social entrepreneurship thru microfinance
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Pursuing social and financial returnsPursuing social and financial returns
Microfinance asMicrofinance asAnti-Poverty Anti-Poverty StrategyStrategy
Striking a balance:Striking a balance: Social and economic goalsSocial and economic goals Strengthen the capacity of Strengthen the capacity of
marginalized groups to engage in marginalized groups to engage in productive enterprisesproductive enterprises
Sustain economic interventions Sustain economic interventions for the poor over the long termfor the poor over the long term
Sowing the seeds:Sowing the seeds:Systems, policies, institutions Systems, policies, institutions in placein place Social Reform and Poverty Alleviation Social Reform and Poverty Alleviation
Act (RA 8425)Act (RA 8425) National Anti-Poverty Commission National Anti-Poverty Commission
(NAPC)(NAPC) Microfinance Services for the PoorMicrofinance Services for the Poor People’s Development Trust Fund People’s Development Trust Fund
(PDTF)(PDTF) Government Financial Institutions (GFIs)Government Financial Institutions (GFIs)
NAPC ORGANIZATIONAL STRUCTURENAPC ORGANIZATIONAL STRUCTURE
NAPC’s Thrusts/Functions on MFNAPC’s Thrusts/Functions on MF
Development of a policy environment, Development of a policy environment, especially in the area of savings generationespecially in the area of savings generation
Rationalization of existing government Rationalization of existing government programs for credit/guaranteeprograms for credit/guarantee
Utilization of existing government financial Utilization of existing government financial entities for provision of MF products and entities for provision of MF products and services for the poorservices for the poor
Promotion of mechanisms necessary for Promotion of mechanisms necessary for implementation of MF services, including implementation of MF services, including indigenous MF practicesindigenous MF practices
RA 8425 defines MicrofinanceRA 8425 defines Microfinance
Purpose•Improve HH’s asset base •expand access to savings
Credit - savings mobilization program
exclusive for the poor Characteristics- small loan- simple application- collateral free- alternative loan repayments- minimum savings
People’s Dev’t Trust Fund (PDTF)
Php 4.5 Billion Fund(accumulated in 10 yrs)
only the interest earnings can be used as grant
Capacity building/ institutional strengthening of
MFIs
ELIGIBLE PURPOSES OF PDTFELIGIBLE PURPOSES OF PDTF Consultancy and training services for Consultancy and training services for
microfinance institutions, LGUs and their microfinance institutions, LGUs and their beneficiaries on the establishment of the beneficiaries on the establishment of the necessary support services, social and financial necessary support services, social and financial preparation, preparation of plans and programs preparation, preparation of plans and programs including fund sourcing and assistance, including fund sourcing and assistance, establishment of credit and savings M&E establishment of credit and savings M&E mechanisms;mechanisms;
Scholarships or training grants for microfinance Scholarships or training grants for microfinance staff and officers and selected beneficiaries;staff and officers and selected beneficiaries;
Community organizing for microfinance, Community organizing for microfinance, livelihood and microenterprise training services;livelihood and microenterprise training services;
Livelihood/microenterprise project/program Livelihood/microenterprise project/program feasibility studies and researches;feasibility studies and researches;
Savings mobilization and incentive programs, micro Savings mobilization and incentive programs, micro insurance and other similar facilities;insurance and other similar facilities;
Information and communication systems such as Information and communication systems such as baseline surveys, development monitoring systems, baseline surveys, development monitoring systems, socio-economic mapping surveys, organizational socio-economic mapping surveys, organizational assessments and other similar activities;assessments and other similar activities;
Legal and other management support services such as Legal and other management support services such as registration, documentation, contract review and registration, documentation, contract review and enforcement, financial audit and operational enforcement, financial audit and operational assessment;assessment;
Information dissemination of microfinance technology Information dissemination of microfinance technology and microenterprise development; andand microenterprise development; and
Other activities to support microfinance and Other activities to support microfinance and livelihood/microenterprise development.livelihood/microenterprise development.
