Progress From The Grassroots

Ayala helps create vibrant communities by developing enterprising citizens through the provision of capital, livelihood training and opportunities.

Madgilyn Reyes, 42, is living testimony of how resourcefulness and micro financing are potent antidotes to poverty.

Now on her ninth loan cycle of P50,000, Madgilyn produces 400 cement stoves a week (priced at P45 to P120 each), which are very popular among low-income households in the towns of Quezon province where she resides, as well as those in neighboring Batangas and Laguna.

She dutifully sets aside P2,460 every week as payment for her loan and not once has she been remiss in her payments these past nine years. Not even in 2003, when three of her children had high fever and she needed P20,000 to pay their hospital bills. Ultimately, the bills were settled with the help of the religious community where her husband now serves as a full-time preacher.

"Marami pa akong pangarap sa buhay na maaaring matupad sa pamamagitan ng loans (I still have many aspirations which I know loans can help me attain)," says Madgilyn.

Thousands like Madgilyn have benefited from one bank’s support of microfinance institutions, proving that the poor are credit-worthy given the right mechanisms.

Bank of the Philippine Islands has taken the lead in converging the worlds of microfinance and banking.

"Encouraging and supporting the Filipino entrepreneurial spirit is the most practical and effective way of helping our countrymen with limited resources," says Gigi Montinola, president of BPI.

A pioneer in wholesale microfinance, BPI provides various forms of credit lines for non-government organizations, cooperatives, and both rural and thrift banks with microfinance operations that seek to uplift the lives of Filipinos in need.

"We believe that these institutions are in the best position to handle micro-lending activities because they provide micro-entrepreneurs with access to formal financial markets," explains Josaias de la Cruz, vice-president for microfinance of BPI.

The bank entered into wholesale microfinance in the 1980s through its social development arm, the BPI Foundation. The foundation’s microfinance program called Financing Assistant Line (FAL) began with a breakthrough partnership with Tulay sa Pag-Unlad, Inc., now known as TSPI Development Corporation. BPI initially provided the non-profit grassroots foundation a P500,000 credit line as loan capital for investment in small enterprise projects. It also sponsored the training of TSPI’s evaluation and collection staff.

In 2005, BPI established the Microfinance Unit within its corporate banking division to mainstream microfinance lending into its core business.

To date, the Bank of the Philippine Islands and BPI Foundation have together extended credit of over P356 million to more than 42,000 entrepreneurs and 40 microfinance institutions. All these end borrowers represent the future entrepreneurs who will create jobs and accelerate development from the bottom up.

The companies under the Ayala group have long recognized the need to help the country’s poor help themselves—teaching them to fish rather than simply giving them a fish, as the oft-quoted Chinese proverb suggests. Initiative, hard work and courage had never been a problem for Filipinos. Rather, it was the lack of access to formal financial structures as well as other economic opportunities that had been the stumbling block to those who wanted to improve their lives.

Thus the group is focusing on entrepreneurship as one of its key programs, concentrating on microfinance and enterprise development.

Another beneficiary of BPI’s microfinance program is 47-year-old Mila Aguila, who became her family’s breadwinner at age 14 when her father died. Through hard work, first as a maid and later as a saleslady, she was able to support her two siblings. One graduated from high school and the youngest completed college.

Married at 18, Mila and her husband, Rolando, who was 19, had modest dreams and even more modest prospects. She put up a sari-sari store in 2000, and with her first loan of P5,000 from TSPI, she expanded her business. She paid back that loan after only six months, never missing a weekly payment. With each successive loan, she added more product lines, including garments. Two of her children graduated from college and have begun to enjoy opportunities she never had, while a third is still in school, with brighter prospects in life than Mila could have ever dreamed of. Mila has visited Australia upon the invitation of TSPI’s partners. Her one regret is that Rolando, who died in 2002 from rabies, was not able to share the blessing she has received through her expanded business.

The outcome is direct and widespread, and the many beneficiaries include market vendors, rice retailers, newsboys, fishball vendors, tricycle drivers, and crafts workers.

"As micro-entrepreneurs increase their incomes, so does the country come closer to achieving its goal of alleviating poverty," says de la Cruz. "BPI remains committed to help microfinance institutions make their clients’ growing businesses more productive and competitive."

Other companies in the Ayala group also similarly foster entrepreneurship, albeit on a scale smaller than that of BPI. Manila Water’s microfinance program called "Kabuhayan Para sa Barangay" has benefited over 830,000 residents in its concession zone by providing loans to start-up businesses such as eateries and retail stores in their communities. It has chosen small and medium scale contractors for its various upgrading projects, helping them to grow in capacity and accept larger contracts. As a result, more than 10,000 jobs have been created.

An innovative but most effective enterprise development program has come from an unexpected source: Globe Telecom.

"The ills of poverty and its attendant problems are so large that our response must be commensurate in scale. I do not believe that we would be able to make a difference unless we are prepared to look at CSR strategies as an integral part of our business," Globe Telecom president and CEO Gerardo C. Ablaza, Jr. says.

Recently, Globe offered its AutoloadMAX retailership as an additional source of income.

"One of the best contributions we can make as an organization would be the creation of products and services that are affordable by the mass market consumers, and ideally that could create jobs and entrepreneurship opportunities while supporting local leadership and community cooperation. This would involve making every effort to enhance the positive multipliers of our business where we invest and operate," Ablaza adds.

BridgeCom Sa Bayan (BSB) is Globe’s leadership and entrepreneurship program for barangay councils and micro-entrepreneurs. In 2006, more than 600 barangays and 16 people’s organizations and microfinance institutions from 230 cities and municipalities benefited from BSB.

Since 2005, more than 100 enterprise development training sessions have been conducted involving 4,000 barangay leaders and micro-entrepreneurs who developed their community leadership skills and learned over 20 livelihood and small business opportunities.

The program, in partnership with ABS-CBN Bayan Foundation, Inc., helps identify micro-businesses and provides them with skills on strategic planning, marketing and financial management. It encourages communities to get actively involved in livelihood activities and starting small businesses for families and communities.

"Sa BSB entrepreneurship training, natutunan ko kung papaano ko lalo palaguin ang negosyo kong asin (I learned how to expand my salt business)," says Cecilia Bonilla, a member of a women micro-entrepreneurs’ group from ABS-CBN Bayan. She now owns a truck, which she uses to deliver the salt she sells.

"Doon ko rin natutunan na dapat yung ginagawa mong negosyo ay kung ano merong marami sa lugar ninyo. Tulad dito sa amin, marami ang asin kasi nasa tabi kami ng dagat (I also learned that you choose a product that is plentiful in your area, like salt, since we are near the sea)," she adds.

Natty Ramos of Victoria, Tarlac expanded her sari-sari store to include gasoline retailing. "Natutunan kong mag-budget, mag-marketing at pumili ng isang negosyo na tiyak na kikita ayon sa pangangailangan ng aming lugar (I learned how to budget, and market, and choose a product that is sure to sell in our area), " Natty says.

But perhaps, a better testimony to BSB’s success is the good business ethics it has imparted to budding tycoons.

Noel Menor of Ilocos Norte, who buys and sells garlic, says he learned that "dapat, pag nagne-negosyo yung mabuti lang ang gawin. Importante din na matulungan mo ang mga kabarangay mo para lahat maunlad (In business, one must do good. It’s important also to help others, so we all do well)."

Ablaza says it’s time to move beyond giving and start teaching.

"We believed that Globe’s community investment must move beyond philanthropy and be integrated into our core business strategy and business execution," he says, reaffirming the group’s belief that for the country to progress, economic progress must start from the grassroots.