A regional hub that aims to improve the knowledge and capability of small and medium enterprises (SMEs) and lead to greater access to funds is being eyed to spur economic growth in Asia Pacific.

The Geneva-based International Trade Centre (ITC) and the Manila-based Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) signed a memorandum of understanding on October 28, 2009 to build a long-term strategy for a Regional SME Finance and Knowledge Centre, expected to be the first in Asia.

ITC, a joint agency of the World Trade Organization and the United Nations that assists developing and transition countries achieve sustainable human development through exports, is extending a grant of US$150,000 (nearly PhP7 million) to ADFIAP for the project. ADFIAP serves as the focal point of development banks and other financial institutions engaged in the financing of sustainable development.

Specifically, the Regional SME Finance and Knowledge Centre aims to build the capacity of trade support institutions and SMEs, resulting in easier access to finance. The Centre is expected to produce country-based trainers that would train and coach SME managers on sound financial management practices.

“By building a better dialogue on the needs and competencies between trade support institutions and banks, and between banks and SMEs, we hope to assist SME managers become much better equipped to produce bankable proposals that would attract and embolden banks to lend to SMEs,” said Octavio B. Peralta, ADFIAP secretary general.

In the Asia-Pacific region, SMEs account for around 90% of all businesses and employ as much as 60% of the workforce. At present, however, they generate only around 30% of exports, mainly due to lack of access to credit.

To help boost SMEs’ potential, ADFIAP also inked a memorandum of understanding with the University of the Philippines’ Institute for Small-Scale Industries (UP ISSI) for a joint partnership to develop and promote training and capacity building for micro SMEs in the country and enhance their professional and business viability and sustainability.

The two signing ceremonies were held on the eve of the 6th International Forum for Chief Executives of DFIs (CEO Forum VI) on Oct. 29 at the Dusit Thani Manila, which was organized by ADFIAP for its 109 member-institutions in 41 countries. Present at the signing ceremonies were: ADFIAP’s Mr. Peralta; Roger Megelas, ITC Senior Adviser, Trade Finance for SMEs Unit; and Professor Ruperto P. Alonzo, UP ISSI Director.