Comparative Overview of Nanoenterprises, Microenterprises, and Gig Economy Jobs: Characteristics, Market Factors, Risk Resilience, and Potential Impact


Introduction

Across the economic landscape of the developing world, one cannot overlook the proliferation of small scale enterprises that create a significant economic impact at the grassroots level. This intricate tapestry of economic activity, composed of nanoenterprises, microenterprises, and gig economy jobs, holds tremendous potential for poverty alleviation and socio-economic mobility. To unlock this potential, it is imperative to delve deeper into their unique characteristics, operational factors, resilience to risk, and potential for growth and impact.

Nanoenterprises, the smallest economic units, often operate on the margins of the formal economy, usually out of necessity rather than opportunity. They serve local communities, providing essential goods and services, often with limited resources and technological access. On the other end of the spectrum, microenterprises tend to be more established entities that, despite their small size, exhibit opportunity-driven entrepreneurship and contribute significantly to local and national economies.

Occupying an increasingly significant role in the 21st-century economy, gig jobs – driven by the burgeoning digital platform economy – provide flexible employment opportunities for millions. Like nanoenterprises, they primarily cater to the individuals’ survival and livelihood, but they leverage the power of technology to a much greater extent.

This paper provides a comparative overview of these three crucial components of the economic fabric. It unpacks their defining features, elaborates on their market and operational factors, gauges their risk resilience, and appraises their potential impact. By doing so, the study seeks to reveal opportunities for targeted policy interventions and entrepreneurial support programs to bolster these enterprises’ potential to contribute to sustainable development goals and socio-economic betterment.

In the global south, the sheer scale of nanoenterprises underscores their pivotal role in poverty reduction and economic development. As of 2022, an estimated 8.1 million nanoenterprises operate in the Philippines, and Nigeria boasts a staggering 32.8 million of such businesses (Olagboye, 2021). This highlights a potent yet often overlooked economic force in these developing nations.

Despite the mammoth scale of nanoenterprises, their nuanced understanding remains a challenge due to the prevalent practice of grouping them under the microenterprise umbrella. This conflation, common in many developing nations, masks the unique challenges and potential of nanoenterprises, potentially hindering effective policy and intervention design. Distinguishing nanoenterprises from their larger counterparts, microenterprises, and understanding their intersections with gig jobs offers an opportunity for a more targeted, effective approach to sustainable economic development.

In this light, focusing on the growth and resilience of nanoenterprises, coupled with a nuanced understanding of microenterprises and gig economy jobs, can unlock an inclusive economic paradigm. This approach acknowledges and leverages the power of the smallest economic actors to address poverty, arguably one of the most formidable challenges of our times.

This grand scale and potential of nanoenterprises is not unique to the Philippines or Nigeria but resonates across the developing world. Recognizing and understanding this magnitude can spur a more global momentum towards harnessing these enterprises’ potential and integrating them more effectively into sustainable economic development strategies.

This paper serves as a stepping-stone to understanding these enterprises’ multi-layered complexities in the context of the developing world. It sets the stage for an inclusive discourse that acknowledges the unique role and challenges of each sector and propels evidence-based decision-making towards a more inclusive and resilient economy.

  • Nanoenterprise definition

Chapter 2 delves into the unique landscape of nanoenterprises, dissecting their characteristics and operational dynamics across four crucial categories.

The first category, ‘Enterprise Characteristics’, encapsulates the foundational attributes that define a nanoenterprise. This includes asset size, enterprise registration, the poverty level of owners, motivation for entrepreneurship, education levels and record-keeping habits, and number of employees. These characteristics set the stage for understanding the breadth and depth of nanoenterprises, their constraints, and their operational capabilities.

The second category, ‘Market and Operational Factors’, explores the interaction of nanoenterprises with the market and the operational choices they make. These factors shape the nanoenterprise’s economic footprint and influence their growth trajectory. The access to finance, market participation, use of technology and information, ownership of equipment, capacity for value addition, and the structural dynamics of nanoenterprises fall under this category.

Next, ‘Risk and Resilience Factors’ delve into how nanoenterprises respond to challenges, market shifts, and disasters. Their resilience and flexibility can be pivotal in determining the survival and potential growth of nanoenterprises, especially in volatile economic climates common in the developing world.

Lastly, the ‘Potential and Impact’ category examines the broader socio-economic contribution of nanoenterprises and their growth potential. This section illustrates the role nanoenterprises play in their communities and the larger economy and identifies opportunities for enhancing their economic impact.

Also within Chapter 2, we embark on a crucial comparative analysis. Nanoenterprises, while often subsumed under the broader umbrella of microenterprises, present distinctive characteristics, challenges, and opportunities. The delineation between these two segments of enterprises is imperative to discern for tailoring more effective support interventions and policies.

The comparison also extends to gig economy jobs, an emergent form of livelihood that has grown exponentially in the recent decade. The gig economy, while seemingly disparate from nanoenterprises, offers interesting parallels and contrasts particularly in their resilience to market shifts, flexibility, and the nature of the jobs itself.

This three-way comparison serves not just to highlight the unique attributes of nanoenterprises, but also to illustrate the nuances and fluidity of the entrepreneurship landscape in the contemporary economic milieu. The analysis paves the way for a more refined perspective, challenging traditional classifications and urging for a more dynamic understanding of these small-scale economic activities.

Throughout this chapter, we aim to shed light on the interactions and differentiations between nanoenterprises, microenterprises, and gig economy jobs. Ultimately, our goal is to present a comprehensive picture of their respective roles and potential in fostering inclusive economic growth and poverty alleviation in developing countries.

  1. Enterprise Characteristics
 NanoenterprisesMicroenterprisesGig Economy Jobs
Asset SizePhP3,000 to PhP150,000>PhP150,000 to PhP3MVaries
Enterprise RegistrationMostly UnregisteredMostly RegisteredTypically Unregistered
Poverty Level of OwnersMostly PoorMostly Non-PoorPoor and Non-Poor
Motivation for EntrepreneurshipSurvival and livelihoodOpportunity-seeking and growthSurvival and livelihood
Educational Level/Record KeepingLower educational levels and minimal record keeping.Higher educational levels and better record keeping.Varies. Some may maintain good records, especially digital gig workers
Number of Employees01 to 91 (Self)

In the Philippines, asset size of nanoenterprises generally ranges from PhP3,000 to PhP150,000. This amount is close to nanoenterprises located in developing economies in Asia, Africa and Latin America. This relatively low capital base forms the backbone of a mostly unregistered economic segment largely populated by poor owners.

Driven by survival and livelihood needs, these nanoentrepreneurs typically possess lower educational levels and maintain minimal record keeping – a reflection of their constraints and the informality of their businesses. Furthermore, nanoenterprises usually have no employees, with the owner doing all the operational tasks. Unpaid family members usually help in their livelihood.

