Strtengthening MSMEs through ESD in TVET: Challenges and Imperatives for Financial Service Providers

Dr. Felino SM. Angeles, Jr. President, Tomas Claudio Memorial College Chairman/CEO, Rural Bank of Cainta, Philippines

ABSTRACT
From a global perspective, microfinance has become the new development paradigm in the Third World. This action research deals on the challenges and imperatives faced by rural banks as microfinance enablers and their concomitant crucial role as business development services providers to micro, small, and medium enterprises (MSMEs). Basically, the paper suggests a template for the integration of education for sustainable development (ESD) in technical and vocational education and training (TVET) of MSMEs, as a significant and crucial component of business development services provided by rural banks. On the policy-level, the paper hopes to fill the gap in the effective implementation of laws on the ground, such as Republic Act 9178 (barangay micro-business enterprises/BMBEs) and Republic Act 6977 (Magna Carta of SMEs, which includes micro-enterprises) as amended by Republic Act 8289. Herein lies the challenges and imperatives of the ESD in TVET as a component of microfinance grounded on the principle that we should not only give fish to micro and small entrepreneurs, we should also teach them how to fish.

INTRODUCTION

icrofinance, global perspective: Microfinance is emerging as an integral part of the new development paradigm in the Third World economies (Elahi & Danopoulos, 2004). This action research addresses the challenges and imperatives faced by rural banks in the Philippines as microfinance enablers to micro, small, and medium enterprises (MSMEs), which are also prevalent in Asia and Latin America (Weiss & Montgomery, 2005), where most third world economies can be found; e.g., like in Vietnam (G. Nguyen Tien Hung,2005), Thailand (Coleman, 2006), Nepal (Bhatta, 2001), and Bolivia (Brett, 2006), to name a few. The subject of the paper is in consonance with the poverty alleviation program of the government and the United Nations Millennium Development Goals (MDG) on sustainable development. Reaching out to the poor entrepreneurs
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is a serious concern of the government of each country. How the poor businesses can have access to financial services is a big problem (Villafuerte, 2007). Indeed, strengthening MSMEs is a crucial variable in the poverty alleviation equation of developing economies. This is one way for the government to reach out especially to the micro entrepreneurs, to nurture and develop their capabilities not only to compete in the domestic market, but also to be globally competitive. Rationale for ESD in TVET, and BDS gaps. Education for sustainable development is a global movement spearheaded by the United Nations banner program, the Millennium Development Goals (MDG) and by UNESCO, in the academic sector, which includes technical and vocational education and training (TVET). Sustainable development is one of the eight key programs of UNs MDG. This

paper proposes the integration of ESD in TVET in the business development services provided by rural banks as microfinance enablers to MSMEs. In the Philippines, technical education and skills development is the mandate of TESDA. Rural banks can collaborate, connect or network with TESDA in matters of BDS to MSMEs. However, there should be no argument that technical personnel of rural banks would be more competent than TESDA personnel concerning financial and business management of small entrepreneurs, nurturing the growth and development of the business, or in improving their credit-worthiness, among others. BDS delivery gaps in the Third World, which started two decades ago have a common thread (Weiss & Montgomery, 2005), e.g., technical aspects (TVET) as maintenance of creditworthiness, inability to amortize the small loans, poor business management and documentations, lack of marketing know-how, and ESD component of the training. Rural Banks as stakeholders in strengthening MSMEs. There are currently 756 rural banks in the Philippines with 1,900 branches, which number could serve as engine of growth and development for our MSMEs. Rural banks are key members of the Microfinance Council of the Philippines, Inc. (MCPI), which was formally registered with the Securities and Exchange Commission (SEC) in 1999. MCPI is one major stakeholder that is focused and interested in the plight of MSMEs in the Philippines. Members of MCPI are institutions engaged in retail microfinance operations, such as rural banks, and other financial institutions like thrift banks, development banks, cooperatives, and credit unions. As of 2007, microfinance-oriented rural banks have reached and served 550,000 clients with a total outstanding portfolio of 3.3 billion pesos. The potential market is big, however, and with the flagship project of the government on poverty alleviation aligned with the Millennium Development Goals (MDG) those numbers can be expected to increase dramatically. In view of this, the BSP has granted rediscounting facilities to rural banks to promote the microfinance program of the government. Rural banking, a perspective view. Republic Act 720 enacted in June 1952 created the system of private community-based rural banks in the Philippines. The first rural bank was established on December 11,

