| Warm greetings to you all. It fills me with immense joy and gratitude to stand before you on this significant occasion – the 19th anniversary of the SEDPI Group and the inauguration of our new headquarters in Rosario, Agusan del Sur. It’s wonderful to see so many familiar faces and new ones alike, as we come together to celebrate nearly two decades of dedication, progress, and shared accomplishments.   In reflecting on the history of the SEDPI Group, one cannot help but marvel at the extraordinary growth we have experienced. Since our inception in 2004, we have strived to make a significant impact in our communities, and the fruit of our labor is evident today. In just six years, since 2017, we have grown from 2 branches to a remarkable 15. A testament to the effectiveness of our mission and the unwavering commitment of our teams on the ground. This growth is not merely in terms of our physical presence, but also in the size of the SEDPI family. Today, our membership stands close to 18,000 strong – a number that symbolizes not only the trust our members place in us but also our collective potential to effect change. Each of these members is a testament to our purpose, a driving force behind our mission to uplift lives and to champion sustainable and ethical financing, social investments, and financial education among Filipinos worldwide. At the heart of our operations are our center chiefs, whose dedication and service have been instrumental in bringing our mission to life. Your tireless efforts, undying spirit, and constant dedication have made what SEDPI is today. It’s your commitment to our cause that has made it possible for us to achieve this feat. You are the backbone of our operations, and without you, SEDPI would not be what it is today. We salute your hard work and dedication. We would not be where we are today without our esteemed institutional partners. From the world of academia, Ateneo de Manila University has been a valuable partner, providing us with a strong theoretical framework and research support to ground our work in science and evidence. In the banking sector, Land Bank and BPI have been instrumental in our financial operations, offering steadfast and dependable services that have allowed us to grow and serve our communities better. From the government sector, Pag-IBIG, SSS, and our newest partner, PhilHealth, have helped us secure access to social safety nets for our members, enhancing our services and creating a holistic approach to poverty alleviation. Our staff is the lifeblood of SEDPI Group. You are the ones who bring our vision to life every day, facing challenges with creativity and resilience, and bringing compassion, professionalism, and dedication to your work. Each one of you plays a pivotal role in making SEDPI a beacon of hope for many. Your unwavering dedication and commitment are the life force that propels our organization forward.  As we look back on our journey, it’s essential to remind ourselves of the principles that form the cornerstone of SEDPI. Our six foundational principles – financial education, capital infusion instead of loans, profit and risk sharing, loss follows capital, non-profit insurance product, and partnership and cooperation – have been the guiding compass of our journey. Financial education has been at the forefront of our initiatives. We believe that an informed individual is an empowered individual. By prioritizing intensive savings mobilization, universal insurance coverage, provision of investment opportunities, and liberation from oppressive loan products, we’ve been able to arm our members with the knowledge to make sound financial decisions and build a secure future. Instead of offering traditional loans, we’ve introduced a novel approach to funding – capital infusion through joint ventures. This approach has enabled us to foster a mutually beneficial relationship with nanoenterprises. By adopting a cost-plus basis for our capital contribution, we’ve presented an alternative to the conventional loan systems that often burden the borrower with interest and penalty charges. Our model of profit and risk sharing ensures an equitable distribution of profits and risks. Unlike traditional loan systems where the debtor bears all the risks, our shared approach fosters a culture of collective problem-solving and mutual support. This has led to a more resilient and empowered nanoenterprise ecosystem. The principle of ‘loss follows capital’ ensures that losses are proportionate to each party’s capital contribution. This approach is more equitable and just, significantly differing from traditional loan systems where the debtor often bears the brunt of the losses. Our non-profit insurance product is designed with the primary goal of solidarity and protection. By treating service delivery costs as expenses and accumulating surplus premium payments to strengthen the fund, we’ve ensured that the insurance serves its true purpose of providing protection and not income generation. Our commitment to partnership and cooperation has led us to establish collaborations with government agencies, bringing basic services closer to low-income groups. We’ve joined hands with civil society and like-minded organizations in our fight against poverty, reinforcing our belief that collective efforts can bring about significant change. The essence of our principles aligns seamlessly with the UN Sustainable Development Goals (SDGs), transforming our local efforts into a contribution to a global cause. Our initiatives address a wide range of SDGs – from eradicating poverty to ensuring decent work and economic growth, reducing inequalities, promoting sustainable cities and communities, and ensuring good health and well-being. Through our initiatives, we’ve made significant strides towards achieving these global goals. By providing capital and financial education, we’ve uplifted numerous entrepreneurs from the shackles of poverty. By facilitating job creation and sustainable microenterprises, we’ve fostered economic growth and reduced inequalities. Our housing initiative, KaBalay, has contributed to creating sustainable cities and communities, while KaLusog, our health initiative, has promoted good health and well-being. Our approach to finance, marked by capital infusion and profit-sharing rather than traditional loans, promotes responsible consumption and production. By fostering partnerships and cooperation with government agencies, we’re reinforcing strong institutions. Most significantly, by targeting primarily women, SEDPI is making significant strides towards achieving gender equality in financial inclusion and economic empowerment. As we stand at this juncture, celebrating our past and looking forward to our future, we’re filled with a sense of optimism and determination. We’re ready to tackle new challenges, seize opportunities, and continue our mission to uplift lives. We’re eager to expand our outreach, strengthen our services, and make a more significant impact. Thank you all for your unwavering support and commitment to our cause. The journey we’ve traversed and the journey that lies ahead are both testaments to our shared vision, collective efforts, and our belief in making a difference. As we embark on the next chapter of our journey, let’s continue to aspire, inspire, and make an impact. Maraming Salamat, Mabuhay! |
Profile of nanoenterprises
Nanoenterprises are typically unregistered livelihoods of self-employed individuals or informal solo-preneurs with asset size ranging from PhP3,000 to PhP150,000. They operate businesses alone or with the help of unpaid family members targeting their immediate local communities. Microenterprises are mostly registered enterprises able to hire employees albeit on a minimum wage rate. There are approximately 8.1 million nanoenterprises in the Philippines as of 2022.[1]
Most government programs and private sector engagement fall under the banner of microenterprises, that grossly misrepresents the needs and largely excludes the magnitude of nanoenterprises. Making nanoeterprises visible means more effective and customized policies and programs that should provide them the opportunity to grow into a more sustainable enterprise that would lift them out of poverty.[2]
There are 30 million Filipinos considered as poor based on a survey the Department of Social Welfare and Development conducted in 2022.[3] Directly addressing the needs of the 8.1 million estimated nanoenterprise will reduce this number by 27% which is a great leap forward for a truly inclusive Philippine economic development.[4]
The table below is a brief summary that compares and contrasts nanoenterprises from microenterprises.[5]
| Nanoenterprise | Microenterprise | |
| Assets | PhP3,000 to PhP150K | >PhP150K to PhP3M |
| Employees | 0 | 1 to 9 |
| Approximate number | 8,100,000 | 1,000,000 |
| Enterprise registration | Mostly unregistered | Mostly registered |
| Economic status | Mostly poor | Mostly non-poor |
This paper attempts to provide a more comprehensive profile of nanoenterprises in terms of the following: livelihood characteristics, access to finance, market participation, coping mechanisms in times of emergencies – climate crisis and disasters, digital inclusion, and access to government programs and services.