In contrast, microenterprises operate on a larger scale, with asset sizes ranging from more than PhP150,000 to PhP3 million. A majority of these businesses are registered, signaling a greater engagement with formal financial and regulatory systems. Microenterprise owners typically fall within the non-poor category and are driven by opportunity-seeking and growth motives rather than mere survival. Reflecting a step up from nanoenterprises, microenterprises are characterized by higher educational levels and better record keeping. Moreover, they provide employment opportunities, supporting between 1 to 9 employees.

Meanwhile, gig economy jobs represent a distinct segment, operating on varied asset sizes and typically functioning as unregistered entities. The poverty level of gig workers spans both poor and non-poor categories, suggesting a wide socioeconomic spectrum within this group. Motivated by survival and livelihood needs, gig workers’ educational level and record-keeping practices vary considerably, largely influenced by the nature of their jobs which are primarily digital or app-based. As the term implies, gig economy jobs predominantly engage the individual worker – the ‘self’ in self-employment, with each gig worker essentially constituting their own ‘enterprise’.

  • Market and operational factors
 NanoenterprisesMicroenterprisesGig Economy Jobs
ExamplesSari-sari stores, Carinderia, Ambulant vendors, Smallholder farmers and fisherfolksSmall retail stores, manufacturing businesses, service providers.Delivery Riders, Ride Share Drivers, graphic artists, video editors, content creators, writers
Access to FinanceRely heavily on loans, mostly from informal sources, making them vulnerable to predatory lending.Have more access to formal financial services but still face financial constraints.Usually rely on personal finance and may use digital platforms for fundraising
Market ParticipationLimited due to barriers like high cost of raw materials, lack of market information, and outdated technology.Have better market access but still face challenges such as lack of resources and information.Varies, could be local or global based on gig platform
Access to Technology and InformationVery Limited (due to unaffordable gadgets and low internet availability and high cost of internet access)Moderate (may have more access to technology, but still limited due to financial constraints)High (largely reliant on technology platforms for their services)
Ownership of EquipmentUse rudimentary and obsolete equipment or lease more advanced equipment.Typically possess better equipment and have ownership.Owned
Value AdditionVery limited due to high resource constraints.Can add value through improvements, innovationsDepends on the job, but often limited by platform constraints
StructureAtomistic, low capacity for coordinationSmall Organizational Structure , can coordinate internally and externallyUsually individualistic, coordination varies

Nanoenterprises in the Philippine context take on various forms such as sari-sari stores, carinderias, ambulant vendors, and smallholder farmers and fisherfolks, among others. These enterprises heavily rely on loans, predominantly sourced informally, which makes them susceptible to predatory lending. Their participation in the market is relatively limited due to barriers such as high raw material costs, lack of market information, and use of outdated technology. Access to technology and information is generally very limited, primarily due to the unaffordability of gadgets, and the limited availability and high cost of internet access. As for equipment, nanoenterprises often use rudimentary and obsolete tools, or they lease more advanced equipment when resources permit. The potential for value addition in these businesses is extremely limited, due to their resource constraints. The structure of nanoenterprises is atomistic, with low capacity for coordination due to limited resources and high cognitive load on the entrepreneurs.

On the other hand, microenterprises – such as small retail stores, manufacturing businesses, and service providers – have relatively better access to finance, often availing of formal financial services, albeit still facing financial constraints. Their participation in the market is significantly improved compared to nanoenterprises, though they still encounter challenges such as lack of resources and information. Access to technology and information is moderate, with financial constraints acting as a limiting factor. Microenterprises typically possess better, owned equipment, which facilitates value addition through improvements and innovations. Their organizational structure allows for internal and external coordination, reflecting a degree of organizational maturity.

Gig economy jobs represent a new facet of employment and entrepreneurship. These include delivery riders, ride share drivers, and online freelancers such as graphic artists, video editors, content creators, and writers. Unlike the other two categories, gig workers often rely on personal finance and digital platforms for fundraising. The nature of their market participation varies significantly and can span local to global markets, depending on the gig platform they engage with. Access to technology and information is generally high, as their jobs are largely reliant on technology platforms. In terms of equipment, gig workers typically own their own eqipment, but the potential for value addition is often limited by platform constraints. Gig jobs usually involve individualistic structures with varying degrees of coordination.

  • Risk and resilience factors
 NanoenterprisesMicroenterprisesGig Economy Jobs
Disaster ResiliencyVery LowLowLow
FlexibilityHigh. Can shut down, re-open or pivot easily as opportunities ariseMedium. May require substantial effort for pivotingHigh. Can shift roles/platforms quickly
Agility to Market ShiftsVery LowLowModerate to High, depending on the gig

A critical factor in assessing the potential and vulnerability of nanoenterprises, microenterprises, and gig economy jobs is their level of disaster resilience. In this respect, nanoenterprises exhibit a very low level of disaster resiliency, making them highly vulnerable to various shocks and stressors. Microenterprises and gig economy jobs have slightly higher disaster resiliency, but they still remain at the low end of the spectrum, underscoring the precariousness of their operations in the face of disruptive events.

Another vital aspect is flexibility – the ability to adapt, pivot, or shift in response to changes and opportunities. Nanoenterprises show a high level of flexibility due to their small size and simplicity of operations. They can shut down, reopen, or pivot easily as opportunities or challenges arise. In contrast, microenterprises display medium flexibility, often requiring substantial effort and resources to effect meaningful pivots. Gig economy jobs also exhibit high flexibility, primarily due to the inherent nature of gig work which allows workers to swiftly shift roles or platforms based on demand, personal preferences, or changes in the gig marketplace.

Finally, agility to market shifts is an important indicator of the capacity of these entities to respond quickly and effectively to changes in the market environment. In this regard, nanoenterprises demonstrate very low agility to market shifts, primarily due to their resource constraints, limited market information, and technology gaps. Microenterprises exhibit low agility due to similar reasons, although to a lesser degree given their better resources and market positioning. On the other hand, gig economy jobs display moderate to high agility to market shifts, depending largely on the nature of the gig. Those involved in digital gig work, for instance, can respond relatively quickly to market changes due to their reliance on technology platforms that provide real-time market information and trends.

  • Potential and impact
 NanoenterprisesMicroenterprisesGig Economy Jobs
Economic ImpactProvide essential goods and services to local communities, foster local economic development.High (Beyond Community Level) Contribute to local and national economies, can provide employment.High (Service Sector) Contribute to the economy by providing goods or services
Potential for GrowthLow. Have the potential to grow into more sustainable businesses with proper support and interventions.  Moderate to High. Have more potential for growth due to better resources and market access.Moderate to High. Growth potential is highly dependent on the individual’s skills, the demand for their services, and their business strategies.
Gender and developmentMostly women who provide for the needs of the householdMixed (Men and Women)Mixed (Men and Women)

In terms of economic impact, nanoenterprises play a fundamental role in local communities by providing essential goods and services. Despite their small scale, they help foster local economic development and serve as a significant lifeline for local consumers, especially in remote or underserved areas. On the other hand, microenterprises have a more substantial impact that extends beyond the community level. They not only contribute to local economies but also to the national one, providing employment and enhancing local and regional supply chains. Similarly, gig economy jobs significantly contribute to the economy, especially within the service sector. They provide goods or services, often fulfilling niche demands or offering convenience through digital platforms.

