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lovephileo's review
Investment Sector: IPO / Secondary Offering Submitted by Lovephileo 
, WEB CONSULTANT / PASTOR
at LIGHT OF THE WORLD CHRISTIAN CENTER
3 months ago Tags: microfinance poor entrepreneur micro-business finance SME MFI Add Tag |
All over the developing world people are waking up and learning the dynamism in microfinance industry - to engaged with, to merge with and to partner with, aiming at a world without poverty. An unprecedented positive global response to micro finance is now underway. It's high time to take a quantum leap of change from the world of the rich down to the Bottom of the Pyramid, the 4Bn poverty-stricken micro-poor entrepreneurs and make microfinance the mainstream for economic growth and eradicate worldwide poverty.
Poverty in the Philippines is largely a rural phenomenon. Study on the poverty situation in the country, 77% of poor households reside in the rural areas, mostly dependent on agricultural-related activities. This is the reason why most MFIs in the country prefer to rule over the rural communities and radically makes the legend of micro finance move on and on.
In November 2005, it was reported that the United Nations cited the Philippines as having the best implementation of microfinance among 160 countries during the launch of the International Year of Microfinance. One year after, the World Bank estimates that there are more than 7,000 microfinance institutions now operating around the world.
Today, microfinance institutions are encountering rapid growth in the Philippines. To date, 1,200 MFIs are operating in the country since its inception in 1980s. It became the sed-bed of the Filipino micro-entrepreneurs, investors, institutions abd even christian organizations who impacted the lives of SME clients with values transformation programs. Currently, MFI reaches about 30% of poor Filipinos. In 1995, its phenomenal growth inspired the Philippine government thus made this industry an official tool in poverty reduction through the Social Reform and Poverty Alleviation Act (Republic Act 8425). Five million families or rather 2.2 million poor Filipinos were benefited bythe micro finance players since 2005. One survey estimated an increment of micro clients to 1 million per year.
Just a couple of months, the much-awaited law of micro and small traders was signed - The Magna Carta for Micro, Small and Medium Enterprises, made into law by the President Macapagal Arroyo, the Republic Act 9501. With this law, it is expected that the MSMES economic contribution will increase from its 30% gross value added, upon the government's commitment to reinforce financial support to small businesses by addressing the problem of capitalization and access to credit avoiding such burdensome collateral requirements, access to modern technologies and entrepreneurship training program for workers and a comprehensive plan that would ensure its viability and growth.
Every year, the government allots certain fund for micro financing made available through local partners, microfinance institutions (private, public, NGO) with an aim to bring it right to the doorstep of the poor micro-clients. The government has P80 Billion available for micro finance program this year. The administration was committed to provide three million entrepreneurs with sufficient credit to contribute to the generation of six to ten million jobs by jobs. The repayment rate of micro loans has been impressive - up to 98%. Its loans grew 12% to P6 Billion last year. And to make the program more attractive, the President has ordered interest rates lowered from 12 to 10 percent per annum.
Microfinance Explosion And Innovation SMEs in the Philippines are more than 90% of the country's business and employs 70% of the workforce. if SMEs suffer, the country will suffer. About 229 banks are microfinancing, with a total client base 0f 780,000. The Banko Sentral Ng Pilipinas (BSP) has been encouraging banks to engage in microfinance, a flagship program for poverty alleviation. But despite BSP push for commercially large banks to tap microfinancing, members of the Bankers of the Philippines rejected the call. They tend to ignore SME services for they believe it were small and not very profitable for the bank. Nevertheless, HSBC has proven a big success where their SME clients have grown from retailing to trading companies and small manufacturers.
Unfortunately, for the SMEs - rejection of loan applications has been high either because they could not submit all the documents required by the banks or they do not have the collateral to secure their loans. Further, most banks are delaying plans to extend credit for the SMEs. Yet in the heart of many MFIs such as NGOs, rural banks and cooperatives are well motivated to serve the un-served and under-served poor farmers, fishermen, households, enterprises and communities in remote areas.
The MFI will still be growing even when the economy is hanging in the balance. Micro businesses need additional capital especially this time of crisis. If they need it, they will resort to MFI. Why? because loan processing is not as strict as in conventional or commercial banking also in any financial institutions. Most micro clients are even not qualified when it comes to documentations. This is why the Grameen Bank uses simpler documents for loan applications and accept collateral substitutes in the absence of a land title. Lately, government has launched housing microfinancing which allows poor households to avail of housing affordable and less documentation requirements. A maximum loanable amount of P150,000.00 for home improvement and repair and Php 300,000.00 for house and lot acquisition.
PLDT, the largest and diversified telecommunication company in the Philippines made a radical microfinance breakthrough among private companies in the country or rather around the world where casual, contractual and temporary employees gain access on micro financing. The funds were made available to janitors, waiters, drivers and guards who would have otherwise found it hard to apply for loans from regular banks or financial institutions.
