Mariel Vincent Rapisura, Author at Social Enterprise Development Partnerships, Inc.

Never too Small for Hope – Part II (Transport and Logistics)

Image Credit: FreePik

Respondent: Jhun Rodriguez / Resident of Quezon City- Tricycle Driver

Jhun Rodriquez’s day would start with morning commuters in Quezon City. He is one of 4.5 million drivers across the country who have left their vehicles in garages until quarantine conditions are lifted. Jhun has put a ‘Family Use – Private’ sign on his tricycle, “We are only allowed to use it for business purposes and personal family needs.” The lockdown has banned tricycle drivers from passenger transport since March 15, 2020. “I attempted to take my tricycle the day after the lockdown. The authorities had warned me that it would be impounded. My tricycle is leased so I did not want to take the risk.”

The rent for the tricycle is P200 per day. Jhun had previously earned enough to support the family of 11, “I would usually earn up to P24,000 a month.” Support comes from the family during the worst disasters. Jhun was able to rely on his brother when tropical storm Ondoy ravaged the city in 2009, “My brother is too old to work now so it is my turn to ensure his well-being. I do not have enough money to start a business and our savings have gone towards food and medicine.” Jhun and his brother’s family only eat lugaw, a rice porridge, most of the time. “Eating the same meal every day becomes really difficult for the children. I assure them that when I am able to resume working, we will eat like we used to again.”

The city was distributing P2,000 for tricycle drivers which Jhun was unable to collect, “I believe it is because my house is far from the collection point. The local government did provide us with rice and sardines on two occasions. We have also received grocery items from Gawad Kalinga.” Local organizations have become the most dynamic advocates during the pandemic.

Jhun’s tricycle has become an unexpected business tool: “I was able to borrow P5,000 from my friend and I used the money to buy and sell fish.” He uses the tricycle to take his supply to the local market. “Everyday kindness keeps me optimistic. My customers don’t haggle for lower prices and some do not even ask for their change. It has allowed me to pay back the loan within a week.” Jhun usually buys 20 kilograms of fish and was able to make a profit of P600 per day. Matters have gotten worse since the total lockdown has restricted him from selling at the marketplace.

Respondent: Edwin Cawit / Resident of Lagao, General Santos City – Food delivery service

The onset of social distancing and isolation steadily witnessed a decline in Edwin Cawit’s food delivery service, “We started to feel the effects of COVID-19 in the second week of March when many of our clients canceled their previous orders. Our services came to an immediate halt as of March 18. I understand that safety measures are necessary but the indefinite timelines put us in a dilemma.” His business was growing with profits of P60,000 to P80,000 a month. Although food delivery services make up a small portion of the industry, it has witnessed a steady increase with an expansion of 7.3% between 2016-2017.

Edwin’s passion project has always been on the plates, “I started the business after years of savings because I wanted to be my own manager and operator. Cooking meals was always a family affair so it was a natural career move. I am able to cope because I do not have to compensate for any employee’s salaries.” Edwin has savings to sustain his family but the uncertainty remains a concern. “The only way to prevent fines or penalties was the ‘wait-and-see’ option at the beginning of the lockdown. We listen to and follow updates from our local news outlets and social media pages. We are very careful because our services involve people’s consumption.”Inflation of necessary supplies during a disaster event makes business continuity an even greater challenge. Edwin’s main concern is procuring inventory, “We pick up essential ingredients from outside the local area because of lack of availability. The city’s clustering policy during the lockdown prevents vendors from sourcing some of the vegetables we need from Bukidnon.” The scarcity in supply and increase in price has forced Edwin to shut down despite being able to operate under COVID-19 safety guidelines. “The price of vegetables has inflated by 20 to 30%. Rice and grains have only gone up 10%. However, these cumulative prices make it impractical to continue operations.” The emerging caterer hopes that small businesses will receive the aid they need to carry on after the restriction, “We would appreciate logistical support, availability of supplies from the National Capital Region and other key cities, tax relief, and easing of local cluster market restrictions.”

