As this pandemic continues to cause havoc on the entire world, the World Bank forecasts that the global economy will shrink by 5.2% this year making it the deepest recession since the Second World War.
Here in the Philippines, entrepreneurs and workers in MSMEs are the hardest-hit by this economic disruption.
With nearly 1 million MSMEs in the country according to the Department of Trade and Industry, more than 50% of this number or around 525,000 have closed their businesses. This has left millions of Filipinos unemployed.
The Asian Development Bank earlier said the Philippine economy had bottomed out in May or June and that for the rest of the year, economic contraction is projected at 7.3% by end of 2020.
Recovery is expected to happen by 2021 when the pandemic is hoped to be contained and the economy is expected to bounce back by 6.5%.
This is why the government and various stakeholders from the private sector are trying to do their best to try and help businesses bounce back and begin their recovery.
HOW BDO CASH AGAD IS HELPING COMMUNITIES BOUNCE BACK
There is a bit of good news in all of this as Filipinos once again show resiliency as slowly there has been observing signs of gradual recovery especially in some of the MSMEs.
One of them is Krystal Bantic of Quirino province in the Cagayan Valley region. Krystal runs a grocery store in her town and she became a Cash Agad partner agent last year.
According to Krystal, she actually had few customers availing of Cash Agad in her grocery store in the year before the pandemic struck. This was because at that time, people were used to traveling all the way to Candon City in Ilocos Sur province, which is more than four hours away from Quirino, in order to go to banks and ATMs, enjoy fast food restaurants, and buy essential goods.
“People would make the trip to Candon even though it’s quite far because it was a mix of both business and leisure for them. Also, goods are priced lower in Candon because over here in Quirino our shops are simply getting our goods from there as well,” said Krystal.
The trip to Candon is quite far and the transport available are passenger vans. It takes more than four hours across 289 kilometers. The fare costs at least 200 pesos and even more if a person was also loading some baggage in the van for the trip. When going to Candon, residents of Quirino would have to allot an entire day and at least four hundred pesos for a two-way trip. They would spend more if they included food expenses.
Cash Agad is a service provided by BDO to far-flung and unbanked communities where residents have little to no access to bank services. Many faraway places in the country do not have banks or ATMs where residents may conveniently get cash. This is due to several reasons.
It could be that communities are located in distant islands where motorized boats are the only means of transportation. Some towns and barrios are located in mountainous or hilly areas with rocky and uneven terrain. Others are separated by sheer hundreds of kilometers from urban areas and have no concrete roads nor highways. All of these factors and more prevent banks from building and maintaining physical branch offices in these faraway towns.
The Cash Agad service provides a simple, elegant, and practical solution to all that. By partnering with stores and shops already established in the community, BDO turns them into community-based ATM terminals. The shop owner receives a POS terminal for use in transacting locally-issued ATM cards, whether debit or prepaid and facilitates basic transactions like cash withdrawals and balance inquiries.
Best of all, Cash Agad accepts transactions using ATM cards from different local banks and non-bank financial institutions in the Philippines, not only those from BDO. It’s really a service that benefits entire communities.
From lockdown to opportunity
The pandemic caused subsequent lockdowns and quarantines which prevented people from leaving Quirino as they were used to. This meant that their usual access to cash (banks and ATMs) and goods in Candon was closed off. But fortunately, Krystal and her Cash Agad kiosk at her grocery store was available.
“Grabe po, noong nagka-lockdown dito sa amin. None of us could leave. The local government ordered all transportation to stop. No one was allowed to go out. People had nowhere else to go to get needed cash to spend for food and other basic needs. So more and more people come to my store not only to withdraw cash but also to buy essential goods,” said Krystal.
Krystal faced her own challenges as a Cash Agad partner agent. She was also covered by the travel ban so she could not easily replenish the cash reserves meant for Cash Agad withdrawals. She was able to solve this by either renting a private vehicle to go to the BDO branch in Candon to get cash or she would get the help of the local government to provide transportation to Candon. After all, Krystal had become a frontliner and essential worker since she was the only source of cash for the residents in her town.
Soon enough, practically everyone in the communities around Krystal’s store became her customers. Teachers, government workers, policemen, and even farmers and construction workers all depend on her store and its Cash Agad service to get their salaries. Her store also became the official channel for the government cash assistance given to 4Ps beneficiaries. This was done with the help of the local government.
We asked Jim Nasol, Head of Agency Banking, BDO Unibank, how Cash Agad has been helping businesses bounce back; “Before Cash Agad, there were people who had to spend P100 on a one-way trip just to get to the nearest ATM machine. With Cash Agad they only have to pay a small fee so they immediately save money–or use this extra to buy essential items. Besides the income it generates for our partner agents, we also observed that for every 10 people who withdraw from our Cash Agad partners, about 3 to 4 immediately make a purchase, because they already have cash.
Through these transactions we would be able to help push the local economy of the barrio or the small communities served by our Cash Agad partners as it would also translate to more spending within the community.”
It’s not just Krystal’s store that benefits from Cash Agad. Other business owners in the area, from other sari-sari stores to eateries, to hardware shops, and even stalls for vegetables, fruits, meat, and fish at the wet market–all of them thanked her for being able to provide cash to the community. This is because the amount of local spending had become greater than ever. People were spending their cash on local businesses instead of those in faraway Candon City.
“Krystal’s experience really shows how the Cash Agad service expands financial inclusion in far-flung, hard-to-reach areas in the country. The result is a boost to the local economy. Established businesses earn more. More businesses are set up. The engine of local economic activity is revved up and eventually, there’s improved quality of life for the residents.
“If the country’s economy is ever going to bounce back from the pandemic, it will take all of us–big businesses, MSMEs, and both urban and rural communities and their local governments–to help each other and do our part. There’s a certain inspiration, a beautiful sort of hope when you see communities working together to rise up and recover from a crisis. BDO is doing its part in helping communities recover economically through the Cash Agad network,” Nasol further explained.