Livelihood characteristics
Examples of nanoenterprises include sari-sari stores operators, carinderia, small holder farmers and fisherfolks, dressmakers, and ambulant vendors. Those who participate in the gig economy are also largely considered as nanoenterprises such as delivery riders, and ride share drivers. Freelancers could also be considered as nanoenterprise such as graphic artists, video editors, content creators, writers etc.
Nanoenterprises use rudimentary and obsolete equipment in manufacturing products or delivering services or they may have more advanced equipment that they lease. Microenterprises typically have better equipment and have ownership of these.
Most nanoentarprises are individuals who typically have low educational levels and hardly maintain bookkeeping records. Microenterprises typically have higher educational levels compared to nanoenterprises and could maintain some level of record keeping. Microenterprises also pay business permits and taxes that nanoenterprises hardly pay since they are mostly unregistered.
Both nano and microenterprises lack managerial and technical skills to grow their livelihood and are forced to be entrepreneurs due to lack of employment opportunities. They also have limited access to technology, information and financing that leads to low productivity and low product quality.
Access to finance
Nanoenterprises heavily rely on loans to afford basic needs – food, education, shelter utilities – and recover from a disaster. Loans are also typically used to grow their livelihoods and to finance major life events such wedding, anniversaries and death.
NEs typically access loans from informal sources which make them vulnerable to predatory financing practices. Aside from this, most of them also borrow money from cooperatives, rural banks, microfinance NGOs and pawnshops. Majority also borrow from family and friends albeit in limited amounts.
This goes to show how NEs are trapped in debt. There are very few savings and insurance products available in the market that cater to their needs and preferences – simple, fast, accessible and affordable. Savings and insurance products are more appropriate for disaster risk mitigation and financing major life events. Microfinance institutions, in their continuous drive for growth and profitability, aim to increase their loan portfolio. It is also far simpler for MFIs to offer loans and gain profit to address NE needs compared to designing savings and insurance products for profit that address the same. This are the reasons why most MFIs use loans as the financial product to address livelihood needs, coping in times of emergencies and financing major life events.
It has been shown that low-income individuals can save and will pay premium for insurance if these financial products are designed according to their needs and preferences.[6] Most NEs have extremely limited savings and insurance coverage due to the lack of financial product that directly cater to their needs and preferences.
On average, nanoenterprises borrow a small sum of money ranging from PhP3,000 to PhP20,000 to finance their livelihoods. Although in the proposed definition of naneoneterprises, their loans could be up to PhP150,000.[7]
Microfinance institutions offer them short-term, collateral-free loans to them usually payable in three to six months with interest rates ranging from 2% to 5% per month. SEDPI, a microfinance institution, has a loan portfolio composed of 95.7% with less than PhP20,000 in terms of loan size. Four percent (4%) of loans extended are greater than Php20,000 but less than PhP50,000. A miniscule 0.3% have loans greater than PhP50,000.
Market participation
High cost of raw materials, labor, limited market access, lack of market information, outdated technology, inadequate services and infrastructure hampers overall business environment of NEs. The poor are more than mere victims of circumstance. They are creative individuals. A major barrier preventing NEs from exiting poverty is the problematic market environment. An effective development strategy is to remove the barriers that stand in the way of NE’s ability to help themselves and enhance their ability to participate in markets.
Developing markets and improvements in market linkages and market infrastructure will strengthen the participation of NEs in value chains. The government and development organizations should design programs that lead to sustainable solutions. These interventions should be designed using the following development principles – achieves high impact, specific and focused interventions, sustainable, cost-effective and market-driven.[8]
Coping mechanisms in times of emergencies
The Philippines topped the world disaster risk index in 2022. The Philippines scored high in its exposure, vulnerability, susceptibility, lack of coping capacities, and lack of adaptive capacities in the face of disasters.[9] Impacts of climate change and the global economic crisis are compounding the threats faced by people living in poverty around the world.[10]
The top coping mechanisms, pre-pandemic, of NEs in times of extreme natural events are accessing loans, finding additional work, asking for help from family members, assistance from government and charitable institutions, and selling of assets. Other coping mechanisms mentioned were saving, praying, damayan ang insurance.[11]
Loans topping the coping mechanisms is not surprising but a lot are not aware that this is not good for one’s financial health. Loans should be used for productive purposes only, a cardinal rule when borrowing money. In times of emergencies, loans will be used for consumption – to buy food, rebuild or repair houses, medicines for the sick etc. The loan purpose is not bad but the financial product used is incompatible with the purpose. There is no return from the loan use and loans accessed in times of emergencies typically have high interest rates.
The appropriate financial tool used should be insurance and savings. It is a stark contrast that these two are at the bottom of the coping mechanism strategies of the poor while accessing loans is on top. Insurance is specifically design as a protection strategy against emergencies and external shocks. Savings on the other hand provides a cushion or a buffer to smoothen the impact of financial shocks.
The pandemic made matters worse for NEs since this added to their vulnerabilities – extreme natural events due to the effects of climate crisis. During this period, the coping mechanisms of NEs changed. This time the top coping mechanism used was getting assistance from the government. This was followed by insurance, savings, accessing loans, damayan and distress selling of assets.[12] When strict lockdowns were enforced, NEs could not operate their livelihoods that’s why they did not seek loans as a top coping mechanism. Finding additional work was not mentioned as a coping mechanism unlike before the pandemic. Mobility restrictions imposed during lockdowns prevented NEs from working.
Insurance and savings ranked higher in the coping strategies during the pandemic which is an improvement when these two were at the bottom before the pandemic. This is because microfinance institutions offering savings and insurance products have already penetrated all municipalities in the Philippines. There was less market penetration a decade earlier that made these products inaccessible then.
Although access to savings and insurance products already improved, there are still opportunities for improvement to make these more effective. For example, microfinance institutions should promote savings mobilization rather than provision of higher loan amounts to finance the growth of NEs. MFIs should not merely treat savings from its borrowers as collateral to loans but also a means to smoothen expenditures especially in times of emergencies.
Insurance products for NEs could be improved by offering coverage for disasters that would enable them to restart their livelihoods so that NEs need not be too dependent on loans. Turnaround time in processing claims could also be improved from current practices which takes months due to voluminous documentary requirements. These all could be simplified through streamlining processes and procedures.
Digital inclusion
The Philippines has been dubbed as the social media capital of the world. Meltwater, an Oslo-based social listening and social media analytics company, ranks the Philippines as second in the world in terms of social media use.[13]However, this social media use does not seem to translate to positive economic changes, especially to the poor.
Digital Inclusion refers to the activities necessary to ensure that all individuals and communities, including the most disadvantaged, have access to and use of Information and Communication Technologies (ICTs).[14] Internet access and ownership of gadgets are therefore important in order to take advantage of opportunities in the digital age. This is where the challenge starts for NEs since only 40% of them have access to the internet, 52% of have smart phones and only 8% have laptops.[15] Aside from this, there is also the challenge of the cost of smart phones and internet subscription. NEs, especially in the rural areas, have difficulty getting mobile phone signals due to lack of infrastructure.[16] Not owning a phone, having basic phones and limited access to the internet prevents NEs from accessing information and taking advantage of opportunities online.
