EFFORTS to narrow the country’s digital divide are becoming increasingly critical as rapid digital transformation threatens to leave underserved communities further behind, an Asian Development Bank (ADB) official said.

“Narrowing the digital divide is very critical, as underserved areas risk getting left behind, given the speed at which digital transformation pushes some forward,” ADB Country Director for the Philippines Andrew Jeffries said during The Manila Times forum on Wednesday.

“So, it’s important that others get pushed forward as well,” he added.

Jeffries said that while digitalization has accelerated growth and efficiency for many sectors, the speed at which technology is reshaping the economy has also widened gaps between areas that have access to digital tools and those that do not.

Without deliberate intervention, communities with limited connectivity, infrastructure or digital skills risk being excluded from economic opportunities that are increasingly dependent on technology.

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According to the Bangko Sentral ng Pilipinas (BSP), agriculture and micro, small and medium enterprises (MSMEs) are vital to the country’s economy, yet they remain among the most financially underserved.

Smallholder farmers, fisherfolk and informal workers often lack access to affordable credit and risk protection, as well as capacity-building on financial and risk management.

MSMEs, which account for 99.5 percent of businesses and over 60 percent of employment, continue to receive a disproportionately small share of total business loans.

Progress in account ownership

BSP Financial Inclusion Director Mynard Bryan Mojica said that account ownership in the Philippines rose from 34 percent in 2017 to 50 percent in 2024.

“We have made progress, but we are not yet where some of our Asean neighbors are,” Mojica said.

He stressed that Singapore, Thailand, Malaysia, and even Vietnam, have moved faster in recent years.

“So we should not be complacent. If Asean is a convoy of ships, we are moving, but we want to make sure that we are not trailing behind,” he said.

Mojica said that while individual access to financial services may appear uneven, household-level access is significantly stronger because Filipinos tend to share financial resources within extended families.

“One account is not just one person’s account,” Mojica said, noting that a single bank or e-money account often supports a family.

This relational and family-based structure, he said, is a strength that policymakers must recognize when designing inclusion initiatives.

Despite gains, Mojica acknowledged persistent barriers that continue to keep many Filipinos outside the formal financial system.

These include concerns over costs, lack of identification documents, distance from bank branches or electronic money devices, weak infrastructure, limited internet connectivity, and gaps in financial awareness and trust.

Mojica said that the central bank is intensifying efforts to improve access to finance for MSMEs.

“We often say that MSMES are the backbone because it is true. But MSME financing faces three main challenges,” he said.

“Banks see MSMEs as risky and costly to serve. On the demand side, the MSMEs lack formal documents or credit history. And on the credit enabler side, our financial infrastructure is still evolving,” Mojica added.

Moreover, the BSP prioritizes onboarding those still excluded from the financial system, including the underserved.

“We want to onboard those who are still outside the formal financial system, including farmers, cash-based workers, the youth sector, persons with disabilities, among others,” Mojica said.

“Inclusion must reach the margins, and we are developing a national strategy for financial education to harmonize all financial literacy efforts by various stakeholders in the Philippines,” he added.

 

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