Philippines: Microfinance Swells to P12-B Industry

Apr 2010
Manile, Philippines, April, 18 2010 - From just a handful of lenders and several thousand borrowers in the 1970s, the business of microlending and microfinance has ballooned into a P12- billion industry serving an estimated seven million poor Filipinos, most of them women.

This surfaced at a recent workshop involving a number of public and private agencies from both the entrepreneural and academic sectors who committed themselves to learn from the past while pushing onward.

From just a handful, the number of microfinance institutions or MFIs now total 500.

“A supportive regulatory and policy environment, including the phase-out of government directed credit programs, helped spur the growth of microfinance in the country,” a policy issues paper on microfinance and microenterprise development jointly submitted by the Pinoy Me Foundation and the Hanns Seidel Foundation said.

Government-directed credit programs are more known as subsidy or doleout programs that compete and interfere with commercially-driven lending that teach people to be credit savvy and responsible at the same time.

The paper titled “Mainstreaming Micro” acknowledged that the commercialization of microfinance created new opportunities but ushered in new challenges as well.

For instance, the paper found that rising competition among MFIs has encouraged multiple borrowings, which is bad particularly if this leads to overindebtedness.

The paper's authors, all 11 of them, said this rather odd finding needs to be scrutinized further.

The authors also noted that most microfinance borrowers are not really poor if one goes by the official definition and that these borrowers are urban based.

“Microfinance has so far been an urban phenomenon that finances large retail or trading micoenterprises. Because 70 percent of the poor in the Philippines are in rural areas, the challenge is how to reach the rural, agriculture-based poor population,” the authors said.

They also said that the chronic poor tended to borrow for consumption rather than for income-generating purposes.

The authors include Dr. Cayetano Paderanga, Dr. Gilbert Llanto, Ronald Cua, Piedad Giron, Joselito Almario, Fernando Aldaba, Salvador Sibayan, Pinky Abelleda, Erwin Tiongson, Danilo Songco and Angelica Espinosa.

They collaborated with the Agricultural Credit Policy Council, the Philippine Development Assistance Program, the John J. Carol Institute of Church and Social Issues, the Microfinance Council of the Philippines and PUNLA Foundation. (PNA) RMA/Jun Vallecera/rsm

Source : balita-dot-ph

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