Announcement of Philippines Cottage Enterprise Finance Project on March 29, 1991

FOR IMMil)IAlII l RIllAS11 'Norld Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. * Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 91/61 Contact: Pastor Sison Tel: (202) 458-0344 PHILPPINES: Cottage Enterprise Finance Project The following is additional information on a project announced in the latest issue of World Bank News, which was faxed to you on Thursday. DATE: March 29, 1991 WORLD BANK GROUP SUPPORT: World Bank loan: $15 million. The loan is for 20 years, including five years of grace, with a variable interest rate, currently 7.73 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.25 percent on the undisbursed balance. TOTAL COST: $44.7 million OTHER FINANCING: KfW, $13.4 million; Development Bank of the Philippines, $5.6 million; Mutual Guarantee Association (MGA) subscriptions and fees, $4.4 million; Subborrower equity, $3.4 million; Participating financial institutions, $2.9 million. IMPLEMENTING AGENCY: Development Bank of the Philippines (DBP); Department of Trade and Industry ESTIMATED COMPLETION DATE: 1996 PROJECT DESCRIPTION: The objective of the Cottage Enterprise Finance Project is to extend credit to cottage enterprises through formal banking channels. Under the project, about 60 mutual guarantee associations (MGA) will be established to service about 4,200 member enterprises covering a wide geographic distribution and with special emphasis on women entrepreneurs. Proceeds of the loan will be onlent by DBP to accredited banks for rediscount subloans made to cottage enterprises for investment and working capital. The project also includes technical assistance to help the MGA Management Unit set up, monitor, train, and supervise MGAs; provide pollution abatement assistance to MGA member cottage enterprises; and assist DBP in providing training to financial institutions. A guarantee fund will be set up, comprised to MGA member subscriptions and supplemental matching loans used to guarantee MGA member subloans.