The potential for growth varies across these categories. Nanoenterprises have relatively low growth potential due to their resource constraints and other barriers. However, with proper support and interventions, they could evolve into more sustainable businesses. Microenterprises, on the other hand, have moderate to high potential for growth, attributable to their better resources and market access. Likewise, gig economy jobs offer moderate to high growth potential, highly contingent on the individual’s skills, the demand for their services, and their business strategies.

Examining these categories from a gender and development perspective reveals that nanoenterprises are predominantly owned and run by women, often catering to the household’s needs. This characteristic emphasizes the role of these enterprises in empowering women economically and providing them with a source of income. On the contrary, both microenterprises and gig economy jobs present a more mixed picture with both men and women participating, reflecting the broader societal gender roles in the world of work and entrepreneurship.

  • Review of related literature

The rise of nano-enterprises as a driving force in the informal economy cannot be overlooked. These entities, defined as non-salaried individuals running their own businesses outside an employment contract framework, often emerge as alternatives for family income generation or due to the absence of formal employment opportunities (Lagunas, 2021). Frequently, nano-entrepreneurs do not opt for the informal economy out of choice; instead, they are pushed by a lack of opportunities in the formal sector and the absence of alternative means of subsistence.

This trend towards nanoenterprise entrepreneurship has attracted academic attention due to its significant influence on the informal sector. Various scholars (Acs, 2006; De la Garma, 2010) have devoted studies to this phenomenon. Entrepreneurship is globally perceived as a tool to combat poverty and unemployment (Sigalia and Carney, 2012; Rodríguez and Palavicini, 2013; Pazmiño, Merchán, and Jiménez, 2018). However, there’s an argument that ventures in the informal economy function more as a survival option than poverty alleviation (Walton and López, 2005; Delgado, Cruz, and Lince, 2019).

Nanoenterprises are typically characterized by individual ownership and operation. Valdés (2004) identifies a nanoentrepreneur as a self-employed worker who independently carries out commercial activities. Lejarriaga (2003), García and Fernández (2005), and Raydán (2010) all concur with this definition, adding that nano-enterprises are typically operated as sole proprietorships. This understanding is reinforced by the European Observatory for SMEs (2018) and the Ministry of Economy and Business of Spain (2002), which classify nano-entrepreneurs as individuals running their own businesses with complete autonomy.

Nonetheless, the classification and criteria for micro, small, and medium-sized enterprises have been criticized for their lack of uniformity globally (McKeown, 2017; Poole, 2018). As Olagboye (2021) proposes, it’s crucial to recognize nano-enterprises as an independent category, separate from micro-enterprises. This is particularly true in Sub-Saharan Africa, where many individual entrepreneurs exist in the informal economy.

The informal economy has long been a point of academic interest, attracting a plethora of terms such as the irregular economy, the subterranean economy, the underground economy, the black economy, the invisible economy, and the shadow economy (Ferman and Ferman, 1973; Gutmann, 1977; Dilnot and Morris, 1981; Simon and Witte, 1982; McCrohan and Smith, 1986; Frey and Schneider, 2000; Charmes, 2012). The consideration of the informal economy as independent of the formal one has led to debates over whether to regulate or eradicate it, especially considering its role as a safety net for the poorest populations (2014b; Williams and Martinez, 2014; Benjamin et al., 2014; Dibben, Wood and Williams, 2015).

Olagboye (2021) defines nano-enterprises as non-employing registered and unregistered businesses operated by a single individual or with the assistance of family members. The author argues that formalizing such enterprises can enhance their legitimacy, promoting them as legitimate contributors to economic growth rather than characterizing them as elements of an illegal economy. In essence, the institutionalization of nanoenterprises, or informal economy enterprises (IEEs), presents an opportunity to shift the paradigm of enterprise development, moving away from a ‘one size fits all’ approach to one that acknowledges the socio-economic peculiarities of different contexts (Olagboye, 2021).

  • Nanoenterprise development and sustainable development goals

Nanoenterprises (NEs), owing to their unique characteristics and inherent agility, can play a pivotal role in the attainment of several United Nations Sustainable Development Goals (SDGs). Through their economic activities, NEs significantly influence poverty reduction, gender equality, decent work and economic growth, industry innovation, reduced inequalities, responsible consumption and production, and the establishment of global partnerships.

SDG 1: No Poverty

As entities often formed out of necessity, NEs directly contribute to poverty reduction (SDG 1). By creating income opportunities, particularly for those with limited access to formal employment, they provide a means of subsistence and financial independence. Although NEs generally function more as a survival option than as a poverty eradication mechanism, with appropriate support and interventions, they can evolve into sustainable businesses, potentially lifting their proprietors out of poverty.

SDG 5: Gender Equality

NEs also play a crucial role in advancing gender equality (SDG 5). Women constitute a significant proportion of nanoentrepreneurs, utilizing their enterprises to provide for their households and attain financial autonomy. By fostering an environment where women can take the reins of their own businesses, NEs promote gender equality and empower women, two critical aspects of SDG 5.

SDG 8: Decent Work and Economic Growth

SDG 8 calls for the promotion of sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all. Although NEs often operate in the informal economy and may not offer the same security as formal employment, they provide a source of income and employment, even for those who might otherwise remain unemployed. With the right institutional and policy support, NEs could potentially transition into the formal economy, promoting decent work and contributing to economic growth.

SDG 9: Industry, Innovation, and Infrastructure

Despite operating with limited resources, NEs often demonstrate a high degree of innovation, a key component of SDG 9. This innovation can manifest in various ways, from novel methods of product delivery to creative ways of accessing markets or minimizing costs. While NEs may not contribute significantly to infrastructure development directly, their resilience and growth can spur the need for improved infrastructure, thereby indirectly influencing this aspect of SDG 9.

SDG 10: Reduced Inequalities

NEs inherently foster inclusivity, offering business opportunities to individuals regardless of their social or economic status. In doing so, they play a part in reducing inequalities (SDG 10) by providing avenues for income generation for individuals across the socioeconomic spectrum.

SDG 12: Responsible Consumption and Production

Given their size and scale, NEs can contribute to SDG 12 by promoting responsible consumption and production. They often source materials locally, reducing transport emissions, and due to their small-scale operations, they may generate less waste than larger companies. NEs also have the potential to foster responsible consumption habits within local communities, given their proximity to their customer base.

