Challenges

MSMEs are the backbone of the economy in the Philippines, accounting for 99.9% of all registered enterprises and 65% of employment generation. Yet the sector is also the most vulnerable to natural calamities and pandemics. MSMEs find difficulties in counteracting business interruption due to natural calamities given their limited abilities to assess the risks they are exposed to. Underestimating disaster risk continues to be a source of vulnerability among MSMEs after a crisis strikes. Residual risks remain largely unattended to and risk transfer mechanisms are not harnessed, which can be attributed to their low financial literacy which serves as a barrier to accessing post disaster risk management tools like insurance. As such the Payong app is intended to sensitize MSMEs to the risks of natural calamities and exogenous shocks, raise awareness on risks exposure to create an actionable Business Continuity Plan (BCP) strategy, and impart knowledge on available risk transfer mechanisms available from the private sector (insurance).

Primary target

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Description of Innovation

Payong is a web- and mobile based capacity development tool for MSMEs which aims to enhance the resilience of MSMEs in the face of natural calamities and pandemics. It has four main features by which capacitation of MSMEs is done:
1. Risk Profiling - users find out the risks they face through a location-based Risk Assessment using the GeoHazardPH platform of the Department of Science and Technology (DOST).
2. Business Continuity Planning (BCP) - this feature enables users to develop their own unique BCP to enable them to continuously provide products/services despite disruptive events.
3. E-Learning Modules - provides online courses on Entrepreneurship and other thematic areas which could contribute to improving the operational readiness of MSMEs, including an Integrated Risk Management and Insurance module.
4. Insurance Products Hub - provides MSMEs with access to insurance products available in the market which could address the risks they face. Payong is a web- and mobile based application designed to improve the resilience of MSMEs.

Results

As of end of March 2022, the Payong app has served 568 users composed primarily of MSMEs. In an assessment done in October and December last year, respondents rated the app highly in terms of users' satisfaction. The four features of the app were also rated highly. The importance of Business Continuity Planning (BCP), while a relatively new concept, was very much appreciated as shown by the 72 completed BCPs generated by the app as of March 2022. The Risk Profiling feature provided users with a venue by which they can assess the geo-climatic risks their enterprises face which is also a first for them. The Integrated Risk Management and Insurance Module has been downloaded and completed by 66 users. And with the on-going pandemic acting as a wake-up call, MSME users now have a higher willingness to get familiar with insurance and, in turn, explore the market in search of suitable products through the Insurance Products Hub.

There are discussions between PTTC and the insurance provider 1CISP to include the use of the Payong app in the Koop4HER program of 1CISP which is designed to empower women entrepreneur-members of cooperatives.

Lessons Learnt

The Payong App was designed to provide access to knowledge on business risk management and its tools. It provides a clear benefit to intended MSMEs. Its usefulness and value will depend on its ability to attract, maintain and grow meaningful engagement with its target clientele - MSMEs. The following are key considerations for sustainability and even replication of the app:
* Visibility - the app should be positioned in the over-all efforts of government to support the development of MSMEs. Its value will be amplified when it is seen to complement the over-all effort to develop MSMEs.
* Sustained Marketing - an appropriate communication and engagement strategy that clearly emphasizes the benefits of the app and why MSMEs should not miss it is needed. It should avoid the "apps for everything" message as it could lead to "apps fatigue".
* The Digital Literacy of MSMEs - ascertain the digital preparedness of MSMEs as the app is accessed via smart phones and computers. Based on the January 2022 statistics, more than 80% of users accessed the app via smart phones.
* Key Performance Indicators to monitor and effect improvements in the app.

The Department of Trade and Industry through the Micro, Small and Medium Enterprise Development Council (MSMEDC) issued Resolution No. 1 "Directing all Negosyo (Business) Centers to Promote and Advocate Financial Literacy and Climate and Disaster Risk Insurance (CDRI) to Ensure Disaster Resilience and Business Continuity Among MSMEs in the Philippines" on 28 April 2020. This resolution fully supports the advocacy and use of the Payong app as a digital tool to enhance MSME resilience and financial literacy. In fact, PTTC has already started orienting the Negosyo Centers for the purpose of advocating the use of the app among their respective MSME clients. This will be a continuous undertaking in 2022 and is expected to increase the usage of the app among MSMEs.