Respondent: Shirly Erum / Lagao, General Santos City – Driving Instructor

Shirly Erum’s classroom is the road of General Santos City- “I believe that driving is in our blood. Five out of our nine family members are driving instructors.” The school of driving can be a promising career as instructors make an average of P235,451 annually. The number of students started to slow down in March. “We no longer have enrollees because of the transportation restrictions. Physical distancing also makes it impossible to hold practical sessions.” They would offer three package deals – a five day tutorial for P2,800, seven days for P3,800, or a monthly package between P10,000 to P20,000. Keeping their office is the biggest challenge, “Our maintenance cost fluctuates between P5,000 to P10,000 and the rental fee for the office is P7,000. We have used our savings to continue paying the rent and any vehicle maintenance that was necessary.” Shirly also has to consider the family expenses, “My sister works in Hong Kong and has sent us remittance of P20,000 during the lockdown. We were able to use the money for four months of household expenses. If we can resume operations soon, we would only need P5,000 to start functioning again.”

Respondent: Giselle Pastrano / Resident of Cebu City – Self-service Car Wash Business

The Pastranos anticipated that 2020 would be a year of new beginnings and opportunities. Giselle and Arnold welcomed a new baby, Arnold, in April. They had also opened a new business to provide for their growing family. Transforming their garage in front of their home as optimal for starting their venture. Giselle would be able to take care of her family and work, “Our space was large enough to situate a self-service car wash and food stall. We would earn around P9,000 to P12,000 from the car wash and P16,000 to P18,000 from the food stall.” Both businesses had minimal expenses because they were run by Giselle and Arnold, “We would spend P1,000 to P1,500 that was mostly for the water bill. The expenses for the food stall were P9,000 a month. The profits were more than enough to cover the P7,000 we would need for the household.”

They had only been operating for a month when they decided to shut down. Giselle’s immediate concern was her family’s safety, “Our business is in front of the house. Customers coming in and out expose my family. Compromising their health is never an option.” She also has a seven-year older son, Travis, who is currently unable to attend school. The food & beverage industry is expected to reach $415 million by 2024. Food stalls are becoming more popular as the younger generations opt to eat out. “Many of our ingredients have gone up by 40% to 50%. Our regular customers shared the same concerns and we started seeing a decline in customers when the lockdown started.” Commuter restrictions eventually led them to cease operations of the car wash. Multiple income-generating opportunities are a proven solution for many small businesses to sustain their needs. The COVID-19 restrictions have limited these prospects to entrepreneurs. Giselle currently works as a cashier for a university. It is the only stable income for the household. The lack of earnings has forced her to take loans, “My husband has a van that he would use for delivery operations. He would regularly work for Lazada but that has also stopped since March.” Loss of revenue sources has multifold consequences for microentrepreneurs. “We have lost around P19,000 a month since the lockdown. We also had an SUV that we would rent out through the Grab app. Unfortunately, we had to give it back to the dealership because we were unable to cover the monthly payment or the driver’s salary.”

At APP, we focus on the vulnerable sectors of our society in our development initiatives. MSMEs are among the priority sectors of our national chapter, Philippine Preparedness Partnership’s (PHILPREP) and its targets in local program activities. PHILPREP has developed these case stories to amplify the voices on the ground, especially during the COVID-19 pandemic. It seeks to amplify human stories to raise awareness on how disasters affect the most vulnerable communities.

For Part I of the series, click here.

This article was developed in partnership with the Asian Preparedness Partnership (APP). More information about APP may be found using this link: Asia Preparedness Partnership (APP).

Almost 4 in 10 nanoenterprises bounce back to pre-pandemic level

Update 10: SEDPI Rapid community assessment on the impact of COVID-19 to nanoenterprises

Two months after the government started easing lockdowns in most parts of the country, 36% of nanoenterprises reported to have bounced back to pre-pandemic level. In May, only 18% expected to bounce back within one month which may be a good sign of recovery if the spread of the virus is contained.

Nanoenterprise (NE) is a SEDPI-coined term that refers to unregistered livelihoods of self-employed individuals. They typically operate informal businesses alone or with the help of unpaid family members targeting their own immediate local communities.

Status of nanoenterprises

Those that bounced back report that they are already able to earn about the same income; and experience normal demand to their products and services. For the month of June, there were twice as many nanoenterprises reporting slowdown in sales compared to those that reported strong demand.

Access to supply on inputs needed to operate their livelihoods remain stable.

Financing options

Nanoenterprises typically access loans from informal sources which make them vulnerable to predatory financing practices. Most of them borrow money from cooperatives, rural banks, microfinance NGOs and pawnshops.