SDG 17: Partnerships for the Goals

Finally, NEs have the potential to contribute to SDG 17 by establishing partnerships with various stakeholders, including other businesses, non-profit organizations, and local governments. These partnerships can foster knowledge sharing, collaboration, and the pooling of resources, enhancing the capacity of NEs to achieve sustainable growth and contribute to other SDGs.

In conclusion, the development and support of NEs could serve as a multi-faceted strategy for achieving several of the SDGs. Although challenges exist, with the right policy and institutional support, NEs have the potential to contribute significantly to sustainable development.

  • Further research
  1. The Imperative of State-led Social Safety Nets for Nanoenterprises: Directions for Further Research

As we delve further into the role and potential of Nanoenterprises (NEs) in socioeconomic development, a pertinent area that warrants in-depth exploration is the provision of social safety nets by governments. More specifically, the need for state-backed health and disaster risk mitigation measures for these enterprises. While private sector participation is crucial, the foundation of these safety nets must be laid and sustained by the state for several reasons.

Ensuring Equal Access and Coverage

State-led safety nets ensure universal access and coverage, particularly for NEs operating in remote or marginalized areas, or those run by individuals who may otherwise be excluded from private sector services due to factors such as low income or lack of collateral. Governments, unlike private organizations, are obligated to provide services to all constituents, ensuring that the most vulnerable NEs are not left unprotected.

Promoting Business Continuity and Resilience

Social safety nets, particularly in health and disaster risk mitigation, promote business continuity and resilience in the face of adversities. NEs, given their small scale and limited resources, are often the most affected by health crises or natural disasters. By providing support in these areas, governments can ensure that NEs can recover from setbacks more effectively and continue to contribute to the economy.

Reducing Financial Vulnerability

NEs are often financially vulnerable, and unexpected costs such as healthcare expenses or disaster-related losses can push them further into poverty. State-provided safety nets can reduce this financial vulnerability, allowing nanoentrepreneurs to invest in their businesses rather than spending their resources on coping with such shocks.

Encouraging Formalization

The provision of social safety nets by the state can serve as an incentive for NEs to formalize. This could, in turn, open doors for them to access other forms of support such as training, funding, and business development services, ultimately contributing to their growth and sustainability.

Future research should focus on the design and implementation of these social safety nets. How can they be made most effective for NEs? How should they be delivered to ensure maximum reach? What role can technology play in their deployment? How can they be financed sustainably? Answering these and other questions will help in devising policies and strategies that will ensure NEs, despite their size, can contribute significantly to the economy while also guaranteeing the welfare of those who run them.

Moreover, there should be a keen interest in studying the partnership dynamics between the state and the private sector in providing these safety nets. Such research would shed light on the potential synergies and areas of conflict, enabling a smoother and more effective collaboration between these two important stakeholders in supporting NEs.

Further research in this area is necessary to not only provide a deeper understanding of the needs and challenges of NEs but also to inform policy decisions and guide the development of programs aimed at supporting these vital economic entities.

  • Private Sector Intervention for Coordination and Consolidation

Another compelling area of inquiry concerns the role the private sector can play in fostering coordination and consolidation to enhance market access for both suppliers and buyers. Particularly, there’s an opportunity for large corporations to form partnerships with Nanoenterprises (NEs), focusing on local sourcing of raw materials rather than importation. These partnerships could reduce the carbon footprint of businesses, stimulate local economies, and foster sustainable development.

Despite the potential capital-intensive nature of these partnerships in the short-term, the long-term benefits to the local economy and the environment are undeniable. State intervention in the form of subsidies and incentives could be essential in promoting such partnerships.

Technology Transfer and Capacity Building

Large corporations often possess advanced technologies and technical know-how that can significantly enhance the productivity and efficiency of NEs. Partnerships between large corporations and NEs can provide an avenue for technology transfer and capacity building, leading to improved output and competitiveness of NEs.

Supply Chain Integration

NEs can be integrated into the supply chains of larger corporations, providing a steady and reliable market for their products or services. This can improve their financial stability, encourage growth, and create employment opportunities.

Financial Support and Investment

Larger corporations could provide much-needed financial support and investment to NEs. This could be in the form of direct funding, or indirectly through facilitating access to credit and other financial services. Such financial support can be crucial for NEs to scale up their operations and enter new markets.

Infrastructure Development

Partnerships with large corporations could also lead to infrastructure development in areas where NEs operate. This can include physical infrastructure like roads and utilities, as well as digital infrastructure like internet connectivity, which can open up new opportunities for NEs.

Further research is needed to understand the most effective ways of fostering these partnerships, the potential barriers and how they can be overcome, and the impact of such partnerships on the economic sustainability of NEs. It would also be beneficial to explore the role of government in facilitating these partnerships, and the types of policies and incentives that could encourage more large corporations to partner with NEs.

Moreover, future studies could also focus on the role of social enterprises and NGOs in bridging the gap between NEs and large corporations, and how these organizations can collaborate with governments to promote inclusive and sustainable economic growth.

  • Case Study of SEDPI’s Ethical Financing and Social Safety Nets: Opportunities for Research

A third potential area for research is an in-depth case study of the Social Enterprise Development Partnerships, Inc. (SEDPI) model of microfinance services to Nanoenterprises (NEs). SEDPI’s pioneering work in the field of ethical financing and social safety nets for NEs has led to reduced default rates, and the successful expansion of its branch network and outreach.

SEDPI operates under six foundational principles: financial education, capital infusion rather than loans, profit and risk sharing, loss follows capital, non-profit insurance product, and partnership and cooperation. These principles provide a solid basis for a transformative approach to microfinance that is equitable, empowering, and sustainable.

Impact of Financial Education

An investigation could assess the impact of intensive savings mobilization, universal insurance coverage, provision of investment opportunities, and liberation from oppressive loan products on the economic resilience and sustainability of NEs.

Capital Infusion versus Traditional Loans

Research could compare and contrast the effectiveness of capital infusion versus traditional loans in promoting the growth and sustainability of NEs. It could also examine the benefits and challenges of SEDPI’s co-ownership business partnership model.

Profit and Risk Sharing

An evaluation could be made of the impact of SEDPI’s profit and risk sharing mechanism on the viability of NEs, and how this approach differs from conventional loan systems where debtors shoulder all the risks.

Non-Profit Insurance Product:

A study could analyze the success of SEDPI’s non-profit insurance product, and how this approach to insurance contrasts with profit-oriented models.

Partnership and Cooperation

An exploration could be undertaken of SEDPI’s partnerships with government agencies, civil society, and other like-minded organizations. This research could analyze how these partnerships have contributed to the organization’s success, and what lessons can be learned for other organizations aiming to serve NEs.