These ICT challenges of NEs constrained their participation in e-commerce. SEDPI’s research shows that in 2022 only 19% of NEs are into online selling and 13% buy products online. There was a short-lived participation in e-commerce in 2021 but this was not sustained due to the lifting of mobility restrictions and high cost of deliveries of products ordered online.[17]
Digital financial inclusion among NEs is low. Only 23% of them have bank accounts, 3% have mobile wallets and 3% know how to do online banking.[18]
Access to government programs and services.
At the personal level, they also lack civil registry documents such as birth certificates and marriage certificates that makes it challenging for them to access government welfare services such as SSS, Pag-IBIG and PhilHealth. These civil registry documents are typically required to get government identification cards such as a driver’s license, voter’s ID, passports. These government-issued identification cards are then required to apply for membership in SSS, Pag-IBIG, PhilHealth and other government programs.
Due to the lack of government-issued identification cards, NEs experienced delays in getting the cash assistance program the government provided to its citizens during the pandemic. Lockdowns started on March 14, 2020.[19] A month after, only 60% of NEs under SEDPI received cash assistance. This improved to 98% by the end of the month when local government units started easing requirements.[20]
As of May 2021, there are 3.36M self-employed individuals who are members of the SSS. This is the membership classification where NEs fall. However, they comprise minority since self-employed members also include professionals, proprietors of businesses, farmers, fisherfolks and the informal sector. Even if the 3.36M self-employed members of SSS were all considered as NEs, this will only make up 41% of the 8.1M estimated NEs.
Nanoenterprises lack support from the government because they are lumped with the microenterprise sector. Nano and microenterprises clearly have different profile, behavior and needs. Microenterprises are defined as having up to Php150,000 in assets as defined under the Republic Act 8425 (Social Reform Agenda) and Republic Act 10693 (Microfinance NGO Act). However, the Bangko Sentral ng Pilipinas defines loans extended to microenterprises at a maximum of PhP300,000. Meanwhile, the Department of Trade of Industry defines microenterprises as entities with up to PhP3M in assets.
In reality, MFIs serve mostly NEs, who are considered mostly poor, but have financial products and services designed for MEs, who are considered mostly non-poor. Financial products designed for microenterprises focus more on repayment history, capacity to pay and using savings as collateral. These designs are inappropriate for NEs since they face more vulnerabilities. There should be more social safety net mechanisms for financial product designed for NEs such as using savings for emergency purposes, capacity building for livelihood development, insurance coverage for disasters and subsidies from the government.
The inconsistencies in the definition of various government agencies on what microenterprises are, barring the fact that nanoenterprises are rendered invisible, leads to ineffective and inappropriate policies and programs. Microfinance institutions design their financial products and services according to the criteria set by government financial institutions geared towards microenterprises. Thus, the needs and financial product preferences of NEs are not addressed which may explain why they have a hard time escaping poverty.
Way forward
Making nanoenterprises separate and distinct from microenterprises means more effective and customized policies and programs that should provide them the opportunity to grow into a more sustainable enterprise that would lift them out of poverty.
A more robust welfare and social safety net programs should be in place to allow NEs to not just cope or survive in their current situation but to recover and thrive to transition as a micro or even a small enterprise. This strategy would complement existing market-based approaches that would reduce vulnerabilities of NEs.
The sheer number of nanoenterprises as distinguished from microenterprises should make them more visible to the government and private sector. Upscaling nanoenterprises renders tremendous multiplier effect. If NEs eventually transition as MEs, they will provide employment that starts at the bottom of the pyramid. They should be recognized as a pillar in socio-economic development since lifting them out of poverty will propel the Philippines to a developed country through inclusive growth.
[1] https://vincerapisura.com/a-case-for-nanoenterprises/
[2] https://vincerapisura.com/a-case-for-nanoenterprises/
[3] https://www.rappler.com/nation/filipino-families-living-in-poverty-2022-dswd/
[4] https://vincerapisura.com/a-case-for-nanoenterprises/
[5] https://vincerapisura.com/a-case-for-nanoenterprises/
[6] The poor and their money
[7] https://vincerapisura.com/a-case-for-nanoenterprises/
[8] Morgan, Mary, Making Markets Work for the Poor: A Reader, Southern New Hampshire University, June 2006
[9] https://www.gmanetwork.com/news/topstories/nation/847535/philippines-tops-world-disaster-risk-index-2022-ndrrmc-took-note-of-report/story
[10] https://www.un.org/sustainabledevelopment/blog/2017/09/worlds-poor-bearing-the-brunt-of-global-crises-stresses-un-rights-expert/
[11] Based on SEDPI’s research conducted in 2008 with Opportunity International, 2014 with Cordaid and 2015 with People In Need. There were 79 FGDs conducted all over the Philippines.
[12] SEDPI conducted a research in 2020 in CARAGA region to determine coping mechanisms used by NEs during the pandemic.
[13] https://www.meltwater.com/en/blog/social-media-statistics-philippines
[14] https://inclusivedocs.com/web-accessibility/what-is-digital-inclusion-and-why-is-it-important/
[15] Based on SEDPI research
[16] Ph data: Schumacher and Kent, “8 charts on internet use around the world as countries grapple with COVID-19,” Pew Research Center, April 2, 2020
[17] Based on SEDPI research
[18] Based on SEDPI research
[19] Santos, Ana P. (March 17, 2020). “Coronavirus: Philippines quarantines island of 57 million people”. Al Jazeera. Retrieved March 20, 2020.
[20] Based on SEDPI research
A case for nanoenterprises
According to the Department of Trade and Industry (DTI), there are nearly a million microenterprises in the Philippines. DTI considers any business with less than PhP3 million in assets and less than 10 employees as microenterprise.
The challenge with this classification in the social development perspective is that it lumps together poor and non-poor enterprises in one huge bucket. It attempts to describe a very broad base enterprises that have largely varied capacity in terms of management capacity, use of technology, access to finance, and general sophistication of products and services offered.
Enterprise classification in the Philippines
| Assets | # of employees | Approximate number | |
| Large | >PhP200M | ≥200 | 5,000 |
| Medium | >PhP15 to PhP200M | 100 to 199 | 5,000 |
| Small | >PhP3 to PhP15 | 10 to 99 | 106,000 |
| Micro | Up to PhP3 | 1 to 9 | 1,000,000 |
Source: Department of Trade and Industry
This paper intends to provide a case for nanoenterprises that is distinct and separate from microenterprises. The purpose is to aid in policy development for the government, as well as program intervention design and implementation of development organizations, so that their needs are addressed at its core.
The lowest asset base of a microenterprise in DTI’s definition is vague since it could mean as low as one peso or no asset at all. The microenterprise category is very important because this is where the poor belongs. However, microenterprises that have assets greater than a million pesos could not be classified as poor.
What is a nanoenterprise?
Government policies and programs of development organizations can better respond to the needs of the poor belonging to the microenterprise sector if there is a clear delineation between poor and non-poor microenterprises. Poor mircoenterprises are rendered invisible since non-poor microenterprise needs are prioritized and is the basis for most policies, programs and engagement.
Let us use nanoenterprises to refer to poor microenterprises. The table below shows the difference between a nano and microenterprise.
| Nanoenterprise | Microenterprise | |
| Assets | PhP3,000 to PhP150K | >PhP150K to PhP3M |
| Employees | 0 | 1 to 9 |
| Enterprise registration | Mostly unregistered | Mostly registered |
| Approximate number | 8,100,000 | 1,000,000 |
The Social Reform Agenda or Republic Act 8425 of 1998 defined a microenterprise with a maximum capitalization of PhP150,000. The same amount is set as the maximum amount for microfinance loans. This figure could be used as a good basis to separate nanoenterprises from microenterprises.