1952, the Rodriguez Rural Bank in Pasig, Rizal, which is now a chartered city and part of Metro Manila. By year 1953, 18 rural banks were established in various parts of the country. To date, after 5 decades, total rural banking head offices have grown to 756 with 1,900 branches, of which, 60 percent are scattered in Luzon, 23 percent in the Visayas, and 17 percent in Mindanao. The rural banking system is crucial especially to LDCs like the Philippines. It is a network that offers immediate access and extensive reach to the countryside, and serves as an effective delivery platform of priority financing programs of the Government not only to the MSMEs, but also to the agricultural sector, and the rural marketplace. Rural banks serve as intermediate for both financial and non-financial services between --- the national and rural economies, rural and urban communities, and government and the countryside and MSMEs. In the Philippines, micro, small, and medium businesses or enterprises (MSMEs) pack more economic strength than corporate giants. According to the National Statistics Office, there are 781,046 MSMEs officially registered; extrapolating those in the underground economy, conservatively, the number could easily reach 1 million MSMEs. These businesses make up 99.6 percent of all registered firms in the country and of these 91.75 percent are micro, 7.6 percent are small, and only less than 1 percent are medium (NSO, 2006). Technically, therefore, the so-called SMEs in the country are dominantly micro enterprises. This pie chart of MSMEs may well be typical among LDCs where the vast majority of the populations operate primarily in the large, but hidden, informal (underground) economies that are not recorded in official gross national product (GNP) or purchasing power parity (PPP) statistics (de Soto, 2000:35). The value of economic transactions in these markets may match or even exceed what is recorded in the formal economic sectors in developing countries (Henderson, 1999). Certainly, no LDCs would want these MSMEs to remain at the micro level forever. Catering to the financial requirements of MSMEs for them to fully takeoff is a big challenge to LDC economies, specifically, to the public finance sector, which according to World Bank shapes the course of development (World Development Report, 1988). However, empirical reality has it that the basic financial requirements of these micro businesses, say for example, to acquire additional equipment
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and purchase raw materials, remain unserved by the formal banking system. To survive, MSMEs must normally seek finance elsewhere sometimes from family members and relatives, but more typically from local money lenders and loan sharks who charge exorbitant rates of interest. Microfinance movement, a powerful tool to fight poverty: The success of the Grameen Bank experiment of microfinance group lending about two decades ago triggered the world-acceptance of the microfinance movement as a powerful tool to fight poverty and to raise the economic condition of poor families. Microfinance means the supply of services to the poor to improve their economic condition. All the stakeholders in the microfinance industry in the Philippines including the practitioners (like NGOs, rural banks, thrift banks, credit cooperatives, cooperative banks), policymakers and regulators (like Bangko Sentral ng Pilipinas, Department of Trade and Industry, Land Bank of the Philippines, Cooperative Development Authority), advocates, businessmen, lawyers, academicians, researchers, students and faculty, and others are now closely networking to fasttrack the development, growth, and promotion of microfinance in the country. There is no single entity (private entity or government agency) that can claim exclusive credit for the development, growth, and promotion of microfinance in the country. Simply because there are much microfinance programs or schemes that are mushrooming and being launched in the private and public sectors. For example, Bangko Sentral ng Pilipinas (BSP) microcredit programs are limited only to financial/non financial programs (like training and technical assistance, etc.) extended by financial institutions and under its supervision like thrift banks, rural banks and rural cooperative banks. In the same manner, the Department of Trade and Industry (DTI) has its own sphere of influence for microfinance programs under specific laws, namely Republic Act No. 9178 (barangay microbusiness enterprises/BMBEs) and Republic Act 6977 (Magna Carta of SMEs which includes Micro-enterprises) as amended by Republic Act 8289. Land Bank of the Philippines (LBP) has its role in micro-agri finance. An attached agency of LBP namely the Peoples Credit and Finance Corporation (PCFC) is an aggressive wholesaler of microfinance services. There are Councils/Commissions too in some government agencies that provide vital back-up support to the
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microfinance institutions in the country. Other government agencies/attached entities, too, like the Department of Social Services & Development (DSSD), Development Bank of the Philippines (DBP), Department of Agriculture (DA), Quedancor and the Cooperative Development Authority (CDA) have their own contributions to the development, growth, and promotion of microfinance in the Philippines. And finally, we have the NGOs, which are also very aggressive in helping those who have less in life through very liberal microfinance programs. However, this paper focused only on the role of rural banks in providing assistance to the growing number of MSMEs in the country.