Further, a breakthrough in mobile banking is a matter of great development as it accelerates the outreach of financial services of the poor. Roughly, 84% of the lower-income population in rural areas of the Philippines finds it difficult to access a telephone. The increasing use and diffusion rate of mobile telephony in developing countries is creating low cost alternatives for people to make deposits, remittances and payments (Smart Money and Globe G-Cash in the Philippines). The rapid growth of branchless banking including mobile phone banking is reducing the cost and expanding the availability of such services. In the Philippines, people would rather pay one percent to remit money via their mobile phone network than the 3-18 percent they are often charged by others.
Microfinance Motivation and Challenge
Yet, despite the successes of Philippine microfinance industry majority of MFIs are still institutionally weak to spread the "manna from heaven" and saturate the poorest provinces or the frontier areas. The challenge in Philippine micro financing is whether MFI could operate on rural areas where main economic and business activities are farm-based and farm-related enterprises.
I believe it takes a heart to face the challenge to invest this time to the poor. Bill Gates called it "social capitalism", we often call it "social responsibility" and then God called it "The Great Commission". That makes MFI more radical when it enables God and man meet together through a holistic ministry of financial working capital to finally bring man into its ultimate source of financial freedom ( Matthew 6:33, Bible). There is a need to reach these unreached and need of social passion and humility. Giving them self-determination, self-respect and dignity. But there is a need for us to sacrifice, to leave behind an old self-ego and to press toward into something worthy than silver and gold, something that would transform this world.
Let me challenge my Filipino brothers - explore all our resources and efforts to encourage developed countries to invest with our micro entre"pinoy" who said to be unbankables yet willing and able to pay amortizations. They toil day and night because they are bound to pay daily emergency lending communities or individuals who serve an excessive interest rates and let them pay their loan for a period of weeks or only a month. why? because MFIs are nowhere to be found.
I personally motivated by the Great Commission - to touch the life of the poor, change their way of living and transform their lives from the clutches of poverty and usher them into what God wants them to be. A life of freedom and abundance.This is the purpose of my journey in microfinance for 6 years. True, it's kind a difficult to invest and win the business with the poor. You must have the mind of the company's day-to-day operation, the heart that transform the character of the clients into faithfulness of loan repayment at the same time, and an elbow that protects the investment of the institution. As far as my experiences is concerned, collection is a thing of good deal of thought but creating a culture or values in them through moral education and transformation programs, a values formation orientation and constant investment of relationship - that would assure a certain MFI's sustainability, efficiency and viability.
Both profit financial and gain moral and spiritual uplifting especially in Christian MFI where I spent most of my microfinance experience as loan officer. The industry is spiced-up not only with social responsibility and acoountability but aims for life transformation. In fact, MFI changes life and life style of the poor entrepreneurs. The poor learns to pay more, to pay back, to fear God and go against bad debts, to work harder and smarter through social development program like livelihood, entrepreneurial skills developmental training, exhibits and spiritual encounter. We assist women in developing micro-finance projects, basically home-based to make them financially empowered. It worked with me - when crisis strikes, the company or the loan officer and the clients are working out together for the good. Changes and challenges are easily overcome due to constant social communion existing between the staff and the clientelle.
Indeed, this industry is not just a matter of weekly amortization from P5,000 initial credit, weekly savings, insurance and livelihood where 92% of the borrowers are women - rather, a ministry that would usher the 4Bn lies at the Bottom of the Pyramid (BoP) into a good and godly life.
FYI:http://www.microfinancecouncil.org/dload/MCPI%20Performance%20Report%20-%20December%202006.pdf
///Any comments and questions are appreciated and am willing to reply.
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Transcript Editor, Marketing Officer-podwriter transcriptions, Event organizer, Entrepreneur, owner of memokitchen.com site at memokitchen.com
WEB CONSULTANT / PASTOR at LIGHT OF THE WORLD CHRISTIAN CENTER
WEB CONSULTANT / PASTOR at LIGHT OF THE WORLD CHRISTIAN CENTER
Transcript Editor, Marketing Officer-podwriter transcriptions, Event organizer, Entrepreneur, owner of memokitchen.com site at memokitchen.com
Transcript Editor, Marketing Officer-podwriter transcriptions, Event organizer, Entrepreneur, owner of memokitchen.com site at memokitchen.com
WEB CONSULTANT / PASTOR at LIGHT OF THE WORLD CHRISTIAN CENTER
WEB CONSULTANT / PASTOR at LIGHT OF THE WORLD CHRISTIAN CENTER
WEB CONSULTANT / PASTOR at LIGHT OF THE WORLD CHRISTIAN CENTER
WEB CONSULTANT / PASTOR at LIGHT OF THE WORLD CHRISTIAN CENTER
WEB CONSULTANT / PASTOR at LIGHT OF THE WORLD CHRISTIAN CENTER
WEB CONSULTANT / PASTOR at LIGHT OF THE WORLD CHRISTIAN CENTER