On average, nanoenterprises borrow a small sum of money ranging from PhP3,000 to PhP10,000 to finance their livelihoods such as sari-sari stores, carinderia, farmers, fisherfolks, dressmaking and vending. Microfinance institutions offer collateral-free loans to them payable in three to six months with interest rates ranging from 2% to 5% per month.

With microenterprises cautious on demand, they prefer not to access loans. Only two of three of those who finished their loans opted to renew their for another cycle. This is also a sign that nanoenterprise have the ability to weigh risks and returns.

For the month of June, when normal loan collections resumed, one in three nanoenterprises was able to repay in accordance with amortizations based on the Bayanihan Act’s loan deferment schedule. A majority are requesting for up to two months additional grace period to allow them more time to adjust and cope with the new normal.

Essential financial service to low income group

There are approximately 8 million low income households that access microfinance services in the Philippines. MFIs are frontliners in the delivery of financial services to low income groups who find it difficult to open deposit accounts and access loans from commercial banks.

SEDPI estimates that a PhP40B economic assistance to nanoenterprises channeled through MFIs will address their financing needs to jumpstart their livelihoods. This is based on 8 milion estimated number of microenterprises and PhP5,000 economic assistance package.

The proposed Philippine economic stimulus package contains a total of PhP245 billion budget to assist micro, small and medium enterprises. Only a small fraction of this is expected to reach nanoenterprises.

Prioritizing nanoenterprises

The negative impact of COVID-19 to nanoenterprises is undeniable. The research shows that nanoenterprises are showing positive signs of bouncing back faster.

Preferential option to those at the bottom of the pyramid should be extended first since these groups can bounce back quickly; only need a small amount of stimulus; will reduce need for cash dole outs; and will reach millions of Filipino low income households.

Note:

The research is part of a series of rapid community assessments that determines the economic impact of COVID-19 to microenterprises and the informal sector. SEDPI, a microfinance institution (MFI), conducted the survey from June 23-30 with 5,791 respondents located in Agusan del Sur and Surigao del Sur.

It is not a representative sample of the entire Philippines. It is highly localized but should be a good case study that reflects the situation in the countryside. SEDPI believes that the nationwide experience may not be far from our research results.

Previous updates:

The titles are hyperlinked. Click on the titles to full read article online.

• June 12 (Update 9): Microenterprises show signs of bouncing back as lockdown eases
• May 28 (Update 8): 8 out of 10 microenterprises open for business one month after GCQ
• May 22 (Update 7): Demand for microenterprise products remain weak amid COVID pandemic
• May 15 (Update 6): Demand slumps on microenterprise products 2 weeks after GCQ
May 8 (Update 5): Only 5% of microenterprises back to “normal” in first week of GCQ
• April 30 (Update 4): Two in three microenterprises hopeful to bounce back two months after lockdow – UPDATE 4
• April 24 (Update 3): Community assessment and recommendations for support to microenterprises and the informal sector during and after COVID-19 – UPDATE 3
• April 14 (Update 2): Community assessment and recommendations for support to microenterprises and the informal sector during and after COVID-19 – UPDATE 2
• April 6 (Update 1): Community assessment and recommendations for support to microenterprises and the informal sector during and after COVID-19 – UPDATE 1
• March 30: Immediate impact of COVID-19 lockdown to microenterprises

Plight of Microentrepreneurs in the Philippines Part 1 of 3 Sari-sari Stores

Never too Small for Hope- Part I

Doing business is largely a family affair in the Philippines – 80% of enterprises are family-owned or family-controlled. Microenterprises are the most intimate and the most common of these businesses. Nine of out of 10 MSMEs in the Philippines are microenterprises. Their kinship is the most deep-rooted because members of the community build these businesses around local needs.

Strength comes in numbers. Being small and having few employees put microenterprises in the most disadvantageous position. Most microenterprises are cottage industries, typically employing only family members. They are comprised of one to nine members and the very few largest ones have $6,000 in assets.

The Philippines is one of the countries with the highest economic damages as a result of disasters, having an Average Annual Economic Loss (AAL) of $284 million. Financial deficits hit the smallest enterprises the most. Economic losses have a ripple effect that magnifies and multiplies the challenges, especially for microenterprises. The COVID-19 pandemic has introduced lockdowns that prolong the hardships for many of these businesses.