OBJECTIVES OF THE STUDY

Basically, the paper aims to: 1) present a template for the integration of education for sustainable development (ESD) in technical and vocational education and training (TVET) of MSMEs, as a significant and crucial component of business development services provided by rural banks; and 2) fill the gap, on the policy-level, relative to the effective implementation of laws on the ground, such as Republic Act 9178 (barangay micro-business enterprises/BMBEs) and Republic Act 6977 (Magna Carta of SMEs, which includes micro-enterprises) as amended by Republic Act 8289.

REVIEW OF LITERATURE
From a global perspective, microfinance is emerging as an integral part of the new development paradigm in the Third World economies (Elahi & Danopoulos,2004). Business scholars and academicians who have examined it have identified some challenges and imperatives faced by microfinance enablers like rural banks in the Philippines, which are also common and prevalent in Asia and Latin America (Weiss & Montgomery, 2005), where most third world economies can be found; e.g., like in Vietnam (G. Nguyen Tien Hung,2005), Thailand (Coleman, 2006), Nepal (Bhatta, 2001), and Boliva (Brett, 2006), to name a few. Available literature and studies on the subject lend support to the significance of the study, its theoretical and conceptual frameworks. Indeed, there is a need for microfinance enablers to help strengthen the MSMEs especially in less

developed countries, like the Philippines (Villafuerte, 2007), as this is an effective flagship project for poverty alleviation, which is also aligned with the banner project of the United Nations Millennium Development Goals. Concepcion (2007) and Zobel de Ayala (2006) emphasized the importance of entrepreneurship for national development and the need to adopt a global mindset to be competitive in the 21st century global marketplace. From foreign literature, the above perspective or point of view was supported by Todaro (1997) who batted for the flight of LDCs in their pursuit for economic development; and echoed as well by De Sotto (2000) and Henderson (1999). Sachs, who is part of the team that crafted the UNs Millennium Development Goals, made an emphatic statement about the need for rich and poor countries to collaborate in pursuit of the end of poverty.

was the motive force in the economic development of such countries as England, Japan, Germany, and the United States. The entrepreneur is indispensable to the development of countries under basically democratic regimes. Even the communist China has glorified the role of small entrepreneurs in its evolving market-oriented reforms. The accession of Russia and China into the WTO and into the mainstream of world free enterprises showcased the role of small enterprises and entrepreneurs.

