social entrepreneurship thru microfinance

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)


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


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)


Business Business development loansdevelopment 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)



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)


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

social entrepreneurship thru microfinance

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