SEDPI proposes that PhP150,000 be used as the maximum asset size for nanoenterprises while those that exceed this but is less than PhP3 million would be classified as microenterprise. Nanoenterprises use rudimentary and obsolete equipment in manufacturing products or delivering services or they may have more advanced equipment that they lease. Microenterprises typically have better equipment and have ownership of these.
Nanoenterprises are typically unregistered livelihoods of self-employed individuals or informal solo-preneurs. They operate businesses alone or with the help of unpaid family members targeting their immediate local communities. Microenterprises are mostly registered enterprises able to hire employees albeit on a minimum wage rate.
As of March 2022, SEDPI estimates that the total outreach of microfinance is 9.1 mllion based on reports from the Bangko Sentral ng Pilipinas, Cooperative Development Authority and Securities and Exchange Commission.[1] One will observe the gross underestimation DTIs 1 million microenterprises versus the 9.1 million microenterprises the microfinance industry serves. This is mainly because DTIs estimate is based on registered microenterprises that are mostly non-poor. Removing the one million microenterprises accounted for by DTI, that leaves the number of nanoenterprises to be at 8.1 million.
Why nanoenterprises?
The sheer number of nanoenterprises as distinguished from microenterprises should make them more visible to the government and private sector. Most government programs fall under the banner of microenterprises, that grossly misrepresents the needs and largely excludes the magnitude of nanoenterprises. Thus making a concrete case to add nanoenterprises as the smallest size in classifying enterprises.
As it is, nanoenterprises lack support from the government and has limited engagement with the private sector This is because they are lumped into the microenterprise sector that clearly have different profile, behavior and needs. Making nanoeterprises visible means more effective and customized policies and programs that should provide them the opportunity to grow into a more sustainable enterprise that would lift them out of poverty.
There are 30 million Filipinos considered as poor based on a survey the Department of Social Welfare and Development conducted in 2022.[2] Directly addressing the needs of the 8.1 million estimated nanoenterprise will reduce this number by 27% which is a great leap forward for a truly inclusive Philippine economic development.
[1] https://vincerapisura.com/philippine-microfinance-industry-estimates/
[2] https://www.rappler.com/nation/filipino-families-living-in-poverty-2022-dswd/#:~:text=MANILA%2C%20Philippines%20%E2%80%93%20There%20are%20over,Welfare%20and%20Development%20(DSWD).
Philippine microfinance industry estimates
The Bangko Sentral ng Pilipinas (BSP) defines microfinance as the provision of a broad range of financial services such as deposits, loans, payment services, money transfers and insurance products to the poor and low-income households, for their microenterprises and small businesses, to enable them to raise their income levels and improve their living standards.[1] It is also defined as the provision of financial services to low-income clients, including the self-employed.
Who is a microfinance client?
Typical microfinance clients are low-income persons that do not have access to formal financial institutions. Microfinance clients are typically self-employed, often household-based entrepreneurs.
In rural areas, they are usually small farmers and fisher folk, as well as others who are engaged in small income-generating activities such as food processing and petty trade. In urban areas, microfinance activities are more diverse and include shopkeepers, service providers, artisans, street vendors, and others.[2]
Microfinance products
Financial products of microfinance used to be limited to savings and credit. Several financial services have sprung up in the past decade to address the other financial services needs of microfinance clients like insurance, remittance and even housing services.
Loans that are up to PhP150,000 used for consumption or productive purposes are classified as microfinance loans as stated in government’s Social Reform Agenda or Republic Act 8425 of 1997. The same amount is set as the maximum capitalization for microenterprises.
For microhousing loans, the Bangko Sentral ng Pilipinas (BSP) set the ceiling to PhP300,000 although the Housing and Land Use Regulatory Board (HLURB) classifies socialized housing at PhP450,000.
Government policy
The National Strategy for Microfinance envisions a viable and sustainable microfinance market that will help provide poor households and microentrepreneurs with greater access to microfinance services.
It calls for a greater role for the private sector and the non-participation of government line agencies in the provision of credit and guarantee programs. Emphasis is on the adoption of market oriented financial and credit policies to ensure viability and sustainability.[3]
It is worthy to note that the Philippines closed the gender gap in terms of financial inclusion[4] which is largely attributed to microfinance institutions.
Players, portfolio and number of clients
There are approximately 6,183 microfinance institutions in the Philippines.
| Microfinance institution | Number |
| Banks (2022)[5] | 139 |
| Cooperatives (2020)[6] | 2,762 |
| Microfinance NGOs (2022)[7] | 27 |
| Financing companies (2017)[8] | 673 |
| Lending companies (2017)[9] | 2,582 |
| Total | 6,183 |
The microfinance industry in the Philippines has grown into a PhP406 billion industry in terms of loan portfolio as of March 2022. [10] This would be larger if the portfolio from financing and lending companies that also mostly qualify as microfinance loans are added. the figure also
| Microfinance institution | Amount of portfolio in billion pesos | ||||||
| 2022 1Q | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | |
| Banks | 26.8 | 27.7 | 26.6 | 27.2 | 22.6 | 17.1 | 13.7 |
| Cooperatives | 327.1* | 327.1* | 327.1 | 315.8 | 315.8 | 194.1 | 167.4 |
| MF NGOs | 52.8 | 52.8 | 50.4 | 41.9 | 30.9 | 28.6 | 20.6 |
| Total | 406.7 | 407.6 | 404.1 | 384.9 | 369.3 | 239.8 | 201.7 |
* Carried over from 2020 figures, due to lack of updated data from the Cooperative Development Authority, to come up with a reasonable estimate of the total outstanding loans of the industry.
There are 18.2 million recorded microfinance clients in the banking system, Microfinance NGO and cooperative sectors.[11] In SEDPI’s research with various microfinance institutions, it is common for a client to have multiple memberships. In fact, a typical microfinance client has average membership in two to three microfinance institutions.
To estimate the number of microfinance clients served, the total number is multiplied by a factor 0f 50% to account for multiple memberships. This would bring the estimated number of microfinance clients in the industry to 9.1 million as of the first quarter of 2022.
| Microfinance institution | Number of clients/members | ||||||
| 2022 1Q | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | |
| Banks | 1,985,422 | 1,978,394 | 1,996,657 | 2,410,677 | 1,986,683 | 1,956,276 | 1,686,152 |
| Cooperatives | 9,900,000* | 9,900,000 * | 9,900,000 | 9,800,000 | 9,500,000 | 9,400,000 | 8,000,000 |
| MF NGOs | 6,400,000 | 6,200,000 | 6,400,000 | 6,200,000 | 5,200,000 | 4,300,000 | 3,900,000 |
| Total | 18,285,422 | 18,078,394 | 18,296,657 | 18,410,677 | 16,686,683 | 15,656,276 | 13,586,152 |
| 50% of total | 9,142,711 | 9,039,197 | 9,148,329 | 9,205,339 | 8,343,342 | 7,828,138 | 6,793,076 |
* Carried over from 2020 figures, due to lack of updated data from the Cooperative Development Authority, to come up with a reasonable estimate of the number of microfinance clients in the industry.