According to Todaro (1997), in developed nations (or MDC), monetary and financial policy plays a major direct and indirect role in governmental efforts to expand and contract their money supply and to raise and lower the costs of borrowing in the private sector (through direct and indirect manipulation of interest rates). This is made possible by the existence of highly organized, economically interdependent, and efficiently functioning money and credit markets. Financial resources are continuously flowing in and THEORETICAL FRAMEWORK out of savings banks, commercial banks, and other nationally regulated public and private financial The theoretical framework of the study has two intermediaries with a minimum of interference. elements --- 1) Rural banks as microfinance enablers Moreover, interest rates are regulated both by to MSMEs are crucial institutional components in administrative credit controls and by market forces of economic development; and 2) Integration of ESD in supply and demand, so there tends to be consistency TVET in business development services provided by and a relative uniformity of rates in different sectors rural banks is indispensable to strengthening MSMEs of the economy and in all regions of the country. (Villafuerte, 2007; Romero, 2007). Financial intermediaries are thus able to mobilize private savings and efficiently allocate them to their The huge number of small entrepreneurs in most productive uses. This is a critical ingredient in LDCs, both above ground and underground, is an the promotion of long-term economic growth. By amazing phenomenon, which may astound hard- contrast, markets and financial institutions in many nosed economists from developed countries of the developing countries (LDC) are highly unorganized, Western world. Most MSMEs, Mostly unserved often externally dependent, and spatially fragmented. by the formal banking and financial sector of the Many LDC commercial banks are merely overseas country, have managed to survive with the help of branches of major private banking institutions in the informal, unorganized, but socially embedded developed countries. Their orientation therefore, financial linkages in the huge underground economy. like that of multinational corporations, may be more Bridging the financial requirements of these MSMEs, toward external and less toward internal monetary e.g., improving their access to banks and other situations. The ability of Third World governments financial institutions, and providing them basic to regulate the national supply of money is further business development services, are certainly the constrained by the openness of their economies and least that LDCs must relentlessly pursue to make by the fact that the accumulation of foreign-currency them surface and be good corporate citizens of earnings is a significant but highly variable source of the economy. Said pursuit is aligned with the UNs their domestic financial resources. Even the money Millennium Development Goals on global poverty supply itself may be difficult to measure and more alleviation. The entrepreneur, according to Villegas difficult to control when there exist, as in many LDCs, (1991), is the fourth factor of production, where land, problems of currency substitution, whereby foreign labor and capital are the first three. The entrepreneur currencies serve as an alternative store of value to
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the domestic currency. Most important, because of limited information and incomplete credit markets, the commercial banking system of many LDCs restricts its activities almost exclusively to rationing scarce loanable funds to creditworthy medium and large scale enterprises, discriminating the MSMEs, thereby, wittingly or unwittingly, putting them at the mercy of loan sharks in the informal sector of the economy (de Soto, 2000; Henderson, 1999). This paper is proposing a conceptual model to help the plight of MSMEs in LDCs, whose numbers must not be ignored. There is, in fact, a compelling necessity to redefine and reorient Government and Private sector focus into promoting and developing MSMEs to generate employment as a major strategy to achieve (many of) our economic goals, aligned with the United Nations MDGS.

The PEAC model of Indonesia The PEAC acronym stands for promoting enterprise access to credit; it is a variant to the basic BDSP model. The PEAC unit is an independent private entity which helps the BDSP.
Figure 2. The Indonesian PEAC model

The Indonesian model introduces an intervention to the basic BDSP model, i.e., the PEAC intervention. Functionally, the PEAC approach links business service providers with banks/FIs to bridge the cited CONCEPTUAL FRAMEWORK gap between demand side (MSMEs) and the supply Basically, the conceptual framework has two basic side (Banks/FIs). More specifically, the PEAC foundations--- 1) the business development services intervention serves the following tasks: Identifies and (BDS) provided by rural banks must address the strengthens experienced business service providers challenges and imperatives of both sides of the for MSMEs; facilitates linkages between banks and microfinance equation, i.e., the supply- side and the MSMEs; stimulates demands for credit-related demand-side, specifically, the MSMEs; and 2) there service; and supports certification of credit related is need for a rural bank model or template of BDS services. that identifies and integrates the ESD in TVET to SCOPE AND LIMITATIONS strengthen MSMEs. The conceptual framework used some existing BDSP models. The basic BDSP model presented in Figure 1 shows the business development service provider (BDSP) relationship with the bank/FI for financial access facilitation. On the other hand, its relationship with the MSME is for capability-building, specifically to increase its credit-worthiness with the banks and financial institutions.
Figure 1. The basic BDSP model

The study only covered rural banks in the Province of Rizal, specifically in East Rizal towns. Rural banks have evolved to assume key roles in the microfinance industry, basically helping the plight of MSMEs in the country, even surpassing the record of NGOs. The respondents were bank officers and customerfacing personnel who have at least one or more MSME clients. The research attempts to evaluate the basic components of the proposed model, such as the observed problems from both sides of the equation (the supply and demand sides), as well as the importance of the various intermediaries, using a structured Likert scale questionnaire. However, it did not attempt to establish the feasibility, per se, of the model. This may be one great challenge for future investigators.