GFI Credit Windows for MFGFI Credit Windows for MF
INSTITUTIONINSTITUTION PROGRAMPROGRAM TARGET TARGET AVAILERSAVAILERS
FOCUS FOCUS GROUPSGROUPS
People’s Credit People’s Credit and Finance and Finance Corporation (PCFC)Corporation (PCFC)
Wholesale Wholesale lending to retailerslending to retailers
Capacity-Capacity-building loansbuilding loans
Accredited MFIsAccredited MFIs Rural/urban Rural/urban microentrepreneurmicroentrepreneurss
Quedan and Rural Quedan and Rural Credit Guarantee Credit Guarantee Corporation Corporation (QUEDANCOR)(QUEDANCOR)
Wholesale Wholesale lending to retailerslending to retailers
Countryside Countryside Lending Conduits Lending Conduits (CLC)(CLC) Agri-CooperativesAgri-Cooperatives
Agri-fishery/forestrAgri-fishery/forestry projectsy projects
Land Bank of the Land Bank of the Philippines (LBP)Philippines (LBP)
Wholesale Wholesale lending to lending to wholesalerswholesalers
Wholesale Wholesale lending to retailerslending to retailers
CooperativesCooperatives Countryside Countryside Financial Institutions Financial Institutions (CFIs)(CFIs) MF NGOsMF NGOs
INSTITUTIONINSTITUTION PROGRAMPROGRAM TARGET TARGET AVAILERSAVAILERS
FOCUS FOCUS GROUPSGROUPS
Development Bank Development Bank of the Philippines of the Philippines (DBP)(DBP)
Wholesale Wholesale lending to retailerslending to retailers
Business Business development loansdevelopment loans
Capacity-Capacity-building loansbuilding loans
MF BanksMF Banks MF-oriented banksMF-oriented banks MF NGOsMF NGOs Savings & Credit Savings & Credit CoopsCoops
National Livelihood National Livelihood Support Fund Support Fund (NLSF)(NLSF)
Wholesale Wholesale lending to retailerslending to retailers
Capacity-Capacity-building loansbuilding loans
CoopsCoops NGOsNGOs BanksBanks
Agrarian Reform Agrarian Reform Communities Communities (ARCs)(ARCs)
Small Business Small Business Guarantee and Guarantee and Finance Finance Corporation Corporation (SBGFC)(SBGFC)
Wholesale Wholesale lending to retailerslending to retailers
MFIsMFIs ManufacturingManufacturing ProcessingProcessing TradingTrading ServicesServices
Reaping the fruits:Reaping the fruits:Significant Developments in MFSignificant Developments in MF Overall Microfinance Program StatusOverall Microfinance Program Status
As of September As of September 20062006
Geographical CoverageGeographical CoverageProvincesProvincesCitiesCitiesTownsTowns
80 of 8080 of 80117 of 117117 of 117
1,453 of 1,500 (97%)1,453 of 1,500 (97%)
Number of MFIsNumber of MFIsIncluding branchesIncluding branches
1,4101,4102,1882,188
Active Microfinance ClientsActive Microfinance ClientsSONA 2 (Beginning July 2004)SONA 2 (Beginning July 2004)Cumulative from SONA 1 (Beginning July 2001)Cumulative from SONA 1 (Beginning July 2001)
1,993,6061,993,6063,433,0493,433,049
New Jobs Generated from Microfinance New Jobs Generated from Microfinance (SONA 2)(SONA 2)
648,005 (33%)648,005 (33%)
Amount of Loan ReleasesAmount of Loan ReleasesSONA 2 (Beginning July 2004)SONA 2 (Beginning July 2004)Cumulative from SONA 1 (Beginning July 2001)Cumulative from SONA 1 (Beginning July 2001)
P 49.22 BP 49.22 BP 59.02 BP 59.02 B
Active Microfinance Clients by SectorActive Microfinance Clients by Sector
34%
29%
20%
1%15%
1% Farmers
Fisherfolk
Workers in InformalSector
Urban Poor
Indigenous People
Youth
Coming to terms:Coming to terms:Basic Sectors on MicrofinanceBasic Sectors on Microfinance
Microfinance is understood as lending Microfinance is understood as lending and microenterprise financingand microenterprise financing
lending ME financing
MF = government program
CHEAP
HIGH INTEREST
Access to microfinance can be improved Access to microfinance can be improved thru capacity building of MFIs and thru capacity building of MFIs and potential clientspotential clients
Lack of working capital is a major Lack of working capital is a major constraint to microenterprise operationsconstraint to microenterprise operations
Stringent requirements of formal Stringent requirements of formal financial institutions stir a continuing financial institutions stir a continuing dependence on informal loan sourcesdependence on informal loan sources
There is capacity to save whether in There is capacity to save whether in formal or informal arrangements, except formal or informal arrangements, except for those with very low incomesfor those with very low incomes
There is willingness to put up businesses There is willingness to put up businesses based on existing opportunities which based on existing opportunities which can be better enhanced by the provision can be better enhanced by the provision of training and support servicesof training and support services
Looking ahead:Looking ahead:Remaining ChallengesRemaining Challenges Unserved areas and underserved Unserved areas and underserved
sectorssectors Poorly informed poorPoorly informed poor Credit pollutionCredit pollution Requirement for non-financial Requirement for non-financial
services for microenterprisesservices for microenterprises Commercial principles and social Commercial principles and social
objectivesobjectives
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