The first part of our series explores the most inherent microenterprise in the Philippines. The sari-sari stores (mom and pop shops) are built into the DNA of every neighborhood and block across the national landscape. There are over 1.3 million sari-sari stores in the Philippines and 94% of consumers depend on them for everyday necessities.

Monalisa Maiquez, 41, Resident of Sta. Maria Kalamasig, Sultan Kudarat

Monalisa is the breadwinner in her family. It is a role that keeps her committed to maintaining her sari-sari store during the lockdown period. She lives with her brother, sister-in-law, and their two kids.

The family of five depends on local government assistance since the community quarantine that started on March 16, 2020, “We have received relief goods four times since the lockdown started. The local government unit of Kalamansig provided five kilograms of rice, two cans of sardines, three packs of instant noodles, 250 grams of sugar, and one pack of instant coffee.”

These rations are essential as Monalia’s revenue has been cut in half since the lockdown, “We would invest P8,000 to P10,000 every week for a profit of P1,000 to P1,500. We are only able to buy up to P5,000 of supplies for the store and our profits do not reach more than P500 weekly.” Her profits barely cover the P2,500 to P3,000 for household expenses.

Mobility restrictions introduce new obstacles for businesses as they lack supplies from the shortage of stocks. Monalisa is currently limited in procuring supplies, “I would travel to the market depending on what I needed. Now I am only allowed to make these trips once a week. We are also constrained to the number of purchasable items. For example, each business owner can only buy six-packs of instant noodles and six cans of sardine.”

Any form of financial assistance would promote the sustainability of Monalisa’s shop, “I have never experienced such a blow to my daily operations. I would need about P15,000 to recover. The business income is siphoned into funding our daily needs making savings nearly impossible.”

Mary Jane Selecia, 41, Resident of Tinungkaan, Maguindanao

The subsidy in income only reminds Mary Jane that her household needs to cut corners – “My shop is bringing in one-third of the profit. I would earn around P4,000 and now I am fortunate if I make P1,000 a week. We invest P3,000 a week to keep the store running.” She lives with her husband and five children. Their daily expenses come to P9,000 per month and were previously covered from the sari-sari store’s profits.

Borrowing money is becoming a vicious cycle for Mary Jane, “We have no savings and the income we make for our businesses go towards repaying our loans from relatives and friends. It seems like we are borrowing to pay over and over again.” Relief information is even more scarce when in the remote mountainous areas like Tinungkaan. The interventions in Mary Jane’s town were constrained to the Department of Social Welfare and Development (DSWD) conducting a survey to determine the poorest population in the village.

Mary Jane’s husband works as a Barangay Secretary and his work became an unexpected lifeline, “We did not need to apply for the Social Amelioration Program (SAP) because of my husband’s job. We are also beneficiaries of the Pantawid Pamilyang Pilipino Program (4Ps).” The SAP has given qualified families P5,000 to P8,000 per month for two months. “We bought one sack of rice. The remaining money is additional capital for our store.”

Her family’s coping mechanism is in her backyard, “Our alternative sources of income are planting vegetables and raising farm animals. The small farm supports us while providing us with food. We are often forced to consume supplies from the sari-sari store.” Stock in her store is already limited because of dwindling supply in Noro, where she buys her supplies. Transportation cost for each of the trips to Noro is now P100, which is an exacerbated cost during the lockdown.

Everyday expenses have become a challenge for her community, “There is a decline in sales because many of our neighbors and customers do not have work. I fear that we may have to shut down if this continues. I would feel more hopeful if I had P10,000 to replace the needed inventory.”

Marcia Mangubat, 53 years old, Resident of Tinagacan, General Santos City

The Mangubats are a persevering matriarch. Marcia Mangubat lives with her mother and two daughters. She runs her sari-sari store and the household with the mantra, “Maningkamot nalang gyud ta na mabuhi (we will work hard to survive).” The pandemic is no exception to this mind frame. Marcia’s store is the only source of income as her daughters look for jobs.

General Santos City is still under a curfew to prevent the spread of infections. Marcia makes sure that her family obeys the rules while trying to carry on with daily life, “The new regulations include wearing a mask whenever one steps out of the house. The first offense is a P3,000 penalty. The following offenses can lead to one-month imprisonment.”