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METHODOLOGY
Research design: The study adopted a descriptive and correlational action research design, with actual actors in the supply side as respondents (e.g., bank officers and customer-facing employees of banks). A Likert scale survey questionnaire was used to gather raw data. Action research, as defined, is a reflective process of progressive problem solving led by individuals working with others in teams or as part of a community of practice (Wikipedia, 2010) to improve the way they address issues and solve problems. In this particular paper, action research aims to improve strategies, practices, and knowledge of the environments within which the rural bank operates. It also aims to propose a new course of action to help rural banks improve its work practices in providing business services to MSMEs. Kurt Lewin, then a professor at MIT, first coined the term action research in about 1944. In his 1946 paper Action Research and Minority Problems (Wikipedia, retrieved July 15, 2010.

formula (i.e., n= N/1+Ne2) at 95 percent confidence level, the total sample size for statistical purposes would only amount to 14 respondents. In view of this, the study opted to increase the sample size to 30, which is basically regarded as big sample (30 or more is classified as big sample size) in statistics; it was then distributed proportionately to the five (5) participating rural banks in East Rizal towns.

Instrumentation: A two-page survey questionnaire (please see Appendix A) has been developed purposely for this research study, covering all the constructs enumerated in the two sections namely, Statement of the Problem and Hypotheses, which form the four main parts of the instrument, demographic profile, supply-side, demand-side, and intermediaries. The first part is an enumeration-type check-list on basic demographic information about the respondents, where they would only check the appropriate response. The second, third, and fourth parts, which form the main body of the instrument, dwell on the supply-side, demand-side, and intermediaries. These three portions (identified as Roman numbers, II, III, Respondents and locale of the study: Rizal and IV) used the Likert Scale, named after Rensis Province was chosen as the source of primary data, Likert who developed it. The items in these sections because it represents the over 52 provinces of the practically cover the observed problems/concerns Philippines, in terms of GDP, type of livelihood, and known among microfinance practitioners like rural demography; and it is one of the oldest provinces in banks (Villafuerte, 2007; Romero, 2007). the country, represented as one of the eight rays of the sun in the Philippine flag. Officers and customer- Basically, the Likert Scale used in the instrument facing personnel of rural banks in Rizal Province were applied an ordered categorical variable representation polled using a structured Likert scale questionnaire. (five categories) of the importance of the various Ekanem and Smallbone (2007) conducted a study items; where 1 denotes least important; 2 denotes on investment decision-making processes in small marginally important; through to 5 denoting most manufacturing enterprises, with the use of insider important. The said categorical scale was patterned accounts as an innovative, qualitative methodology, after the study of Faff and Marshall (2005), involving in-depth, semi-structured interviews and published in the Journal of International Business direct observation, conducted longitudinally in Studies, the official research journal of the Academy eight case study companies. It is a research method of International Business, which is a professional which includes detailed accounts from the actors association of international business educators and themselves, incorporating their actual motives and scholars from 80 countries, worldwide. Likert Scale behavior. The study at hand, practically made use is standard instrument, where respondents are polled of the same approach, in that the actual actors in about their rating of importance about the various the supply side of the equation where given focus in elements related to the subject of investigation. relation to the MSMEs. Validation of the research instrument: The content Sampling and sample size: According to Villafuerte validity was done by people (colleagues from the (2007), there are four (4) microfinance-oriented rural banks of East Rizal towns) who have adequate rural banks (15 including their branches that cater training and education on microfinance concerning to the needs of small borrowers). Assuming one MSMEs; in other words, experts who have hands-on respondent from each bank and applying the Slovins experience on microfinance.
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Statistical Package for Social Sciences