In sum, this case study would provide valuable insights into how social safety nets can strengthen the capacity of NEs to cope with emergencies and disasters. By examining how SEDPI’s model has led to lower default rates and enabled the organization to expand its services, this research could inform the development of strategies and policies aimed at promoting sustainable and inclusive economic growth.

SEDPI at Opisina ni Senator Risa Hontiveros Nag-abot ng Tulong sa mga Nasalanta ng Bagyong Vicky

“Sagol nerbyos hadlok lagi kay basi manganaod kay paspas kaayo ang pag taas sa tubig og sulod kaayo.” 

“Magkahalong nerbyos at takot dahil baka maanod kasi mabilis ang pagtaas ng tubig at pumapasok talaga.”

Ito ang naramdaman ni Roxanne Amigo habang rumaragasa ang baha na dala ng bagyong Vicky.

Kasama sa binaha at na-landslide ang mga residente ng Agusan del Sur at Surigao del Sur, kung saan mayroong microfinance operations ang SEDPI Development Finance, Inc.

Mula sa 10,000 SEDPI members, 1,884 ang apektado sa mga bayan ng Trento, Santa Josefa, Barobo, at Rosario sa Agusan del Sur at Lingig at Bislig sa Surigao del Sur. Dalawa ang inanod ng baha ang bahay. Isa naman ang na-landslide. 

Agad nakapagbigay ng relief goods noong December 2020 ang SEDPI at ang Office ni Senator Risa Hontiveros sa nasalanta ng bagyong Vicky.

Hindi man madalas na mabagyo ang Mindanao, naging handa ang SEDPI sa pagtulong sa mga members dahil sa Social Welfare Protection Program (SWEPP) nito. 

SWEPP ay ang hybrid microinsurance program ng SEDPI na pinagsasama ang “damayan” o pagtutulungan ng kapwa; formal life insurance mula sa CLIMBS Life and General Insurance Cooperative; at social safety nets mula sa gobyerno na binibigay ng SSS at Pag-IBIG Fund. 

Maliban sa regular contributions sa SSS at Pag-IBIG, nagcocontribute ang mga members ng PhP360 every six months para ma-cover ng SWEPP. 

Ang bahagi ng kontribusyon ay linalaan para sa “damayan”. Ginagamit ang naiambag ng mga members para tulungan ang kamember nila sa panahon ng kamatayan, pagkakasakit, sunog, o kalamidad. 

Ito ang naging pondo para makabigay ng relief goods sa mga nabaha at dagdag na PhP5,000 sa tatlong na-wipe out ang bahay.

Bawat pack ng relief goods ay naglaman ng limang kilong bigas at ilang groceries na good for one week para sa pamilya na may limang miyembro.

“Naibsan ang pag-aalala ko dahil may makakain na kami kahit papano. Dumating ang aming pinapanalangin,” masayang nasabi ni Roxanne. 

Naging malaking tulong ang donasyon na 134 sakong bigas na galing sa Liwanag at Lingap Program ng opisina ni Senator Risa Hontiveros. 

Ang programang ito ay nagsimula noong bagyong Rolly bilang isang typhoon relief effort. Sinundan pa ito ng tulong sa mga apektado ng mga bagyong Ulysses at Vicky. 

Mensahe ni Senator Risa Hontiveros, “Tuloy-tuloy ang pagpapadala natin ng Liwanag at Lingap sa mga kababayan nating naapektuhan ng kalamidad at nawalan ng kabuhayan. Umaasa akong sa munting paraan ay makatulong ang relief operations na ito para matugunan ang immediate needs gaya ng pagkain.” 

Naging maganda ang pagtutulungan ng komunidad, SEDPI at ng opisina ni Senator Risa Hontiveros. Sa unang linggo matapos ang bagyo at baha ay nakatuon ang mga nasalanta sa pag-aayos sa kanilang mga bahay at gamit at hindi sa paghahanap ng kanilang makakain. 

Ani ng Vince Rapisura, Presidente ng SEDPI, “Systemic and institutionalized safety nets talaga ang kailangan natin. Kailangan po talaga ay hindi lang yung sarili natin yung nag-eeffort pero nandyan ang private sector, nandyan ang public sector, nandyan ang community.” 

 

 

 

 

 

 

SEDPI at Ambagan PH Tumulong sa mga Nasalanta ng Bagyong Vicky

Agad na nag-abot ng tulong ang SEDPI at Ambagan PH sa 1,884 na nasalanta ng bagyong Vicky sa Agusan del Sur at Surigao del Sur. 

Matapos ang tuloy-tuloy na ulan na dulot ng bagyong Vicky sa Mindanao nagdulot ito ng pagbaha at landslide. 

Kasama sa naapektuhan ay ang mga residente ng Agusan del Sur at Surigao del Sur, kung saan mayroong microfinance operations ang SEDPI Development Finance, Inc. 

Mula sa 10,000 SEDPI members, 1,884 ang apektado sa mga bayan ng Trento, Santa Josefa, Barobo, at Rosario sa Agusan del Sur at Lingig at Bislig sa Surigao del Sur. Dalawa ang inanod ng baha ang bahay. Isa naman ang na-landslide.

Bago pa mabagyo ang Mindanao, naging handa ang SEDPI sa pagtulong nito sa mga nasalanta dahil sa Social Welfare Protection Program (SWEPP). 

SWEPP ay ang hybrid microinsurance program ng SEDPI na pinagsasama ang “damayan” o pagtutulungan ng kapwa; formal life insurance mula sa CLIMBS Life and General Insurance cooperative; at social safety nets mula sa gobyerno na binibigay ng SSS at Pag-IBIG Fund. 

Maliban sa regular contributions sa SSS at Pag-IBIG, nagcocontribute ang mga members ng PhP360 every six months para ma-cover ng SWEPP. 

Ang bahagi ng kontribusyon ay linalaan para sa “damayan”. Ginagamit ang naiambag ng mga members para tulungan ang kamember nila sa panahon ng kamatayan, pagkakasakit, sunog, o kalamidad. 

Pondo mula sa SWEPP Damayan ang pinagkuhanan para sa relief goods sa mga nabaha at dagdag na PhP5,000 sa tatlong na-wipe out ang bahay.

Ani ng Vince Rapisura, Presidente ng SEDPI,“Ito ay isang patunay na ang mahihirap ay kaya nilang tulungan ang mga sarili nila kung merong maayos na sistema at hindi kinukurakot.” 

Nadagdagan ang pondo para sa relief operation nung nag-donate ang Ambagan PH sa SEDPI Foundation, Inc. ng PhP20,000.

Ang Ambagan PH ay isang network ng volunteers at initiatives na nabuo para tumugon sa mga krisis, tulad ng bagyong Vicky. Donasyon at crowdsourcing ang pangunahing pinagmumulan ng kanila resources. 