Based on the above figures, the average loan size per client in the industry is PhP22,000 as of the first quarter of 2022. Microfinance NGOs have the lowest average loan size at PhP8,250 which makes them reach the bottom of the pyramid. Cooperatives have the highest average loan size at PhP33,000 since most cater to salaried workers as well as farmers and microenterprises that require larger loan amounts. The average loan size for rural banks is PhP13,500.
Industry growth
Growth in microfinance portfolio was robust from 2017 to 2019, the pre-pandemic period, which registered 14% to 37% loan portfolio growth rate and 11%-16% member growth rate. Slight growth in loan portfolio was recorded in 2020 at 7% and remained flat in 2021 that registered only 1% loan portfolio growth.
| Microfinance institution | Growth in microfinance portfolio | ||||
| 2021 | 2020 | 2019 | 2018 | 2017 | |
| Banks | 4% | -2% | 20% | 32% | 25% |
| Cooperatives | 0% | 6% | 11% | 42% | 16% |
| MF NGOs | 5% | 20% | 36% | 8% | 39% |
| Total | 1% | 7% | 14% | 37% | 19% |
Number of clients had healthy growth rates from 2017 to 2019 which is ranged from 11% to 16%. On 2020 to 2021, the peak of the pandemic period, negative growth were recorded in terms of number of clients at -1% for each year.
| Microfinance institution | Growth in number of clients | ||||
| 2021 | 2020 | 2019 | 2018 | 2017 | |
| Banks | -1% | -17% | 21% | 2% | 16% |
| Cooperatives | 0% | 1% | 4% | 18% | 11% |
| MF NGOs | -3% | 3% | 19% | 21% | 10% |
| Total | -1% | -1% | 11% | 16% | 11% |
[1] BSP Circular No. 272, 30 January 2001
[2]Salonga, Edwin, “Microfinance: An Empowerment Tool for the Enterprising Poor,” October 8, 2003.
[3] Frequently Asked Questions on Microfinance, Bangko Sentral ng Pilipinas website
[4]https://public.tableau.com/views/MGIGendertableau/Dashboard1GPS?:embed=y&:showVizHome=no&:display_count=y&:display_static_image=y&:bootstrapWhenNotified=true
[5] bsp financial inclusion dashboard 220331
[6] bsp financial inclusion dashboard 220331
[7] list of sec accredited microfinance ngos 2022 221027
[8] list of financing companies with certificate of authority 171231
[9] list of lending companies with certificate of authority 171231
[10] Dashboard: Financial Inclusion in the Philippines, Bangko Sentral ng Pilipinas, December 2020
[11] Based on BSP financial inclusion dashboard and SEDPI multiple membership estimates
Vince Rapisura Advocates for Financial Wellness Among Doctors and Democratization of Beauty at Dermatology Event
At the recent True North: Mapping the Future of Dermatology event organized by the Philippine Dermatological Society in Baguio City, financial literacy expert Vince Rapisura delivered a compelling talk addressing the unique financial challenges faced by doctors and proposing innovative solutions to democratize beauty in the Philippines.
Rapisura began by outlining the financial profile of medical professionals, using data to highlight that despite being high earners, many doctors fall into the category he humorously labels as HENRY — “High Earning, Not Rich Yet.” He explained, “…if you take a look at the range of doctors, nasa middle class to upper middle income class ang mga doctors sa Pilipinas. So kung titingnan natin, konting kembot na lang ay pupunta na sa rich. I therefore conclude na ang mga doctors po ay HENRY.”
The financial literacy advocate pointed out that doctors often focus intensely on their practice, leaving little time for business development or investment, which can lead to lower savings and investment rates. “I think malaki talaga ang clash ng ethics ng pagiging doktor and creating a business out of it,” Rapisura noted, adding that this might be why doctors have a lower financial literacy level compared to other professions.
Addressing the lifestyle challenges doctors face, including the “I deserve this” mentality due to overworking and long periods of education, Rapisura emphasized the need for a structured approach to personal finance. “It’s not how much you make, but how much you keep that matters,” he advised, promoting a budgeting rule of 5, 15, 20, 60 — a guideline that allocates percentage of income toward insurance, savings, investments, and expenses respectively.
One of the most intriguing parts of his presentation was the call for the democratization of beauty, which Rapisura described as a potential tool for lifting people out of poverty. Explaining the concept of a beauty premium, where a study showed that very attractive high school graduates can earn as much as 15% more compared to the average looking. This economic phenomenon, where more attractive individuals tend to earn more, led to his proposal: “What if cosmetic treatments were made affordable for the mass market? Low markup but high volume, less demanding on clients.”
Rapisura’s proposals extend beyond individual financial advice to a broader social impact, demonstrating a visionary approach to tackling issues of wellness and inequality. His talk not only highlighted the financial “unwellness” prevalent among doctors but also showcased innovative ideas that could transform the beauty industry and enhance economic opportunities for underprivileged groups in the Philippines.
Nanoenterprises Confront Inflation: A Mixed Recovery Landscape in Early 2023 Update 19 of SEDPI’s Rapid Community Assessment (RCA) January – March 2023
In the first few months of 2023, nanoenterprises continue their journey towards recovery, now facing the added challenge of rising prices. Our latest study at Social Enterprise Development Partnerships, Inc. (SEDPI) provides new insights into how nanoenterprises are doing. Although there are signs of improvement, the issue of inflation is making the recovery process harder for many.
Our findings show that almost half (47%) of the nanoenterprises surveyed feel their business has weakened a bit during the first quarter of 2023. This is actually a 10% improvement from the last quarter, showing that business conditions are getting slightly better. A consistent one-third of nanobusinesses have been able to keep going as usual over the past six months, showing a good amount of strength despite the difficulties.
However, external factors, mainly rising costs, are making things hard for many nanoenterprises. This period has seen a clear impact on nanoenterprises, with many (83%) saying that higher prices are the main reason they are finding it hard to grow. On a brighter note, fewer businesses are reporting no buyers, with the number dropping from 6% in the last quarter of 2022 to 3% now, which suggests that more people are buying again.
When we look at demand, the picture is a bit mixed. While 38% of businesses are seeing more demand for their products and services—a good increase from last year—the number has dipped a bit from December’s 42%. This shows that while demand is better than during the worst of the pandemic, it’s still changing a lot.
The ability to get supplies stayed stable, with 71% of businesses managing to get what they need, similar to last quarter. However, the overall picture of recovery is a bit worrying, as the number of businesses that feel they have recovered from the pandemic’s impact has dropped from a high of 77% to 51% now, again mainly due to the challenges brought by rising prices.
Half of the businesses surveyed say their income has gone down, pointing to higher prices, more competition, and weakening business conditions as the main reasons. On the other hand, those who have seen their income go up say it’s because of more demand, a good season for farming, and having more people in the household earning money.
For this round of rapid community assessment, there were 571 respondents. The majority of respondents are nanoenterprises owned and operated by women (85%), with an average age of 42 and 73% being married. SEDPI is a microfinance institution dedicated to providing ethical financing to nanoenterprises in Agusan del Sur, Davao de Oro, Davao del Norte, and Surigao del Sur. Their efforts have led to significant improvements in various aspects of the beneficiaries’ lives, such as business growth, education, housing, nutrition, and income.