She understands that safety measures are necessary and adapting to the challenges is the only way forward: “I go to the market myself to buy all of my supplies from the market at the center of the city. I would go at least once or twice a week. The lockdown conditions have led me to make this trip every two weeks.” The supply shortage has decreased Marcia’s revenue from P4,000 per day to P1,500. Her current profits do not cover the P7,000 she needs for the monthly household expenses.

The small bench and table for tea at the corner of Marcia’s shop is vacant these days. She has not experienced such a sales decline in 11 years, “I have been a member of Tinagacan Agrarian Reform Beneficiary Cooperative (TARBC) for six years so I was able to withdraw a savings amount of P5,000. I am afraid that I may reach a point where I will have to withdraw more of my savings.” TARBC teaches small business owners like Marica about how they can apply and access loans as well as create a savings scheme.

The local government has distributed rice, noodles, and canned goods to families like Marcia’s. It is one of the many sources of hope Marcia holds, “The supplies from the store sometimes meet our daily needs. I start the day grateful that all of us are in good health.”

Alejandra Cinco, 56, Resident of Lanao del Sur

Cassava was imported from Latin America through the Manilla Galleons over 400 years ago. It has become a staple across the Philippines since then. For Alejandra Cinco, the vegetable is a saving grace during the lockdown, “We grow cassava on our farm and I make homemade cakes to sell. Our harvest is not selling as much. I purchase sugar and the other ingredients for P100 and sell the cakes for P200. The cakes are the only profit I make some days.”

The virus outbreak may not affect everyone’s health but it deprives many of their basic needs. “I was able to stretch P20,000 towards household needs during the first month of the lockdown. The expenses included the P3,000 I need for asthma medication every two months. We have reduced our investment in the sari-sari store from P1,500 to P1,000 or P500. Buying food for our family is the top priority.”

Alejandra and her husband are housing her mother-in-law, brother-in-law, daughter, and two of their grandchildren during the lockdown period. The additions have raised her household expenses from P6,000 to P11,000 – “We have cut costs wherever we can. My husband delivers cassava to the Malabang area. He earns P700 per trip. I have started to accompany him during these trips to buy some of my supplies at competitive prices.”

Alejandra’s husband was the only one issued a quarantine pass when security measures were taken in April. She became unable to buy supplies from her local vendor: “I was referred to another grocery store but the prices were much higher. Our store sells basic goods such as sugar, coffee, soap, canned foods, and snacks. Some of these items have gone up to P10 more than before. It forces us to retail them at a higher price and lose the already dwindling number of customers.”

The higher prices and limited supplies have taken a toll on everyday operations. “I would have P500 to P1,000 in sales every day. Now I am fortunate if I make P300 on certain days,” states Alejandra.

She currently relies on her savings and one of her children for support, “My son lives in Cebu City and has sent financial support through the remittance center in the Malabang area. We are fortunate that he is able to provide a portion of his salary.”

This article was developed in partnership with the Asian Preparedness Partnership (APP). More information about APP may be found using this link: Asia Preparedness Partnership (APP).

Position Paper on Section 3.01 of the IRR of RA 11469 Section 4 (aa)

The COVID-19 pandemic continues to pose serious threats to health and has already disrupted the economy. This prompted the government to enact Republic Act No. 11469 otherwise known as the “Bayanihan to Heal As One Act,” declaring a state of national emergency in order respond to the urgent needs of the people.

It is in response to this urgent need and call that the Ateneo-SEDPI Microfinance Capacity Building Program (Ateneo-SEDPI MCBP) recognizes our role in aiding government to promote and protect the interests of the Filipino people, especially low income groups, in these challenging times. For the past 14 years, Ateneo-SEDPI MCBP provided training, research and consulting services to more than 2,000 microfinance institutions in the Philippines with a combined outreach of 10 million low income households.

SEDPI invests in 15 cooperatives and microfinance NGOs nationwide. It also directly provides financial services to more than 8,000 low income households in Mindanao. SEDPI works in partnership with Pag-IBIG, Social Security System, Land Bank of the Philippines and Development Bank of the Philippines to bring social protection and welfare services closer to low income groups.

Remaining true to our vision and mission, we commit to do our moral and lawful duty to provide a “grace period” for the loans of our microfinance clients.