Sa karanasan nila mula ng October 2020 na-realize nila na, “Walang maliit o malaking ambag. Sa panahon ng krisis, lahat ng ambag ay dakila.”

Bawat pack ng relief goods na napamigay ng SEDPI at Ambagan PH ay naglaman ng limang kilong bigas at ilang groceries na good for one week para sa pamilya na may limang miyembro.

Pasalamat ng SEDPI member na si Dondon Ocsema, “Malaking tulong iyon para suportahan ang ilang araw na kakainin lalo na ilang araw akong hindi nakapamasada.”

Dahil meron na silang makakain para sa isang linggo mas nabigyang tuon ng mga nasalata, tulad ni Dondon, ang pag-aayos sa kanilang mga bahay at gamit. 

Isa itong full-circle experience para kay Angelica Reyes o Anj na SEDPI Senior Program Officer at Co-Founder at Spokesperson din ng Ambagan PH. 

Nagsimula ang 2020 nang mag-interview si Anj, kasama ang iba pang taga SEDPI, ng members sa Agusan del Sur at Surigao del Sur para malaman ang impact ng microfinance program. 

Anj Reyes kasama ang ilang SEDPI members nung February 2020

Nagtapos ang taon na pinagtagpo ni Anj ang SEDPI at ang sinimulan niyang grupo na Ambagan PH para tumulong sa mga taong minsan ay nakadaupang-palad niya.

“Malaki ang pasasalamat ko sa SEDPI dahil marami sa organizational at administrative skills ko ay natutunan ko mula sa pagiging program officer ng SEDPI. Higit sa lahat, lalong napatibay ng SEDPI ang advocacy ko na makatulong sa kapwa.” – Angelica Reyes

Para sa mga gustong mag-ambag, pumunta lang sa facebook.com/ambaganph at i-click ang sign up link.

 

 

 

 

Microinsurance: Abot-kayang klase ng insurance

Pinaka-essence ng insurance ang pooling of risks over a large number of similar units such as households, persons or businesses. Inispread natin ang risk para yung financial loss ay hindi lang sa atin tatama.

Insurance should not be treated as an investment

Hindi dapat pinagkakakitaan ang insurance dahil hindi ito investment. Para itong bayanihan, you are protecting against financial loss. Hindi financial gain ang habol dito kundi protection from financial losses. Nagbibigay ng proteksyon ang insurance ng katumbas na halaga sakaling mawala ang isang bagay.

Ang insurance ay involved with exchanging the uncertain prospect of large losses for the certainty of small, regular premium payments. Nagbabayad ang maraming tao at pino-pool natin. Ibig sabihin, nagbabayad tayo ng malilit para kapag may tinamaang isa sa pool na ‘yon ay may matatanggap to compensate for the loss.

Sa mga pagkakataong may biglang mangyari sa‘yo na hindi maiiwasan, kahit paano ay makakatulong sa mga mahal mo na may pagkuhanan sila sa ganyang pagkakataon. Yan ang insurance. Sana malinaw na malinaw yan.

Microinsurance defined

Ang microinsurance ay nakapaloob sa batas natin under RA 10607, otherwise known as the Amended Insurance Code. Ito ang definition na nakapaloob sa ating batas. It meets the risk protection needs of the poor. Ang target nito ay iyong mga nasa laylayan, mga low-income households kaya micro ang tinatawag diyan.

Ayon sa batas, ang premiums, fees and charges ng microinsurance does not exceed 7.5% of the current daily minimum wage. Sa PhP570 na daily minimum wage dito sa NCR, PhP42.75 ang katumbas nito. Kung gagamitin ang 260 days na average number of annual working days, hindi dapat lalagpas sa PhP11,115 kada taon.

Ito ang sinasabi sa ating batas na mga benefits na makukuha sa microinsurance: ang guaranteed benefits should not exceed 1,000 times of the current daily minimum wage. Katumbas ito ng PhP570,000 kung gagamitin ang parehong rate sa itaas.

Microinsurance for OFW family members

Very relevant ang microinsurance sa mga OFWs, dahil ginagawa silang “insurance” ng mga kamag-anak dito sa Pilipinas. Puwedeng ikuha sila ng microinsurance para hindi mga OFWs ang gagawing insurance policy.

Mas mura kasi ito. Magbabayad ng maliit na premium ang OFW para icover ang kanilang family members. Kapag may nangyari sa kanila, yung insured amount ay makukuha ng mga beneficiaries mula sa insurance company. Mapuputol ang dependency of family members sa OFWs.

Microinsurance for protection

So, there mga besties, ito ang detalyadong discussion ng microinsurance.  Laging tandaan na nag pagpaplano ng maaga ay isa sa pinakamagandang decision para kinabukasan mo at ng iyong mga mahal sa buhay.

Forms of insurance

May apat na forms ang insurance – formal, informal, public at hybrid.

Pooling of risks over a large number of similar units such as households, persons or businesses ang insurance. Inispread ang risk para ang financial loss ay hindi pasan lamang ng iisa kundi ng marami.

Formal insurance

Galing sa corporations and cooperatives ang formal insurance. Formal insurance ang tawag sa kanila dahil sila ay regulated ng Insurance Commission.

A cooperative is owned by members. Ang corporation on the other hand is a capitalist at profit-led. Mayroon ding Mutual Benefit Association (MBA) under formal insurance. Ito ay mga non-profit forms ng insurance companies sa Pilipinas.

Para sa akin, ang gusto ko talaga ay MBA o di kaya’y cooperative kasi hindi profit ang nauuna. Iyong kapakanan ng tao ang nangunguna.

Informal Insurance

“Damayan-based” scheme ang informal insurance. In Ilocano, damayan means “saranay”. Sa mga Bisaya, ito ay “dayong”. Sa mga Muslim brothers and sisters natin, ang tawag dito ay “takaful.”

Mahaba na talaga ang kasaysayan ng insurance dito sa Pilipinas. Dahil ingrained sa ating mga Pilipino ang damayan. Ginulo lang ito nga mga Westerners dahil ang ginawa nila itong for profit na siyang mas namamayagpag ngayon. Sa akin, ang insurance ay hindi dapat for profit.

Public Insurance

Idinagdag ko ito dahil ito ang mga social safety nets o social insurance schemes na ibinibigay ng gobyerno para sa atin. Examples nito ay ang mga insurance benefits – health, sickness, disability, unemployment, death etc. mula sa Pag-IBIG, PhilHealth at SSS.

Hybrid Insurance

Combination of both formal and informal forms ang hybrid insurance. Pinaghalo ang dalawa. May mga programa ding bukod sa formal at informal ay idinadagdag ang public insurance tulad ng Social Welfare Protection Program (SWEPP) ng SEDPI.