- March 16, 2023 (Update 18): Fragile recovery persists among nanoenterprises post pandemic
- November 27, 2022 (Update 17): 77% of nanoenterprises recover from the pandemic
- April 27, 2022 (Update 16): Only 26% of nanoenterprise resume normal operations from the pandemic
- February 8, 2022 (Update 15): Poverty among nanoenterprises worsens amid the pandemic
- October 23, 2021 (Update 14): Nanoenterprise resuming normal operations slumps
- July 25, 2021 (Update 13): Nanoenterprise recovery almost doubles to 63% a year after lockdowns
- April 22, 2021 (Update 12): 1 out of 4 nanoenterprises adopted online selling in response to lockdowns
- January 20, 2021 (Update 11): Typhoon hampers bounce back of nanoenterprises in CARAGA
- July 17, 2020 (Update 10): Almost 4 in 10 nanoenterprises bounce back to pre-pandemic level
- June 12, 2020 (Update 9): Microenterprises show signs of bouncing back as lockdown eases
- May 28, 2020 (Update 8): 8 out of 10 microenterprises open for business one month after GCQ
- May 22, 2020 (Update 7): Demand for microenterprise products remain weak amid COVID pandemic
- May 15, 2020 (Update 6): Demand slumps on microenterprise products 2 weeks after GCQ
May 8, 2020 (Update 5): Only 5% of microenterprises back to “normal” in first week of GCQ - April 30, 2020 (Update 4): Two in three microenterprises hopeful to bounce back two months after lockdow – UPDATE 4
- April 24, 2020 (Update 3): Community assessment and recommendations for support to microenterprises and the informal sector during and after COVID-19 – UPDATE 3
- April 14, 2020 (Update 2): Community assessment and recommendations for support to microenterprises and the informal sector during and after COVID-19 – UPDATE 2
- April 6, 2020 (Update 1): Community assessment and recommendations for support to microenterprises and the informal sector during and after COVID-19 – UPDATE 1
- March 30, 2020: Immediate impact of COVID-19 lockdown to microenterprises
These findings highlight a key moment for nanoenterprises as they deal with both the positives of recovery and the negatives of inflation. The strength and flexibility these small businesses have shown are impressive, but there’s still a tough road ahead. As SEDPI keeps supporting the sector with fair loans and help in building skills, focusing on how to deal with inflation and keep businesses stable is more important than ever. The path to full recovery for nanoenterprises shows progress but also reminds us of the need for ongoing support and attention to the changing economy.
Habitat for Humanity Philippines Advocates for Comprehensive Housing Solutions at 2nd Socialized Housing Summit
In a compelling narrative at the 2nd Socialized Housing Summit, Ms. Marilyn Estrellado of Habitat for Humanity Philippines shared insights into the transformative work of her organization in addressing the critical housing needs across the nation. Held at Ateneo de Manila University on March 18-19, 2024, and organized by ACSent and SEDPI, the summit served as a crucial platform for stakeholders to convene and deliberate on strategies for socialized housing.
Habitat for Humanity Philippines, with its 35-year legacy in the country, has been instrumental in sheltering over 150,000 families, reflecting its commitment to fostering communities and hope. Estrellado emphasized the multifaceted benefits of housing, which span health, sanitation, social cohesion, and the breaking of poverty cycles. Her experience underlines the significance of strategic and sustainable investment in housing to achieve broad developmental impacts.
The organization adopts a PEOPLE-CENTERED approach, encapsulating Resilient, Inclusive, Sustainable, and Empowered (RISE) strategies, thus ensuring that housing initiatives are not merely about constructing buildings but about building resilient communities. Initiatives like the “Panday Buhay” Construction Skills Development Program underscore the importance of skill enhancement and economic resilience for construction workers, contributing to improved standards in the construction industry.
A pivotal aspect of Habitat for Humanity’s strategy involves People-Public-Private Partnerships (P4 Approach), which optimizes resources across financing models, cross-sector collaborations, and innovative solutions to make housing more affordable. Projects such as the Paknaan Housing Project and Humanity Ville Site 2 exemplify successful collaboration among government units, the private sector, and civil society, showcasing effective models of partnership.
Despite the strides made, challenges persist, including mismatches between housing priorities and the needs of low-income families, insufficient government funding, and environmental hazards. However, opportunities for enhancement are plentiful, with the potential to maximize partnerships, provide technical assistance to local government units, engage with the private sector, and collaborate with micro-financing institutions.
Estrellado also highlighted the organization’s shift towards a more integrated approach with the RISE program in 2018, addressing not just housing but also community development, disaster risk reduction, water, sanitation, and hygiene, and partnership development. This shift represents a holistic strategy to empower communities fully.
The presentation detailed various financing and partnership models that Habitat for Humanity employs, from balanced housing compliance and collaborations with the Social Housing Finance Corporation and Pag-IBIG, to community savings mobilization. These models are crucial for navigating the complex landscape of socialized housing and ensuring that projects are both sustainable and impactful.Estrellado concluded her presentation with a call to action, urging continued collaboration and innovation to address the housing sector’s challenges. She underscored the importance of not losing hope despite the difficulties, drawing on the history of housing advocacy in the Philippines as a source of inspiration.
Dean Roberto Galang Ushers in Collaborative Efforts at Socialized Housing Summit
Ateneo de Manila University warmly welcomed delegates to the pivotal 2nd Socialized Housing Summit with open arms and open minds, as Dean Roberto Galang set the stage for a collaborative discourse on tackling the Philippines’ housing crisis.
Dean Galang acknowledged the gravity of the situation, noting the distressing shortfall in socialized housing units—the demand being 500,000, while a mere 11,000 were constructed last year, exacerbating an already 7 million unit shortage.
In his remarks, he brought to light the glaring presence of informal settlements, a visible sign of the dire housing shortage that is far from the norm in other developing nations. The historical perspective provided a sobering reminder of past efforts, including post-independence housing projects in Quezon City, which now call for a renewed commitment to innovation and action. He urged the assembly of thought leaders and stakeholders to engage in a concerted effort, combining legislative and executive solutions, to advance housing solutions with urgency, especially in the face of increasing climate change risks. The summit, co-organized by ACSent and SEDPI on March 18-19, 2024, at the Ateneo de Manila University, aims to harness social entrepreneurship and forge partnerships across sectors to create lasting and meaningful change in providing adequate housing for Filipinos.
Xavier University’s Pioneering Approach to Disaster-Resilient Communities: The Xavier Ecoville Story
Cagayan de Oro, Philippines – In the aftermath of the devastating Tropical Storm Sendong in 2011, which took hundreds of lives and left thousands homeless in Cagayan de Oro, a beacon of hope and innovation emerged through the efforts of Xavier University and its community. Engr. Dexter S. Lo, during the 2nd Socialized Housing Summit, shared the compelling journey of Xavier Ecoville, a project that not only provided shelter to the survivors but also laid the foundation for a sustainable and disaster-resilient community.
Engr. Lo, who played a pivotal role in this initiative, explained the grave reality that led to the creation of Xavier Ecoville. The project was born out of the urgent need to respond to the catastrophic impact of Sendong, which highlighted the city’s vulnerability to natural disasters. Through detailed maps and simulations created by Xavier University’s Engineering Resource Center, the critical areas affected by the flood were identified, underscoring the importance of disaster risk reduction and the need for resilient housing solutions.
