28 July 2016
Message by Vice President Leni Robredo represented by Ms. Georgina Hernandez, Spokesperson at the 2016 Microfinance Council of the Philippines, Inc. Annual Conference, Century Park Hotel, Pasay City
The Philippines is considered a bright light in Asia when it comes to microfinance. We are blessed with a perfect storm that relentlessly uproots challenges to extreme poverty.
One) we have an advocate in the Senate who prioritizes those who truly need help, two) we have a government bureaucracy that is very willing and ready to break down silos, 3) we have a very active civil society that puts Occupy Wall Street to shame, and 4) we have private sector players who are not scared to disrupt and innovate business models to address social, not just business, needs, and 5) we have the right regulatory environment that encourages growth in this sector.
But most important of all are the poor themselves, who do not shy from hard work nor simply wait for dole outs. The poor, who, with a little lunch money of a loan, can turn their own dreams into food carts, mounds of pretty bags made from recyclable materials, and unique, world-class products like Naga’s very own pilinut-flavored lipstick.
You must try it! It has natural moisturizers to make your lips happy.
A survey conducted by the Economist Intelligence Unit (EIU) showed that the Philippines maintained its rank as the microfinance leader in Asia and the third-best in the world last year.
Our country received a score of 81 in the Global Microscope 2015, next only to Peru’s 90 and Columbia’s 86. This means, we have an environment conducive for micro-lending and micro-saving, at a time challenges in income inequality are intensifying.
A week ago, I went to Ahon sa Hirap’s 25th Anniversary Celebration in Los Baños. I was reminded again of how microfinance erases hopelessness, crystallizes a better future, allows a family to climb their way out of hunger with dignity.
Nakasalamuha ko po ang mga kagaya ni Ginang Nancy Tuazon na nag-umpisa sa paggawa ng doormat para madagdagan ang kanilang kinikita. Mula sa maliit na pautang, lumago ang kanilang pinagkakakitaan at ngayon gumagawa na rin siya at ang kanilang komunidad ng mga punda, kumot, at wallet.
Ito po ang mensahe na nais nating iparating. Ang mensahe ng pag-unlad na umaasa hindi sa limos ng iba kundi sa sariling kakayahan.
As Housing Secretary, one of our goals is for each Filipino family to have a home. Having your own space gives you dignity. It allows you to face the world the next day with head held high, well rested and secure in the knowledge that you will come home to a secure, loving space after a long day at work.
Through PAG-IBIG, a member can apply for a loan to help in buying a house. However, the ultra poor who are in most need of housing are not qualified to apply for loans. Just like entrepreneurs like Nancy, who needed funding for her business and cannot complete the checklist of criteria for securing a loan from a bank.
To solve this, the Social Housing Finance Corporation (or SHFC) has a Mortgage Program to help Community Associations buy the land that the community already occupies.
Through the CMP, we dispel the notion that government housing is free. We meet with communities to explain that the terms of payment are very low, but they must be paid for the program to continue.
The CMP is a great initiative, just like the DSWD’s Self-Employment Assistance – Kaunlaran project. Both work with the bottom poor and give them the ability to improve lives without making people dependent on the system. But in both initiatives, the problem is information asymmetry.
The credit scoring industry is still a very nascent one in our country, and one that we need especially for the bottom poor. But until we have set up this system perfectly, we are limited by the fact that government project officers are not credit officers. How do they sort high-risk and low risk-clients?
How do they know which family has the capacity and willingness to pay? How do we ensure sustainability? After all, we are talking about government funds, and it is critical that they must be lent prudently.
Until our financial inclusion efforts have created a mature system where we don’t have to depend on the local government unit, parent leaders, and the borrowers themselves to let us know who can pay off loans, microfinance institutions may be in the perfect position to help.
MFIs are set up to reach the poorest of the poor in the farthest areas. You have the technology to make your social enterprise sustainable, like micro insurance. Plus it’s not just capital that you provide, but mentoring and hope. You know the landscape; hence you can easily adapt to policy changes. You know the people; and they can’t run from you
We laud your efforts. We think that MFIs are a crucial support for those in the fringes of our economy.
We appreciate each and every credit officer who walk the dusty and stony roads to reach clients, whether its sunny or stormy. I know this, because I walk those roads too.
But our path ahead is still full of challenges.
According to the World Bank, cross-country data and specific policy experiments of various governments “suggests that developing the financial sector and improving access to finance are likely not only to accelerate economic growth, but also to reduce income inequality and poverty.”
In other words, it is possible to have an economy that is growing faster, but more people are getting left behind. The growth of finance is not necessarily accompanied by inclusivity.
There is empirical evidence that microfinance services in the country thrive better in areas where there is infrastructure. So MFI money is still concentrated on urban areas or near-urban, rather than rural areas.
I urge and encourage you to go where your light is most needed, but the government and the private sector will have to work together to build the infrastructure so you can do this.
There is a need to scale-up, modernize and use technology, and improve performance indicators and measurements to use quality of life indicators rather than activities. Don’t just measure your portfolio; analyze how people’s lives have transformed. Provide financial literacy trainings.
Our people need to know how to save for a rainy day to protect their small businesses from their daily needs. Use market-based principles for sound and sustainable market operations. Rethink and restructure your operations if needed.
The implementing rules and regulations for Republic Act 10693 or the Microfinance NGOs Act, will be a great guiding light for this industry. It will create the council and accreditation procedures to help professionalize the entire sector. It will elevate the financial, social, and governance standards to make this industry more effective in providing financial access to the poor. It will also clear taxation issues, so you can focus on what you do best: alleviate poverty.
We at the Housing and Urban Development Coordinating Council, which brings together the key shelter agencies of the government, would like to learn extensively from the success of the microfinance sector.
We hope that MCPI and its members can work with us in formulating long-term solutions, programs, and objectives.
The success of relocation sites do not just rest in the number of homes we build, but in the beauty and functionality of the communities we create.
We will build communities that have connections to electrical lines and running water, playgrounds and libraries, a little space for running and zumba for nanays.
Relocation sites should also be areas where residents may have livelihood options and have access to jobs and schools.
I am reassured that we can combat poverty through active citizen involvement, mutual dialogue, and cooperation among stakeholders.
As we bring the poor into the conversation, empowering them with the right to shape their own future, and with the help of organizations like yours, our hope is to turn the impossible into reality.
Maraming salamat at mabuhay kayong lahat!