RUNNING a debt-free company is good but it may also cause aspiring and established entrepreneurs to miss out on opportunities to expand their business and record higher profits, according to the country’s sole public credit registry.
A statement issued by the Credit Information Corp. quoted CIC President and CEO Ben Joshua A. Baltazar as saying that credit is essential in allowing businesses to grow and develop. Avoiding debt may not also bode well for the economy’s growth as firms are limited in their ability to expand. Baltazar noted how the continuing misconception on credit, how it is often associated with financial mismanagement or instability, proves to be disadvantageous for the economy and the country’s financial system as some financially capable individuals avoid credit altogether.
“While being debt-free is all well and good, by not taking advantage of credit, aspiring and established entrepreneurs are missing the opportunity to venture into business or further expand their capital for bigger profits and growth. As for individuals, they may be missing out on a much earlier expansion of their assets through acquiring real estate properties for passive income. All these missed opportunities could have also helped stimulate economic activity,” Baltazar said.
He said this part of the many reasons financial literacy is crucial to the economy. He said this rings true especially this week with the celebration of the 2023 Economic and Financial Literacy (EFL) week, which has the theme “Bayanihanomics: Sama-samang Pakikilahok para sa Matibay na Ekonomiya” [collective participation for a resilient economy].
The term “bayanihanomics” is a portmanteau of “Bayanihan” (solidarity) and “economics.” The term depicts the goal of promoting collaboration geared towards inclusive economic growth and development, as in the Philippine Development Plan 2023-2038.
“Financial literacy empowers individuals with more confidence in handling and managing their financial health which nurtures positive financial behaviors and decisions, helping them become more financially resilient. It also has the potential to drive economic growth and improve Filipinos’ financial resistance in recovering from financial shocks and in navigating through challenging economic conditions,” Baltazar said.
In line with the 2023 EFL Week, the CIC will conduct its 8th CIC Academy webinar series on November 22, and a special webinar session for Neda employees – to discuss the role of credit and the country’s credit registry in the national development agenda, which they may incorporate in the implementation of Neda’s programs and other initiatives.
“While credit is a powerful financial tool that empowers MSMEs and individuals to unlock opportunities to achieve their aspirations, key to reaping its benefits is good financial management and responsible borrowing,” the PCEO concluded.
In a bid to address the stigma around credit and in pursuit of its mandate, CIC conducts free financial literacy webinars under CIC Academy, its nationwide educational flagship program. This year alone, over 8,000 participants from all over the country have joined the CIC Academy webinar sessions.