Monday, September 26, 2005

Microfinance In The Philippines

Links to graphics:

The two maps show the Philippines as small black dots. The first map shows a world that is slowly embracing microfinance. And understandably, those not participating may not be in urgent need of measures aimed at poverty alleviation.

To interpret the second map, it shows that the Philippines (colored black) has Portfolio At Risk – 30 days in the range of 4.6-6.5%. Though not the leader in this area, but still compare this to the ratios of non-performing loans in the local commercial banking system, which average in the double-digits. And we can truly say, not bad.

The pie chart shows that the Philippines received 4% from ADB’s Microfinance loans which share amounted to US$20 million.

The little piece below was originally intended as additional comments on the subject of microfinance discussed in another blog, to help shed light on the many blessings that could be brought into a country which seriously embraces its many time-tested principles and practices. But decided against it for the reason that it may not be the proper forum at this time, though it would have reached more people given the wide readership of that blog.

So here goes.

Without a doubt, microfinance is not, and has never been, touted as the perfect vehicle for addressing poverty, especially the abject poverty we see in the country. Thus, it is also heir to failures

But first, let it be reiterated that the successful and sustainable microfinance organization is one that is privately owned and operated. And such is the case with the current microfinance environment in the Philippines. The prior microcredit programs initiated and run by the government are essentially the past. And indeed they failed because the borrowers failed them. And for a variety of reasons. Included among them would be inadequate loan education and monitoring of the borrowers, borrowers are not personally invested, and yes, even maybe because of the acquired bad attitudes/habits in the local culture.

But can microfinance work in the Philippines? Please read these articles from Grameen Foundation USA and you be the judge:

Does microfinance have a significance presence in the Philippines? Here is a partial list of a coalition of microfinance organizations in the Philippines:

You may also be able to pick successful names from the thousands of credit unions/cooperatives scattered in the country, since most of them already perform micro-finance activities without the official designation.

Overall, are microfinance organizations in the Philippines good at collection or re-payment efforts, which process completes the loan cycle?

I can only provide and vouch for it firstly, from anecdotal evidence from the credit union I am a member of (established in 1954), and secondly, from recollections of articles and news reports I have read, including the links on my last comment and the graphics above.

Lastly, let me ask in return, would the Philippines be “is estimated that the Philippines is home to the largest number of Grameen-style programs”, if its history on repayment rates was very poor? Especially as compared to the other countries which have histories of good repayment rates?