The Development Bank of the Philippines and the Philippine Development Assistance Programme have known each other for some time.

PDAP was aware that DBP extends loans for small and medium-scale enterprises and development agencies while the government financial institution recognized PDAP as a competent non-government organization that is making a difference in the fight against poverty.

But it was not until the two institutions got together in 2006 to support the development of the muscovado, organic rice and seaweeds industries that they forged a partnership that is destined to change the way NGOs and GFIs come together for a common purpose.

Through this partnership, partner organizations of PDAP in the pursuit of the PRIME program get access to development loans of the DBP that are coursed through its microfinance unit, assuring them of the extra capital they badly need to expand their enterprises.

It was a match made in heaven, explains DBP microfinance unit head Romy Carandang, because DBP is able to fulfill its mandate to help spur development of vital industries in the countryside through loans at competitive rates while helping raise the incomes of communities that PDAP serves.

PDAP, meanwhile, is able to take a giant step closer to strengthening the capability of its supported organizations to expand their reach, particularly to the farmers’ groups who need the extra income.

And because PDAP has done its work in getting the business entities ready and able to take on the responsibility of paying the loans, DBP is able to get its money back to continue lending to other SMEs.

Carandang says DBP’s relationship with PDAP started in 2006 when it was invited to attend a number of meetings and discussions on the Prime program and the industries that it covers.

“We observed during those meetings that PDAP was really working hard on promoting the three commodities. And it so happened that we were also promoting a lending program on high value crops. So we had an immediate meeting of the minds,” Carandang says.

Seeing the opportunity in organic agriculture commodities espoused by PDAP, DBP opened up an Organic Agriculture lending window with an initial allocation of PhP200 million.

Not long after, DBP and PDAP sat down to discuss how they can partner on projects since the two institutions shared the same objectives – poverty alleviation, promotion of sustainable agriculture and the growth of high impact industries.

“Our unit specifically is involved in high risk, but high impact projects. We are there in areas where commercial banks do not want to enter into. It so happens that PDAP is also in those areas,” Carandang says.

The first fruit of those lengthy discussions is the extension in 2008 of a PhP5 million loan under the One Town One Product window to the Sitangkai Exports Corp., which is at the forefront of efforts to expand the profitable seaweed industry in Tawi-Tawi.

This was quickly followed by an P11.5 million development loan to the Sultan Kudarat Muscovado Farmers and Millers Cooperative, which has been instrumental in catapulting Sultan Kudarat among the top muscovado producing provinces in the Philippines.

In both instances, PDAP endorsed the borrowers for consideration by DBP, putting its reputation behind the capability of the two groups to put the money into good use.

Carandang says that because DBP is confident in PDAP, it did not hesitate to extend the loans.

It was also encouraged by the fact that SITEXPORTS and SKMFC did meet all the financial requirements and standards set by the bank.

“We use the same standards in evaluating the applications of the groups that PDAP endorses. And because these groups have already been prepared by PDAP, our evaluation process is shortened,” he explains.

Carandang notes that these groups already have the proper financial documents, including a business plan and cash flow analysis.

What’s more, there is a ready and growing demand for their products so the probability is high that these groups would have more than enough cash to pay their loans.

He says it was unfortunate that DBP and PDAP only got together in the latter part of the PRIME program, which is funded by the Canadian International Development Agency, for the two would have been able to do so much more.

Nevertheless, the two groups are confident that their relationship would only get stronger as they explore more groups and industries.

“We do have a common objective, which is to do something for our country. We do not even have a memorandum of agreement, just a meeting of minds and hearts,” Carandang says.