In Section 4 (aa) of RA 11469, the law directs:

“ . . . all banks, quasi-banks, financing companies, lending companies, and other financial institutions, public and private, including the Government Service Insurance System, Social Security System and Pag-IBIG Fund, to implement a minimum of a thirty (30)-day grace period for the payment of all loans, including but not limited to salary, personal, housing, and motor vehicle loans, as well as credit card payments, falling due within the period of the enhanced Community Quarantine without incurring interests, penalties, fees, or other charges. Persons with multiple loans shall likewise be given the minimum thirty (30)-day grace period for every loan . . . ”

However, we noticed an inconsistency with the implementing rules and regulation (IRR) of RA 11469. In Section 3.01 of the IRR of RA 11469 where “Mandatory Grace Period” was discussed, it states that:

“ . . All Covered Institutions shall implement a 30-day grace period for all loans with principal and/or interest falling due within the ECQ Period without incurring interest on interest, penalties, fees and other charges. The initial 30-day grace period shall automatically be extended if the ECQ period is extended by the President of the Republic of the Philippines pursuant to his emergency powers under the Bayanihan to Heal as One Act . . . [emphasis added]”

The text of RA 11469 clearly provides in Section 4 (aa) that all loans falling due within the period of the enhanced community quarantine shall not incur interests, penalties, fees, or other charges. This provision of the law was not adhered to by the IRR when it said that “ . . . All Covered Institutions shall implement a 30-day grace period for all loans with principal and/or interest falling due within the ECQ Period without incurring interest on interest, penalties, fees and other charges . . .” [emphasis added]

Prohibiting financial institutions to impose “interest on interest” is far different from prohibiting them to impose “interest” on loans. The IRR provides that financial institutions are only mandated to cancel the additional interest that may be imposed due to late payment of the loan. This is different from what the law really provides which mandates financial institutions to totally cancel the interest of the loan for the duration of the quarantine period.

Many of our clients who have loans (microcredit) with us used this to finance their livelihood. In a community assessment we conducted on March 31, 2020, 40% of our members completely stopped their lovelihoods and another 40% reported weakened livelihoods. We were not able to reach the remaining 20% because they live in places where cellphone signal could not reach them.

This is why we, in the microfinance industry, applaud RA 11469 for canceling the interest of loans during the duration of the quarantine. In fact, as early as March 15, 2020 we already declared a moratorium on loan repayments to our clients. This means that interest on these loans for the quarantine period will not be charged.

However, if the IRR will be implemented, only “interest on interest” will be canceled and not the whole “interest” of loans during the quarantine period. This will create a huge problem for MFIs since most access loans through commercial banks. If the IRR will be implemented, MFIs will still have to pay the interest on loans from commercial banks even if MFIs already canceled the interest on the loans of our clients.

With the current IRR, MFIs will bear the brunt of the cost of interest which may endanger their financial sustainability. There is also a good chance that this interest will be passed on eventually to microfinance clients who are already bearing the biggest impact of the pandemic.

With this, we strongly urge the concerned agencies of our government – Bangko Sentral ng Pilipinas, Department of Finance and Securities and Exchange Commission – to review the IRR of RA 11469. We would like to the IRR to follow the spirit of RA 11469. Hence, we call for the revision of Section 3.01 of the IRR of RA 11469 for it to remain true to the provision of Section 4 (aa) of RA 11469.

We hope that this matter will be resolved soon. The spirit and purpose of the Bayanihan to Heal as One Act must be genuinely upheld. We call for the government to completely prohibit interest charging on loans during the enhanced community quarantine.

It is our fervent hope that this crisis will be put to an end soon. MFIs will remain a partner of the Filipino people in securing their livelihood, health, and safety all throughout this challenging times until we are able stand up again as a strong and progressive nation.

Thank you very much and may God bless our country.

In the spirit of Bayanihan and in service of the Filipino people.

Vince Rapisura is SAFER Foundation’s first brand ambassador

Quezon City –Financial Wealth Expert and Host of Usapang Pera Vince Rapisura signed a contract with SAFER Foundation last February 19, 2019 to become its first official brand ambassador. Also present during the event are SAFER Board member Benedict Balderama (Executive Director, PHILSSA), Executive Committee Members Roselle Rasay (Executive Director, CODE-NGO) and Kevin Lee (Convenor, HRC).

As a DRRM and development practitioner, Vince expressed his support to SAFER and how it targets to help vulnerable communities affected by disasters. He aims to educate the general public in becoming responsible donors and active agents of change in times of crisis.

