Philippines: Small and Medium Enterprise Development Support Project

Evaluation Document | 27 June 2014

Reviews the nonsovereign components of the project, which provided a partial credit guarantee to a financial institution to support its lending to small and medium-sized enterprises, and an equity investment in a credit information bureau.

In August 2005, the Asian Development Bank (ADB) Board of Directors approved a partial credit guarantee (PCG) facility of P1 billion, a $25 million equivalent loan guaranteed by the Republic of the Philippines to the Small Business Guarantee and Finance Corporation, and an equity investment of up to $1 million in a proposed credit information bureau that was to be established by the government. These facilities were part of ADB’s Small and Medium Enterprise Development Support Project.

This project performance evaluation report reviews the nonsovereign components of the above project involving the provision of a PCG to one financial institution to support its lending to small and medium-sized enterprises (SMEs) and a proposed equity investment in a credit information bureau. The rationale and objectives of both components were to improve the enabling environment for SMEs and their ability to access finance.

The project is rated unsuccessful overall, based on unsatisfactory ratings for its development impact and outcome and ADB work quality, and a less than satisfactory rating for ADB investment profitability and ADB additionality.

The assessment offers these lessons:

  • More work should have been undertaken to establish an adequate pipeline of participating financial institutions at the outset.
  • Pricing needs to be market related and fully reflect project risks. Where market comparators do not exist, more exhaustive studies and analyses of the effective demand for guarantees should have taken place.
  • The impact of ADB staff changes on the monitoring process was underestimated. Although the need for effective monitoring was stressed in the report and recommendation of the President (RRP), its outcome was far from satisfactory.
  • Better due diligence of the financial intermediary for the partial credit guarantee should have taken place as ADB neither fully considered Security Bank Corporation’s risk rating process nor understood its processes and procedures.
  • Better due diligence should have been undertaken for the proposed equity investment in the credit information bureau, and the risks of the government establishing a state-owned corporation, rather than a private corporation adequately flagged in the RRP, to avoid unnecessarily locking up ADB headroom.


  • Acknowledgements
  • Basic Data
  • Executive Summary
  • Chapter 1: The Project
  • Chapter 2: Evaluation
  • Chapter 3: Issues, Lessons and Recommended Follow-up Actions
  • Appendixes