Despite early warnings and the clear danger presented by residing near the Cagayan de Oro river, many were caught unprepared when Sendong struck, leading to significant loss of life and property. This tragedy spurred Xavier University, under the leadership of then-President Fr. Roberto Yap, SJ, and the board of trustees, to take decisive action. They launched the Xavier Ecoville Resettlement Project, utilizing 5 hectares of land donated for temporary shelters and another 5 for permanent homes for the flood survivors.
With an overwhelming outpour of support from various donors, the university managed to raise approximately 85 million pesos for the project. This fund not only facilitated the construction of homes but also ensured transparency and accountability, with regular updates provided to the public via the university’s website.
The construction of Xavier Ecoville was a collaborative effort, involving faculty and students from the university’s Engineering Resource Center, architects, international organizations, and even the Philippine Army. This partnership resulted in the creation of temporary bunkhouses and, eventually, permanent homes that housed over 500 families, transforming their lives and providing a new beginning away from the flood-prone areas.
However, Xavier Ecoville’s vision extended beyond merely providing shelter. It aimed to build a community that was not just safe but also sustainable and self-sufficient. This comprehensive approach included the development of social infrastructure such as the St. Francis Xavier Chapel, a community center, and a study center, among others. The project emphasized the importance of integrating technology, resources, and people – focusing on appropriate technology that meets the community’s needs, mobilizing resources through partnerships, and investing in people to foster a strong, resilient community spirit.
As Engr. Lo eloquently put it, Xavier Ecoville is not just about building houses but building a community. The project served as a model for disaster response and community development, showcasing how academic institutions, government, and the private sector can come together to address urgent social issues effectively. It highlighted the role of education, community engagement, and innovative thinking in creating solutions that not only address immediate needs but also ensure long-term sustainability and resilience against future disasters.The success of Xavier Ecoville stands as a testament to the power of collaboration, innovation, and compassion in the face of adversity. It serves as a beacon of hope for other communities facing similar challenges, demonstrating that, with the right approach and commitment, it is possible to turn disaster into an opportunity for growth, development, and a better future for all.
Is Housing the Next Frontier in Microfinance? SEDPI’s Vision for Accessible and Sustainable Housing Solutions
In a recent address at the 2nd Socialized Housing Summit, Vince Rapisura, a pivotal figure in microfinance and social entrepreneurship, presented a compelling case for integrating affordable housing solutions into microfinance. His presentation, rooted in a deep understanding of the challenges faced by low-income Filipinos, offered a fresh perspective on addressing poverty through sustainable housing.
Rapisura, known for his innovative approaches in the field of microfinance, emphasized the necessity of moving beyond traditional loan models to meet the multifaceted needs of impoverished communities. Drawing from his extensive experience, he highlighted the pitfalls of a debt-centric culture, where loans are often seen as the primary solution to financial growth and stability. Instead, Rapisura advocates for a model that encourages savings and responsible financial management as keys to achieving long-term prosperity.
One of the critical insights shared by Rapisura was the debt trap many low-income individuals find themselves in, exacerbated by the lack of access to architectural and engineering services and quality building materials. He shared poignant stories of individuals like Jade, a puto vendor overwhelmed by debt, and Cherry, whose family’s health suffered due to their inadequate living conditions. These stories underscore the urgent need for more holistic and accessible housing solutions that consider the realities of those they aim to serve.
Rapisura’s proposal involves a shift in perspective from viewing low-income individuals as debtors to seeing them as business partners in joint venture projects. This approach not only fosters a more equitable relationship between financial institutions and their clients but also emphasizes the importance of saving over borrowing. By encouraging clients to save for future needs, including housing, SEDPI aims to break the cycle of debt and promote financial stability and growth.
A significant part of Rapisura’s presentation focused on the SEDPI Lay-away Program, a novel approach to helping low-income individuals achieve their goals without resorting to high-interest loans. By saving for items like smartphones, clients can avoid the debt trap associated with installment plans, which often lead to paying significantly more than an item’s retail price. This model is extended to housing, where saving for a down payment becomes a viable path to homeownership, contrasting sharply with the high costs and risks associated with traditional housing loans.
SEDPI’s research into the housing needs of its community revealed a stark reality: the demand for affordable housing far outstrips supply, with a significant portion of the population living in hazard-prone areas without proper documentation or access to quality building materials. This situation calls for innovative solutions that go beyond financial assistance, requiring partnerships between microfinance institutions, government agencies, and the private sector to address the complex challenges of providing safe, affordable housing.
Rapisura’s vision for SEDPI KaBalai, a pilot housing project in Bislig City, embodies this comprehensive approach. By combining ethical financing principles with a focus on community building and disaster resilience, SEDPI aims to provide not just houses but homes that offer security, stability, and a foundation for future prosperity. This initiative highlights the potential for microfinance to play a crucial role in addressing one of the most pressing challenges facing low-income Filipinos today: the need for accessible and sustainable housing.As the presentation concluded, it was clear that Rapisura’s approach to integrating housing solutions into microfinance offers a hopeful blueprint for addressing poverty. By focusing on savings, ethical financing, and community partnership, SEDPI is paving the way for a future where affordable housing is within reach for all, proving that, indeed, wealth can be built slowly and collaboratively.
ASA Philippines Foundation Showcases Impactful Home Financing Solutions at the 2nd Socialized Housing Summit
ASA Philippines Foundation, one of the giant microfinance institutions in the Philippines, presented its innovative Home Financing program at the 2nd Socialized Housing Summit, showcasing its contributions to addressing the housing needs of low-income communities. The summit, organized by the Ateneo Center for Social Entrepreneurship (ACSent) and Social Enterprise Development Partnerships Inc. (SEDPI) on March 18-19, 2024, at the Ateneo de Manila University, provided a platform for critical discussions on social housing initiatives in the Philippines.
Kamrul Tarafder, ASA Philippines’ Chief Executive Officer, highlighted the foundation’s significant reach, operating in 100% of the provinces and with extensive penetration in municipalities and cities throughout the Philippines. With over 1700 branches nationwide, the organization has a profound impact on providing access to financial services to marginalized communities.
Tarafder presented the Foundation’s Home Financing (HomFin) program, designed to address the dire need for affordable housing solutions. The HomFin program has disbursed over 12 billion PHP, significantly affecting the lives of numerous Filipinos. By offering non-interest-bearing loans and other subsidiary loans, ASA Philippines has displayed its commitment to financial inclusion and its innovative approach to socialized housing.
ASA Philippines has also demonstrated impressive financial performance, showcasing the Foundation’s sustainable growth. The financial position of the organization reflects a robust balance sheet with strong capital assets and an operational self-sufficiency that exceeds industry standards. Such financial health allows the Foundation to continue its crucial work in community services, providing extensive support from burial assistance to scholarships and business development programs.
A notable component of ASA Philippines’ presentation was its successful track record in debt repayment, including a groundbreaking ₱5 billion Gender Bond in 2023 and strategic partnerships with institutions like ADB and Citi. These achievements underscore the organization’s reputation as a reliable and innovative financial institution dedicated to sustainable development and economic inclusion.
Tarafder shared inspiring before-and-after photos of beneficiaries who have received HomFin funding, transforming not only their living conditions but also their lives. One striking story was that of Lourdes Otilano from Guinobatan, Albay, who, with the help of a HomFin loan, improved her family’s living conditions, demonstrating the program’s tangible impact.