SAFER Foundation is the first local joint humanitarian initiative in the Philippines. SAFER was founded by the Philippines’ largest NGO networks to raise money for the isolated and most vulnerable communities that are affected during disasters and emergency situations which are NASSA/Caritas Philippines, the HRC and CODE-NGO.

Vince Rapisura established Social Enterprise Development Partnerships, Inc. (SEDPI), a social enterprise that provides financial literacy trainings to low-income OFWs in 15 countries worldwide. He is also a microfinance and social entrepreneurship professor at the Ateneo de Manila University for the past 15 years.

Maria Cecilia Concepcion

Cecilia Concepcion earned a degree in Management and minors in Literature (in English) and Enterprise Development from Ateneo de Manila. In her years in the University, she participated in various organizations such as AIESEC and Ateneo Special Education Society (SPEED).

In AIESEC Ateneo, she had the opportunity of creating and eventually leading Project Asenso, a Global Community Development Program that aimed to assist micro-entrepreneurs through learning opportunities on entrepreneurial strategies and financial management. These seminars were conducted by foreign volunteers themselves—with the help of SEDPI as a consulting learning partner. This inspired her to join the company eventually.

Aside from this, she also participated in various advocacy projects for SPEED and served as the Public Relations Head of the organization in her senior year. Through these organizational activities, she was exposed to different players in the development sector.

Her experience as a Management major also provided her with different opportunities such as establishing a start-up called Urban Gardens PH with a group under the School of Management Business Accelerator (SOMBA) program that mentored the start-up, as well as being a part of the Final 4 in the School of Management’s Marketing Business Plan Competition.

Through these various organizational activities and background as a Management major, she was further encouraged to participate in development for a better Philippines.

Changing mindsets: Teaching financial literacy to OFWs in HK

Many overseas Filipino workers face problems with loans. A program for OFWs in Hong Kong is helping change that.

By: David Lozada

HONG KONG – In a crowded street in central Hong Kong, overseas Filipino workers (OFWs) line up in front of pawnshops and loan agencies. The crowd starts to thicken even before the offices open.

For domestic helper Maria Wilma Padura, the scene is all too familiar.

The 43-year-old has been an OFW in the city for 18 years, working multiple jobs to raise her family back in the Philippines.

“It’s a common problem among OFWs. Many of us are neck-deep in loans. I’ve been taking loans for years before I learned to manage my finances,” Padura said.

According to her, the problem starts even before OFWs leave the Philippines.

“When you leave the country, you take a loan to pay for the placement fee. You pawn your properties just to pay. When you get here, you have to adjust to the living expenses,” Padura said.

She added: “Aside from paying off the loans, you have to pay for your children’s education and the expenses of your family. When an emergency comes up, you really have no choice but to take another loan.”

Many OFWs in different countries face problems with loans. Many fall victim to loan sharks while some are forced to run away. Some end up using their passport as a collateral so they end up overstaying their visa and forced to go home. Some even end up in prison. (READ: Debt bondage: The scourge of OFWs)

Statistics from Hong Kong’s Immigration Department show that, as of February 2015, there were a total of 173,726 Filipino domestic workers in Hong Kong. This was an increase of nearly 7,000 for the same period in 2014, when a total number of 166,743 Filipino domestics were recorded.

OFW problems

This problem is what the Social Enterprise Development Partnerships Inc (SEDPI), in partnership with the Ateneo School of Government (ASOG), wants to solve in their Financial Literacy, Leadership, and Social Entrepreneurship (FLSE) workshop for OFWs on Sunday, May 29.

“OFWs need to manage scarce resources. They need to focus on making their hard earned money productive,” Vince Rapisura, president and chief executive officer of SEDPI.

Some OFWs present in the workshop have been working in the city for 20 to 30 years. Before leaving for Hong Kong, the participants admitted that they only wanted to work abroad for up to 10 years so they can be with their families back home.

“This is the case for many OFWs. They end up staying too long abroad because they mismanage their finances,” Rapisura said.

According to a study conducted by SEDPI, around 57% of OFWs who attend their workshops struggle to meet their daily needs. Some 33% struggle to find funds to finance businesses or sources of income back in the Philippines while 14% struggle to fulfill their financial obligation to their nuclear family.