Table 1 show some critical problem-areas that small banks and FIs have to address relative to strengthening The Statistical Package for Social Sciences (SPSS) was MSMEs in terms of improving access to banking and used in this study to ensure accuracy and precision in business development services. Basically, the first the treatment of data. three problem-areas, i.e., administrative, technical, financial management and credit concerns are within CHALLENGES AND IMPERATIVES the control of banks and FIs. The said concerns can be Challenges. Operationally defined, challenges are effectively addressed by management, with political problems or opportunities borne out by previous will and investment on training of people, such as ESD studies (Villafuerte, 2007; Romero, 2007; Angeles, in TVET. The external concerns must be collectively 2008). Tables 1 and 2 show a list of challenges addressed by the banking sector to put pressure on from the supply side (banks/FIs) and demand side the policy-making body. (MSMEs), respectively.
Table 1. Observed challenges of Banks/Fis (Supply Side) related to MSMEs Credit Access Banks/FIs; Likert Rating 1. Administrative Concerns/4.01 Table 2. Observed Challenges of MSMEs (the Demand Side) Relative to Credit

Challenges
Inadequate managerial/ administrative expertise, training, education 1.2 Poor record-keeping systems; documentation

MSMEs; Likert Rating 1. Business management; 3.98 2. Documentation; 4.10 3. Assets;4.16

Challenges 1.1 Weak financial business management 2.1 Poor record-keeping and business documentation 3.1 Lack of collateral 4.1 Limited information/ knowledge on credit and how to improve their creditworthiness

2. Technical Concerns/4.24; BDS, 4.41

2.1 Poor or lack of access to information on technical aspects of products/services 2.2 Inefficient production methods/practices

4. Credit know-how; 4.35

3. Financial Management and Credit Concerns/4.28

3.1 Inadequate basic financial management know-how 3.2 Limited knowledge on and failure to utilize available bank or FI services, e.g., deposits and other cash services, credit facilities 3.3 Traditional lending practices of banks/Fis, e.g., collateral-based evaluation; reluctance of banks to adopt new technologies for lending to MSMEs, inadequate concern by banks and Fis on clients actual business operations. 3.4 Low priority given to MSME financing by medium and large banks.

Table 2 shows the challenges of MSMEs, the demand side, which basically boiled down to weak business management. Weak financial business management was the main problem among MSMEs, which technical people from the rural banks can provide. Poor record keeping and business documentation, as well as limited information/knowledge on credit and how to improve their credit-worthiness also stand out as areas for improvement, which again, the BSD program of the rural bank can provide with high credibility and competence. Said challenges were also pointed out in the IFC study (Ferriols, 2007). Proposed Conceptual Model for the Philippines, shown in Figure 3, has the following features: There is a two-way communication or feedback mechanism between and among the three components of the model. This is significant and crucial to ensure the growth and development of MSMEs.

4. Other External Concerns/4.44

4.1 Government regulatory policies 4.2 Difficulties in securing business permits and licenses 4.3 Other environmental/ ecological concerns

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The BDSP component integrates ESD in TVET. The model is designed to make use of some presently installed/available infrastructures, e.g., Small Business Consultants, or MSME technical assistants. The project may be designed and implemented with the Rural and Thrift Banks as the major providers of credits. Commercial Banks can be tapped to provide wholesale funds and/or exchange medium to facilitate distribution/movement of credit funds from bank to bank.

MSMEs, which would only take three sessions to deliver at four hours per session. The course covered three modules on overall business management concepts; general accounting and finance; and sales and marketing management. Non-content learning goals pertained to value formation and development, such as integrity, honesty, genuine customer service, social responsibility, environmental awareness, and business ethics, which are basic ESD components.

MSMEs covered by the study were in various fields of business, such as agro-business, rice farming, fish Rural Banks and FIs shall provide BDS material and vending, food business, footwear and leather goods, technical support for MSMEs, with emphasis on ESD land transportation, processed foods and beverages, vulcanizing shop, digital photoshop, etc. in TVET.
Figure 3. Proposed Conceptual Model for the Philippines

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

Results indicated that the technical training provided by rural banks on financial and business management is better appreciated when the basic ESD components such as social responsibility and customer needs satisfaction, among others, are integrated to it. This paper showed that small entrepreneurs do appreciate life-long learning values, besides technical and vocational education and training.