Another impactful story was of Agustina Completo from Tabaco City, Albay, whose new home construction was funded through the HomFin program, illustrating the program’s reach and effectiveness. Stories of individuals like Lucita Boytiquel and Marissa Pisay, who received HomFin funding and ASA grants, show the organization’s dedication to uplifting lives and building resilient communities.The presentation concluded with a call to action for other organizations and individuals to engage in similar transformative work. Tarafder’s insights and the success stories shared provided a beacon of hope and a model for addressing the housing crisis.
Addressing the Housing Affordability Crisis: Insights from Dr. Marife M. Ballesteros at the 2nd Socialized Housing Summit
In an enlightening presentation at the 2nd Socialized Housing Summit, Dr. Marife M. Ballesteros of the Philippine Institute for Development Studies (PIDS) delved into the pressing issue of housing affordability in the Philippines. Her analysis shed light on the multifaceted challenges of providing adequate housing for all income groups, particularly the low-income and impoverished segments of society.
Dr. Ballesteros began by defining housing affordability, introducing two critical methodologies for its assessment: the Income Ratio Method and the Residual Income Approach. The latter, she explained, offers a more nuanced view by accounting for households’ capacity to maintain a minimum standard of living after housing costs. This method highlighted a stark reality: many Filipino families are experiencing “housing stress,” where their income, after housing expenses, falls short of covering basic non-housing needs.
The presentation featured results from the Residual Income Method, indicating a significant portion of the population could not afford adequate housing. It painted a vivid picture of the income disparity and its impact on housing accessibility. Dr. Ballesteros outlined the income clusters ranging from poor to rich, providing a detailed look at the annual family housing expenditure across these groups. Notably, the analysis revealed that for lower-income groups, the amount allocated to housing far exceeds the 30% threshold often considered sustainable, underscoring the depth of the affordability crisis.
One of the most compelling parts of Dr. Ballesteros’ talk focused on the concept of “housing stress,” illustrated by data showing how various income groups fare in affording socialized vs. economic housing. The data indicated that while middle and upper-income families could manage the costs associated with housing, the poor and low-income families faced insurmountable barriers, often lacking the means even to meet the down payment requirements for socialized housing units.
In her conclusions and recommendations, Dr. Ballesteros called for innovative, out-of-the-box solutions to the housing affordability crisis. She stressed the need for significant government subsidies, such as grants and donations, to provide for the poor and low-income families. Moreover, she highlighted the importance of community-led housing initiatives and the development of social and affordable private rental housing as viable paths forward. She also addressed the necessity to curb speculative increases in land and property prices through various measures, including mixed-use development and real estate valuation reform.
Dr. Ballesteros’ presentation underscored the complexity of the housing affordability issue in the Philippines, urging a holistic approach that goes beyond traditional market-led housing provision. By emphasizing the role of decent housing in lifting families out of poverty and improving overall well-being, she made a compelling case for comprehensive, coordinated action involving government, private sector, and community stakeholders.As the 2nd Socialized Housing Summit continues, Dr. Ballesteros’ insights serve as a crucial reminder of the urgent need to address housing affordability. Her call for innovative solutions and collaborative efforts offers a roadmap for making decent, affordable housing a reality for all Filipinos, reinforcing the summit’s goal of bridging gaps and building futures through socialized housing.
Summit Concludes with Strategic Blueprint for Housing Crisis Resolution
As the 2nd socialized housing summit hosted by ACSent and SEDPI at Ateneo de Manila University drew to a close, Vince Rapisura provided key takeaways and actionable steps toward addressing the Philippines’ housing backlog. Emphasizing the commitment of Senator Risa Hontiveros to champion housing issues in her legislative agenda, Rapisura outlined a strategic approach to enhance the Pambansang Pabahay para sa Pilipino (4PH) program. Key proposals include diversifying housing modalities, securing funding for SHFC, streamlining licensing and permitting for developers, and incorporating people’s plans and horizontal development strategies.
Furthermore, Rapisura announced plans for a collaborative workshop aimed at bridging microfinance institutions and developers, reflecting the summit’s consensus on the need for multi-sectoral cooperation. He also called for partnerships with Pag-IBIG Fund to expand financing options for prospective homeowners. Highlighting the importance of fair labor practices, Rapisura advocated for improved pay and benefits for construction workers, essential to the sector’s sustainability.
Committed to maintaining the momentum, Rapisura announced the decision to host annual summits to tackle the 6.5 million housing unit backlog, inviting all stakeholders to contribute to the collective effort of building sustainable, inclusive communities across the Philippines.
Empowering Urban Poor: The Imperative Integration of People’s Plans in 4PH Housing Program
In a compelling presentation at the 2nd socialized housing summit, Buboy Magahis highlighted the pressing need for incorporating people’s plans into the Philippines’ Pambansang Pabahay para sa Pilipino (4PH) program, advocating for a more inclusive and sustainable approach to address the nation’s housing crisis. Hosted by ACSent and SEDPI at Ateneo de Manila University, the summit brought together voices from various sectors to forge actionable paths toward resolving housing challenges.
Magahis, representing the grassroots organization Kilos Maralita, shared poignant narratives of families living in peril along riverbanks, emphasizing the transformative potential of people’s plans in crafting viable housing solutions. Through a video presentation, attendees witnessed firsthand the community’s journey from the brink of eviction to the realization of their right to dignified housing, underscoring the importance of their active participation in the planning process.
Central to Magahis’s message were the following recommendations to enhance the 4PH program:
- Integrate People’s Plan: Advocating for the inclusion of comprehensive people’s plans in 4PH, Magahis stressed the necessity of community involvement in housing projects, ensuring that the solutions are tailored to the actual needs and capabilities of the urban poor.
- Provide Capital Subsidy: Recognizing the financial limitations of the target beneficiaries, he suggested that the government should offer a capital subsidy to reduce the loan amount, making it more accessible for low-income families to secure housing under the socialized housing bracket.
- Develop Multi-Use Spaces: Magahis proposed the inclusion of commercial spaces within housing developments to generate additional income. This innovative approach would enable homeowners to fund the maintenance of their buildings, thereby ensuring the sustainability of the housing projects.
- Site Development as Counterpart of Local Government Units To further reduce the cost of construction, local government units should shoulder site development so that this is not passed on to the homeowners making the houses more affordable.
- Facilitate a One-Stop-Shop for Requirements Processing: To streamline the often cumbersome process of acquiring housing, a unified platform for processing all necessary requirements was recommended, simplifying access for potential beneficiaries.
- Explore Rental Housing Concepts: Acknowledging the diversity of the urban poor’s financial capacities, he called for the development of rental housing models to accommodate those unable to afford home ownership.
- Institutionalize Property Management in Socialized Housing: To ensure the effective management of housing estates and the generation of income for maintenance needs, Magahis emphasized the importance of community involvement and management through institutionalizing property management in housing plans.
Magahis’s presentation at the summit served as a powerful call to action, urging policymakers, developers, and community leaders to recognize the vital role of the urban poor in shaping their housing futures. As the Philippines grapples with a significant housing backlog, the integration of people’s plans in the 4PH program emerges as a crucial step toward building resilient, inclusive, and sustainable urban communities.
The Imperative Integration of People’s Plans in 4PH Housing Program