Only 400,000 poor households have access to microfinancing

The poverty incidence in the Philippines has grown from 31.8 percent in 1997 to a record 34.20 percent at the start of the year, according to the National Anti Poverty Commission (NAPC), the Cabinet-level committee tasked by the Arroyo administration for poverty alleviation.

That can be translated into at least 5.2 Filipino households living below or straddling the poverty line. Of these number, only an estimated 400,000 households have been able to access financial assistance to cope with the difficult times.

Financial assistance however did not come via dole-outs but through borrowings extended by various microfinancing institutions or MFIs. And it is these MFIs that the NAPC has been concentrating on to achieve the goals set by the Arroyo administration in its state-of-the-nation (SONA) address early this year.

The Arroyo administration wants 300,000 womenfolk or the women of the poor households to gain access to livelihood, to create one million additional jobs in the rural areas, and for 20,000 youths to be employed in employment projects every year.

By the end of 2004, that means nearly one million womenfolk would have access to gainful livelihood through financing or borrowings. And the only way to achieve this is through the development and expansion of the microfinance sector.

A major government player in microfinance is the People’s Credit and Finance Corp. (PCFC) which has a presence in 71 of 77 provinces.

According to PCFC chairman Gary B. Teves, there are 791 head offices and over a thousand branches of rural banks with 65 with direct links with the PCFC. There are over 300 credit-granting non-government organizations (NGOs) of which 30 are PCFC conduits.

There are 59 cooperatives and 26 cooperative rural banks also allied with PCFC.

Among the successful institutions deeply involved in microfinancing are the CASRD Bank presently servicing 44,000 poor women, the New Rural Bank of San Leonardo in Northern Luzon, the Solid Women’s MFI of Negros Women for Tomorrow in the Visayas, and the Multipurpose Cooperative of Panabo in Mindanao.

All these institutions claim an average high repayment ratio of 96 percent.

Recently, the Land Bank of the Philippines (LBP) and the NAPC has been working on launching the People’s Development Trust Fund (PDTF), another instrument for microfinancing.

"Perceived as the answer to fund requirements for capacity building, interest earnings from this fund will finance institutional strengthening requirements of MFIs," Teves said, adding that the implementing rules and regulations have already been forwarded for approval of the President.

According to the United Nations Development Programme (UNDP), the microfinance sector needs at least P4.2 billion to expand their operations to service one million clients by 2005. It was however described as a "fraction of the more than five million new families waiting to avail of opportunities by that time."

A survey conducted with the help of the UNDP concluded that one of the biggest challenges of the sector is increasing the scale of microfinance to some unserved and underserved areas.

According to the UNDP, some 53 MFIs, with a total loan portfolio of P1.264 billion, responded to the survey. They reported a total of 316,410 clients as of June this year. Of the figure, the NGO group reported a total of 217,024 clients representing 69 percent of the client outreach.The rural banking sector accounted for 76,825 clients (24 percent) and the cooperative sector 22,596 (seven percent). – TPTorres