Imperatives. Defined: , imperatives are the mustdo for rural banks as microfinance enablers. Rated as Significantly Important by the respondents are financial and business management which gets an overall weighted mean of 4.01; technical concerns, 4.24; financial management and credit concerns, 4.28; and other external concerns, 4.44, which include among its constructs, things which are related to government requirements, like securing license, etc, These are gaps which ESD in TVET can provide when integrated with the BDS program of rural banks. ESD/TVET Course Templates for MSMEs: Two types of learning templates are presented here, one is for classroom type teaching-learning situation, and another for a one on one mentoring of the entrepreneur on site (workplace of the entrepreneur). Content-wise, some of the key courses provided by rural banks in the subject area included general business and financial management concepts, promotions and marketing, customer satisfaction, retention, and profitability, among others. The proposed classroom-type ESD/TVET template for

Specifically, the various concerns under the SupplySide, affecting the strengthening of MSMEs access to banking and business development services, were perceived as Significantly Important by the respondents; i.e., administrative concerns get an overall weighted mean of 4.01; technical concerns, 4.24; financial management and credit concerns, 4.28; and other external concerns, 4.44, which include among its constructs, Difficulties in securing business permits and licenses and Other environmental/ ecological concerns get similar weighted means of 4.46, and Government regulatory policies, gets a weighted mean of 4.40. Similarly, Significantly Important ratings were observed for the variables of the Demand-Side and Intermediaries. Basically, these concerns must be proactively addressed by stakeholders of microfinance in the rural bank sector, if we are to help the plight of MSMEs in the Philippines. Descriptive statistics on supply-side: External concerns, such as government regulatory policies, securing business permits and licenses, and environmental concern, get the highest overall weighted
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mean of 4.44 (meaning, significantly important) from among the 4 supply-side problems. The administrative (4.01), technical (4.24), and financial management/ traditional lending practices of banks (4.28) are numerically lower, but still significantly important.

addressed by the rural banking sector in the Philippines. The study confirms that the various concerns affecting the plight of MSMEs in the country (Villafuerte, 2007; Romero, 2007; and Ferriols, 2007) are significantly important. In fact, the importance of MSMEs in the economy, let alone by their sheer number cannot and Descriptive statistics on demand-side: The leading must not be taken for granted by all microfinance demand-side problem is about the limited knowledge stakeholders; their promotion, growth and development, about credit and how to improve their credit- so that they will not remain micro, small, and medium worthiness (4.35); followed by lack of collateral forever, must be foremost in the mind of microfinance (4.16); poor record-keeping and documentation practitioners, advocates, policy-makers, and regulators, as (4.10), and weak financial business management well as international donor agencies. (3.98). These concerns were also cited in the works An overview of the problems confronting the supplyof Villafuerte (2007) and Romero (2007). side dramatically accentuates the lack of financial management know-how and credit concerns (4.28), Descriptive statistics on BDSP: The overall technical know-how (4.24), and administrative concern weighted mean for BDSP was the highest among (4.01); indeed, crucial matters that intermediaries could intermediaries (4.41 ). This means that respondents effectively deliver. regarded the business development service of rural banks as an important variable for the growth and The demand-side concerns were highlighted by their development of MSMEs. They also put premium on limited knowledge about credit and how to improve the technical assistance that rural banks can provide their credit-worthiness (4.35), lack of collateral in the aspects of effective business management. (4.16), poor documentation of their business Verbal comments from respondents: Some significant verbal comments gathered from respondents outside of the survey instruments tend to validate the above statistical findings (please see Appendix C) specifically on problems from the demand-side. While MSMEs were generally appreciative of the financial assistance from rural banks, most of them have valid concerns on such critical issues like lack of training on business management, lack of marketing know-how, lack of collateral and poor record-keeping. These gaps should be provided by the integration of ESD in TVET in the BDS of rural banks. operations (4.10), and weak financial business management (3.98). Likewise, these were crucial issues that would require timely and cost-effective interventions from intermediaries.

