napc and microfinance
TRANSCRIPT
NAPC and NAPC and MicrofinanceMicrofinance
Andrea S. AlforteMicrofinance Unit, NAPC Secretariat
PRESENTATION OUTLINEPRESENTATION OUTLINE
• Basic Microfinance Concepts• Microfinance and Poverty
Reduction• NAPC Mandates in Microfinance
Basic Microfinance ConceptsBasic Microfinance Concepts
Paradigms on creditParadigms on credit
MODERN•Asset
• poor are bankable• collateral free
• banking at doorsteps• demand driven
TRADITIONAL
• liability
• poor can’t pay
• collateral req’t• bank as only source
of formal credit• subsidized credit/ supply driven
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
Core PrinciplesCore Principles
• Low-income households need sustained access to financial services.
• The poor have the capacity to repay their loans and to save.
• Microfinance institutions can be operationally and financially self-sufficient.
Who are the MF Players?Who are the MF Players?
MICROFINANCE CLIENTS(3.1 million as of March 2006)
MICROFINANCE INSTITUTIONS Rural/Thrift/MF Banks, NGOs,
Cooperatives(about 1,817 MFIs)
Capacity Building Support Agencies/
Institutions
Policy/Regulatory/ Supervisory AgenciesGFIs/ Wholesalers
DONOR COMMUNITY
Capacity Building Support Agencies/
Institutions
Target Clients of MFTarget Clients of MF
• Economically active and entrepreneurial low-income households
• Those who have a stable economic activity and will be able to sustain and enhance that activity
Types of Projects FinancedTypes of Projects Financed
• Consumer trading/marketing• Home-based micro-enterprises• Food processing/services• Agri-based
Small
Medium
Large
MicroPoverty Threshold
Very Poor
Moderately Poor
Vulnerable Non- PoorE
NT
ER
PR
ISE
RIS
KS
/vu
lner
abili
ties
Classification of the poor as target for microfinance services ( Adapted from the JBIC Study on Sustainable MF for Poverty Reduction in the Philippines, Sept. 2004)
Microfinance Clients SituationMicrofinance Clients Situation
How can MF Assist the Poor?How can MF Assist the Poor?
• If provided on a sustainable basis, microfinance can:– Build viable businesses,– Help increase income,– Build assets, future investments and
savings,– Generate employment,– Reduce vulnerability to external shocks
Microfinance and Poverty Microfinance and Poverty ReductionReduction
Gov’t Poverty Reduction Gov’t Poverty Reduction ProgramProgram
• Asset Asset ReformReform
• Human Human DevelopmeDevelopment Servicesnt Services
• Employment Employment and and LivelihoodLivelihood
• Security and Social Protection
• Participation in GovernanceParticipation in Governance
MICROFINANCE/MICRO-ENTERPRISE
MF in Poverty Reduction MF in Poverty Reduction StrategyStrategy
• Increased livelihood and employment opportunities
• Strengthening the capacity of marginalized groups to engage in productive enterprises
NAPC Mandates in MFNAPC Mandates in MF
NAPC Institutional MandatesNAPC Institutional Mandates
• Coordinate with different national and local government bodies and private sector to assure full implementation of social reform and poverty alleviation programs
• Oversee, monitor and recommend policies to ensure effective formulation, implementation and evaluation of policies, programs and resource allocation
• Ensure meaningful participation of the basic sectors
• Develop and promote microfinance
NAPC’s Thrusts/Functions on MFNAPC’s Thrusts/Functions on MF
1. Development of a policy environment, especially in the area of savings generation
2. Rationalization of existing government programs for credit/guarantee
3. Utilization of existing government financial entities for provision of MF products and services for the poor
4. Promotion of mechanisms necessary for implementation of MF services, including indigenous MF practices
Policy Environment for MFPolicy Environment for MF
• RA 8425 – directs creation of NAPC, organization of PDTF and PCFC privatization and capitalization (1998)
• General Banking Act of 2000 – Section 13-(i) and 13- (iv) encourages application for microfinance-oriented banks
• RA 9178 promoting establishment of Barangay Micro Business Enterprises (Nov 2002)
• Administrative Order 86 – organizes National Credit Council to rationalize directed credit programs of government (1996)
• Executive Order 138 – directs non-GFIs to stop retailing credit (1998)
• Executive Order 110 – Directing the PCFC as the Administrator of the People’s Development Trust Fund (2002)
• New regulations for credit cooperatives (2002)
NAPC’s Thrusts/Functions on MFNAPC’s Thrusts/Functions on MF
1. Development of a policy environment, especially in the area of savings generation
2. Rationalization of existing government programs for credit/guarantee