Kinds of insurance

Pooling of risks over a large number of similar units such as households, persons or businesses ang insurance. Pinaghahati-hatian ng maraming ang risks – tulad ng kamatayan, pagkakasakit, aksidente, kalamidad – para ang financial loss ay hindi pasan lamang ng iisa kundi ng marami tao.

Term insurance
Upon death of the insured, may benefits paid to beneficiaries ang term insurance. May matatanggap na benefit sa mga beneficiaries kapag namatay ang insured. Ibig sabihin nito, kailangang may mamamatay (yung insured) para may tatanggap nito.  Gusto n’yo ba ang claim na ito?  Siyempre hindi, di ba? Kung sa akin lang, gusto ko buhay ako!  Pero yan ang reyalidad sa buhay na hindi maiwasan. That goes without saying, lahat tayo ay mamamatay. Mangyayari at mangyayari ‘yan, kaya dapat lang na paghandaan.  Sino ba sa atin ang hindi mamamatay?  Kung breadwinner at may mga dependents, dapat kumuha ng term insurance. Pero kung walang dependents, hindi kailangang kumuha ng life insurance.

Disability insurance Benefit paid to beneficiaries upon disability o pagkabaldado ang disability insurance. Ibinabayad sa mga beneficiaries kapag yung insured ay ma-disable. Again, ito ay para sa mga breadwinners at may mga dependents.

Credit Insurance
Kung may utang tapos, kumuha ng credit insurance para kapag namatay ay hindi maipapasa sa estate ang utang. Ang insurance company ang magbabayad ng utang mo, in case na may mangyari sa iyo.  Kaming mga may-ari ng financial institution na nagpapautang sa mga micoenterprises ay ikinukuha naming sila ng credit life insurance. So that in case na may biglang mangyari sa kanila ay hindi na kami tatakbo pa sa mga naiwang kamag-anak na maningil sa utang ng yumao.

Crop Insurance
Protection for poor crop yields and natural disaster recovery ang crop insurance. Ito ay ibinibigay kung mayroong natural calamities o di kaya’y natural disasters na tatama sa mga magsasaka tulad ng bagyo, pagbaha, drought, peste at marami pang iba.

Health Insurance
Medical coverage for illness and injuries ang health insurance. Kapag naospital o di kaya ay inoperahan, ang health insurance ang magkocover ng mga gastos sa hospital.

Property Insurance
Protection para sa damage, destruction and theft of household assets ang property insurance. Kung nagmamay-ari ng sasakyan, bahay, inventory ng business o warehouse, puwede itong iinsure.

Agrarian Reform Beneficiaries in Sultan Kudarat Receive Millions Worth of Agri-Inputs from DAR – IARCDSP

Pandemic or not, farmers in Mindanao tirelessly till the soil. This is why the Department of Agrarian Reform, together with SEDPI, continue to work while majority of the population are on a standstill to bring the most awaited agri-input investments from the DAR – Italian Assistance to ARC Development Support Program (IARCDSP) to our farmers. 

Five (5) Agrarian Reform Beneficiaries and Farmers Organizations in Sultan Kudarat received the first tranche of the promised agricultural inputs that shall kickstart their agricultural businesses supporting farmers in their Agrarian Reform Communities (ARC).

Josephine Balicaw, officer of Marguez United Irrigators Farmers Association (MUIFAI) in Pag-asa ARC, couldn’t help but shed tears when around PhP1.5M sacks worth of inputs were unloaded from a 10-wheeler truck and brought to what was once an empty warehouse. They have been preparing for this through the capacity interventions of SEDPI and now the moment has come for them to put theory into action. 

 

Josephine Balicaw, third from left, together with other officers and members of Marguez United Irrigators Farmers Association in Pag-asa ARC.

In the same way, Noria Gapor, officer of Sigay Ka Tamontaka 4 Association (SKTFA) from Kutawato ARC, was reeling with disbelief when she was told that all the sacks were to be offloaded and not brought elsewhere. “Akala ko ilang sako lang para sa amin. Lahat pala!” (I thought we’re only getting a few sacks of inputs but we’re getting them all!), said Gapor.

It is quite an emotional experience as well for our farmers in Naldan Creek Irrigators Association (NCIA) in Lambayong ARC, Kalayaan Communal Irrigators Association (KCIA) in Lutayan ARC, and Taguisa Agrarian Reform Beneficiary Multi-Purpose Cooperative (TARBMPC) in Lebak ARC. For these ARBOs, now that the inputs are here, they will be able to provide farmer-friendly agri-input financing, farm machineries rental, and hauling services to fellow farmers in their community.

This is one of the foreign- assisted projects being implemented by the Department of Agrarian Reform and funded under the loan agreement executed with the Government of Italy. This project involves not only millions worth of agricultural inputs, farm machineries and equipment, hauling trucks, but also intensive capacity building training on microfinance management tools and monitoring & evaluation systems spearheaded by SEDPI. 

There is a total of 35 Agrarian Reform Beneficiaries/Farmers Organizations involved in the DAR – IARCDSP Project covering Sarangani, Sultan Kudarat, Maguindanao, and Lanao del Sur Provinces. 

 

Cryptocurrencies: Where does Bitcoin come from?

Should you be investing in Bitcoin? Will it sustain its massive gains? Is it safe to invest in it?

A lot of people have become curious about Bitcoin again since its perceived value is near historic highs the past month.

What is Bitcoin?

Bitcoin is a cryptocurrency. Other popular cryptocurrencies include Bitcoin Cash, Litecoin, Ethereum, Binance Coin, Tron, and many others. They have their own exchange rates and places where they can be traded or purchased.

The controversial cryptocurrency mysteriously came into being as an invention or “gift” from Satoshi Nakamoto, who released white papers detailing the rules of Bitcoin. However, the individual or institution known by that presumed alias has not come forward to claim credit and to this day remains anonymous.

To put the origin of cryptocurrencies into context, the 2008 global financial crisis revealed the ugly truth about our imperfect banking system – oppressive and inaccessible to the poor. Many noted that only the rich benefit from the banking system.

The average person receives cents when they make deposits into the bank, and the only people who have the ability to access those funds are the rich. Traditional banking system is intrinsically capitalistic — favors profit that benefit the top 1% of society.

This gave rise to cryptocurrencies that attempt to challenge the current banking system. They were established to address inequities in favor of a secure, democratic and efficient financial system.

Crypto versus fiat

When we refer to cryptocurrency, this is only one type of money. Currencies like coins and paper money, also called fiat currencies, are printed by the central bank of each country. These central banks create the rules for using their currency.

For the Philippines, the central bank is the Bangko Sentral ng Pilipinas (BSP).  Other countries have their own versions and rules, such as the Federal Reserve in the United States; Reserve Bank of India; and the European Central Bank among others.

How does money gain value?