CONCLUSION/RECOMMENDATIONS
The following could be drawn from this study:

Lack of concern to the plight of MSMEs (4.24) was also observed. However, as pointed out by Romero (2007), this meant that there was no lack of social responsibility among rural banks and its perceived absence is not the reason non-microfinance rural banks chose to stay out of micro-credit. Rather, it is the shortage of available training on microfinance technology, the absence of a nationwide credit information bureau, and crossed signals that microcredit is akin to dole-out programs of the past and not the cost-recovery strategies of the present.

The descriptive stats on BDS program, e.g., the high rating on BDSP (4.41), meant that respondents realized and appreciated their importance in BDS provided by rural banks are appreciated by small strengthening MSMEs access to credit and other entrepreneurs; however better appreciation surfaced business development related services. when basic components of ESD such as those related to values and value formation are integrated to the The predicament of MSMEs in a developing country or technical aspects of the service. The Significantly LDC like the Philippines, in so far as access to banking Important supply-side and demand-side challenges and business development services is concerned, or problems affecting the MSMEs access to banking has been given a quantitative character by the various and business development services must be proactively
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statistics on the supply-side, and demand-side, presented in this study. Likewise, the importance of the various elements embodied in the proposed conceptual, integrative model deemed applicable for LDCs has been statistically highlighted. Indeed, a review of some existing variants from the basic BDSP model is warranted as borne out by the Significantly Important problems presented in the study. As pointed out by Villafuerte (2007), there are many entities involved in the promotion and development of MSMEs in the country, however there is no conceptual model that integrates or consolidates all of the efforts and initiatives. M.O. 238, as has been noted earlier, only provides an oversight function, but not an integrative model to orchestrate the efforts of all concerned entities, specifically on the matter of BDS provision. On the policy level, a review of M.O. 238 may be in order, to also include an integrative function of all the concerned microfinance stakeholders, not just an oversight function. Embraced in Section 2 of the M.O. is a provision for the oversight official to create coordinating bodies he may deem necessary, in which the integration of ESD in TVET could be done. Or, in view of the growing role of the formal microfinance providers, the said integrative or coordinating function envisioned by the proposed conceptual model may be offered to any of the concerned government entities, such as the Department of Trade and Industry or the Bangko Sentral ng Pilipinas. This paper could very well serve as a platform for more in-depth study by future investigators on MSMEs nurturing and development in LDCs. Somehow, the study provides critical insights and helps close the knowledge gap about the plight of MSMEs in the country.

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REFERENCES
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Henderson, H. (1999). Beyond globalization: Shaping Totterman, H. and Sten, J. (2005). Start-ups business a sustainable global economy. West Hartford, CT: incubation and social capital, International Small Kumarian Press. Business Journal, Vol. 23 (5):487-511. Kristensen, P. H. and Zeitlin, J. (2004). Local players in global games: the strategic constitution of a multinational corporation. Oxford: Oxford University Press. Villafuerte, N. F. (2007). Microfinance handbook (Philippines). Philippines: Apples of Gold Publishing.

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BRIEF BIODATA
Dr. Felino SM. Angeles, Jr. is presently involved in Education and in Banking being the Chairman and CEO of the Rural Bank of Cainta (one of the earliest banks in Rizal) and President of the Tomas Claudio Memorial College (the oldest HEI in Rizal). He is active in micro enterprise development, particularly microfinancing and entrepreneurship training. He also sits with the Board of Trustees of the Coordinating Council for Private Educational Associations as a representative of the Philippine Association of Private Schools, Colleges and Universities. He earned his Doctoral degree in Management from the Philippine Womens University and his Bachelors degree from the University of the Philippines. Prior to his present involvements, Dr. Angeles has worked in various capacities at Mobil Oil Corporation, SGV and Company, United Coconut Planters Bank (Senior Manager, Vice President and President/CEO of one of its financial subsidiaries), has taught at the De La Salle University, has worked with UNDP and USAID assisted projects and was engaged in management consultancy. (Email: fsmangeles@yahoo.com)

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