3. Utilization of existing government financial entities for provision of MF products and services for the poor
4. Promotion of mechanisms necessary for implementation of MF services, including indigenous MF practices
Credit Policy PrinciplesCredit Policy Principles
• Greater role of the private sector (MFI) in financial services provision
Enabling policy environment to facilitate increased participation of MFI
Market-oriented financial and credit policies (interest on loans and deposits)
Non participation of the gov’t in the implementation of credit and guarantee programs
viable/sustainable private (micro) financial market
NAPC’s Thrusts/Functions on MFNAPC’s Thrusts/Functions on MF
1. Development of a policy environment, especially in the area of savings generation
2. Rationalization of existing government programs for credit/guarantee
3. Utilization of existing government financial entities for provision of MF products and services for the poor
4. Promotion of mechanisms necessary for implementation of MF services, including indigenous MF practices
GFI Credit Windows for MFGFI Credit Windows for MFINSTITUTIO
NPROGRAM TARGET
AVAILERSFOCUS
GROUPSPeople’s Credit and Finance Corporation (PCFC)
Wholesale lending to retailers
Capacity-building loans
• Accredited MFIs • Rural/urban microentrepreneurs
Quedan and Rural Credit Guarantee Corporation (QUEDANCOR)
Wholesale lending to retailers
• Countryside Lending Conduits (CLC)• Agri-Cooperatives
• Agri-fishery/forestry projects
Land Bank of the Philippines (LBP)
Wholesale lending to wholesalers Wholesale lending to retailers
• Cooperatives• Countryside Financial Institutions (CFIs)• MF NGOs
Development Bank of the Philippines (DBP)
Wholesale lending to retailers Business development loans Capacity-building loans
• MF Banks• MF-oriented banks• MF NGOs• Savings & Credit Coops
INSTITUTION
PROGRAM TARGET AVAILERS
FOCUS GROUPS
National Livelihood Support Fund (NLSF)
Wholesale lending to retailers
Capacity-building loans
• Coops• NGOs• Banks
• Agrarian Reform Communities (ARCs)
Small Business Guarantee and Finance Corporation (SBGFC)
Wholesale lending to retailers
• MFIs • Manufacturing• Processing• Trading• Services
UCPB-CIIF Finance and Development Corporation (UCFDC)
Wholesale lending to retailers
• Farmer-based/owned coops and organizations• Rural Finance Institutions (RFIs)
• Coconut farmers
NAPC’s Thrusts/Functions on MFNAPC’s Thrusts/Functions on MF
1. Development of a policy environment, especially in the area of savings generation
2. Rationalization of existing government programs for credit/guarantee
3. Utilization of existing government financial entities for provision of MF products and services for the poor
4. Promotion of mechanisms necessary for implementation of MF services, including indigenous MF practices
ADB Technical AssistanceADB Technical Assistance
• Conduct nationwide survey of 53 MFIs and 424 MFI clients in frontier areas
• 3 FGDs with 39 BS Representatives
• On-site Training and Mentoring of 29 MFI units in frontier areas
• 20 Microfinance education seminars in frontier areas (3,300+ participants)
MF Sector Strengthening ProjectMF Sector Strengthening Project
• Provision of technical assistance to MFIs on ASA methodology
• Trained local practitioner-trainers on ASA
• Documentation of successful MF practices
• Development of ASA Instructional Manual
NAPC Executive Mandate on MFNAPC Executive Mandate on MF
• Monitor the July 2001 & 2004 SONA target on MF: – make MF as a cornerstone in the fight against poverty
– 300k new women borrowers per year (2001-2004); 3 million clients (2004-2010)
• E.O. No. 110 (PCFC as PDTF Adm.)– reiteration of Section 10 of RA on NAPC’s function over
PDTF
• NAPC as the main policy body over microfinance (6th NAPC EB -2/36/03)
MF/ME DatabaseMF/ME Database
• Local policies• Map of areas with MF services• Directory of Microfinance
Institutions• Credit Windows of Wholesale
Microfinance Providers
NAPC’s Mandate on PDTFNAPC’s Mandate on PDTF
• Source funds for the establishment of/and augmentation of PDTF
• Recommend the accreditation of organizations/institutions acting as resource partners for institutional development
• Ensure that validation/monitoring activities are conducted for PDTF-funded projects
• Promote research and development work on livelihood & MF technology, publications/communications programs for poor beneficiaries
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
PDTFPDTF
• PDTF ExeCom• Identify strategic activities to
augment PDTF• Recommend to PCFC projects,
organizations and institutions for PDTF accreditation
Other ActivitiesOther Activities
• Conducted Regional Training on Gender Issues in Microfinance (Luzon, Visayas, Mindanao)
• Membership to Microfinance Program Committee