, government is pushing for a strengthened public-private partnership. Civil society has also shown that it can be a powerful and effective advocate for the MDGs as shown by its landmark partnership with lawmakers resulting in the formulation of the 2007 Alternative Budget for the MDGs. Moreover, the business sector, through the Philippine Business for Social Progress, has committed about PhP3.2 billion for 2004 to 2009 to scale up successful MDG-related programs.

At the end of the day, though, ordinary citizens and the private sector are the stars in this social entrepreneurship movement. While we in government strive to provide an enabling environment for social entrepreneurs to flourish, it is the citizens who will have to act and initiate the formation of these enterprises.

I once again take this opportunity to thank and congratulate ISEA for providing a forum for a more systematic and institutionalized learning and sharing environment, dedicated to promoting and advocating the growth of social enterprises not only in the Philippines but also in Asia. May you remain steadfast in your commitment to building a country, and a continent, where opportunities abound for everyone, particularly the poor and underprivileged, regardless of income, education or location.
Thank you and have a good day.