For example, the PhP100 bill costs about PhP3 to print, so why is it worth PhP100? That value is what we as a society have agreed on and trust to hold its value. We further trust that value because it was issued by the government and serves as its legal tender. It guarantees that the value of bills and coins are its face value rather than the amount spent to print it.

Role of central banks

Central banks determine how much money is in circulation and decides when to print and how many. All global currencies are guaranteed by their government as legal tender.

Because money issued by the government is guaranteed by the government, typically countries with stronger economies have more trusted central banks and have stronger currency value. Countries like Japan, Korea, U.S.A, as well as the United Kingdom, which are more developed, have “hard currencies.” In comparison, the Philippine Peso is not as strong (“soft currency”).

Central banks seek to stabilize the value of their currency. BSP doesn’t want the value of the Philippine Peso to be too volatile in either direction.

During the Asian financial crisis, the value of the peso devalued. The peso lost 45% and was devalued against the US dollar. It fell from PhP24.5 to PhP35.61 in a matter of two months. The worth of the money was essentially halved.

To avoid such volatility, central banks intervene in the market. They buy or sell currency in order to adjust the supply of money, which stabilizes exchange rates.

No central bank regulates Bitcoin

On the other hand, cryptocurrencies are decentralized. There is no governing body that regulates its prices and enforces its rules.

Cryptocurrencies are bought in peer-to-peer networks or exchanged. Theoretically, anybody could establish a digital currency so long as they have a peer-to-peer network. But whether or not the currency is trusted is another issue. The value of cryptocurrencies is agreed upon by those participating in the market.

The peer-to-peer network of cryptocurrencies is very similar to the Philippine Stock Exchange, or the stock market. There is a network specific to facilitating the exchange and purchase of each cryptocurrency.

Need for stability in Bitcoin

Rapid devaluation of currencies are avoided to establish trust and integrity among market players in the economy. Gradual increase and decrease in the value of a currency is preferred over wild swings which is a typical characteristic of cryptocurrencies.

Until Bitcoin reaches the trust level that would make it stable and immune to wild swings, its commercial use will be very limited. This will make it stuck as a speculative asset class that would go against its aim create a secure, democratic and efficient alternative financial system.

 

SEDPI’s Group Yearly Renewable Term Insurance

SEDPI offers Group Renewable Term Insurance (GYRT) in partnership with CLIMBS, a service more catered to common Filipino households.

Term insurance provides protection against emergencies for a specific period of time. As lifetime coverage is not always needed, term insurance provides cheaper premiums with larger benefits. On average, investment-linked insurance schemes charge PhP80,000 in premiums.

For the same PhP1 million coverage, individual term life insurance premiums can be as low as PhP5,500 for ages 21-30 and cap around PhP21,000 for ages 51-60. SEDPI’s Group Yearly Renewable Term has PhP500,000 life benefits and PhP500,000 accident benefits. For ages 18-60, the premium is PhP4,000. This makes it even more affordable compared to individual term insurance policies. Due to its affordability, participation in group insurance is high.

Group insurance means that one contract is issued to cover a group of people. In this case, SEDPI is the policyholder. As a SEDPI member, one is entitled to access this group insurance program, even if they are abroad.

OFWs dealing directly with Philippine-based insurance agents are constrained by a lack of international selling licenses. Since SEDPI is the policyholder an directly deals with CLIMBS, OFWs can participate in the insurance program. Eligibility is determined by membership to SEDPI, and the process does not require rigorous underwriting due to the large number of members.

Yearly Renewable insurance indicates that the insurance protection coverage is active for one year. The annual premium must be paid in order to restart coverage for the following term.

The group’s performance based on mortality rates is evaluated each year. A higher mortality rate may mean a higher adjusted premium the following year, but a lower mortality rate than average can lead to a lower premium for the group.

SEDPI members in Mindanao have exhibited lower mortality rates, and SEDPI is in negotiations with CLIMBS to lower the premium for this group.

Enter keyword GYRT on Vince Rapisura’s Facebook messenger to join.

SEDPI’s Social Welfare Protection Program

SEDPI offers the Social Welfare Protection Program (SWePP), where members can avail microinsurance coverage for their families in the Philippines or themselves. SWePP is a consolidated microinsurance and social safety net program and provides security and protection to low-income SEDPI members.

As a hybrid form of insurance, it adopts formal, informal, and government social insurance programs. It partners with a formal insurance provider, has a damayan portion, and also partners with government agencies – Social Security System (SSS) and Home Development Mutual Fund’s Pag-IBIG or Pag-IBIG.

SEDPI serves to make government services more available to poorer communities. Low income households, which make less that PhP240,000 a year; microenterprises such as farmers and fisherfolks, and OFW family members are recommended to get SWePP.

SWePP provides (1) CLIMBS Life Insurance, (2) access to SSS and Pag-IBIG, and (3) Damayan for fire and calamity assistance. SEDPI is in talks with PhilHealth to include health insurance in the future.

SWePP benefits include up to PhP80,000 life and accident insurance from CLIMBS; and PhP5,000 for fire protection and PhP500 worth of relief goods from the damayan component. These benefits are offered for an annual membership fee of PhP720.

SEDPI is an accredited collection agent of SSS, meaning that payments can be remitted through SEDPI to be paid to the SSS. Becoming a member of the SSS and making one contribution entitles members to a PhP20,000 death benefit. The minimum contribution is PhP360.

For a one time payment or contribution, SSS provides lifetime benefit of funeral protection. With three contributions per year, members are eligible for sickness and maternity benefits.

If a member makes 36 payments before the age of 65, they are given lifetime coverage for disabilities as well as additional death benefits. If a member makes 36 payments, then up to the age of 60, they can also enjoy unemployment benefits.

Making 36 to 119 contributions will gain the benefit of a lump sum pension. Making at least 120 contributions will give the benefit of monthly pensions. Vince Rapisura, SEDPI Group President, recommends that members aim to make approximately 500 contributions to their SSS. More contributions equal higher pensions.

SEDPI’s is also an accredited collection agent of Pag-IBIG. When one becomes a member of Pag-IBIG, one contribution every six months provides a PhP6,000 death benefit.

Pag-IBIG is a complement to retirement funds of Filipinos because of its high dividends. As the national savings program of the government, members are eligible to receive their total accumulated value, which is equivalent to personal contributions, employer contributions, and your dividends. The returns are promising, and they compound.

Pag-IBIG also grants access to socialized housing loans at a 3% per annum interest rate, up to a maximum of PhP580,000. OFWs are charged market rate, but this amount typically hovers around 5% – 7% per annum. Up to PhP6 million can be loaned.

For its microfinance operations in Mindanao, SEDPI is planning socialized housing projects for its members in partnership with Pag-IBIG. It has already acquired 7.1 hectares of land and is in the process of acquiring 4 hectares more in the provinces of Agusan del Sur and Surigao del Sur. Construction and development are planned for 2021.