The same study found out that despite the challenges, OFWs’ top financial goals and dreams are to achieve the following:

Permanent work or source of income (72%)
House and lot (31%)
Happy and prosperous family life (28%)
Education (27%)
Help nuclear family (13%)
Retirement (13%)
Move out of poverty (3%)

“It’s interesting to note that most OFWs want to create permanent work or sources of income in the Philippines. Their end goal is still to go home and live in the country,” Rapisura said.

SEDPI is a capacity-building institution that trains provides training, research and consulting services in micro finance, social entrepreneurship, and financial literacy for OFWs and locals organizations in 27 countries. From an initial capital of P45,000 (US$1,027), the financing company now has P268 million ($5.737 million) based on audited financial statements in 2015.

Active vs passive income

FINANCIAL LITERACY. SEDPI President and CEO Vince Rapisura teach overseas Filipino workers how to manage their finances. Photo by David Lozada/ Rappler

Rapisura encouraged OFWs to increase their investments to achieve eventual financial independence.

Active income are earnings gained through work and employment while passive income are received on a regular basis with little effort required to maintain it, like stocks, mutual funds, and real estate rentals.

“As a rule, you should use your active income to pay for your needs while you use your passive income for your wants,” he said.

Most OFWs, Rapisura noted, barely differentiate between needs and wants. This becomes the root of their and their families financial problems.

“You need to change your perspective. You should encourage your family back home that their expenses on needs must come from them and expenses on wants/ goals must come from income abroad,” Rapisura said.

He added: “If you don’t have control over their spendings and your own income, you’ll end up staying here in Hong Kong for a long time.”

Road to financial independence

NO MORE DEBT. Domestic helper Maria Wilma Padura achieved financial independence after joining the LSE program. Photo by David Lozada/ Rappler

Padura was part of the FLSE in 2013. She said the program helped her achieve financial independence.

“When I became part of the program, I was still neck-deep in loans. I didn’t know how to manage and budget my resources. I applied what I learned about financial literacy and before I finished the course, I was able to pay off all my loans,” she said.

Aside from paying off her debts and helping her sister finish her education, Padura is paying forward and want to help other OFWs currently in debt. She founded the Passi City, Iloilo Association of OFWs in Hong Kong in 2003. In 2015, she organized the Passi City Balik sa Bayan Incorporated to help OFWs who come home start their own businesses and investments. The Iloilo organization is currently undergoing the same FLSE program.

Padura was awarded in Outstanding Community Leader Award in 2015 and a finalist of Bayaning Pilipino sa Asia Pacific in ABS-CBN’s Gawad Geny Lopez. The local government of Passi City also gave her a Golden Heart Award and Outstanding Passino Award in March 2016.

“I taught my family how to manage their finances properly. I still help them but I don’t pay for all their needs anymore. I learned to say no when needed, which is very difficult for us OFWs,” Padura said.

While many OFWs struggle to become financially independent, Padura said it is possible with the right mindset on saving and budgeting.

For Rapisura, the training is a service to the country’s modern heroes, who seldom end up broke after spending decades working abroad.

“SEDPI would like to harness the power of OFW remittances to contribute to nation building. We need to teach them how to become responsible consumers for their families and themselves,” Rapisura said.

He added: “Remember, your most valuable asset is you. This is more relevant if you’re the sole breadwinner for your families.” – Rappler.com

View original article here.

Financial planning for overseas Filipinos

For many Filipinos, the lure of working overseas is plain and simple: money. A higher take home pay enables them to provide their family with a better life.

Earning in terms of a stronger currency allows the overseas Filipino to buy more pesos.

In 2015, the number of overseas Filipino workers (OFWs) was estimated at 2.4 million. Remittances reached $22 billion as of end-November 2015.

But not all is well in the land of OFWs, wherever it may be.

A 2011 study by Social Enterprise Development Partnerships Inc. sounded the alarm bell.

One out of 10 OFWs is financially broke. Eight out of 10 of those who return to the Philippines have no savings.

Despite a higher earning power compared to working the same job in the Philippines, why are they coming bank without any savings or investment?

The primary reason Filipinos aim to work abroad is the higher pay which enables them to provide a better life for their families, whether in the Philippines or abroad. For OFWs working in developed countries such as the USA, the UAE, and Singapore to name a few, they are earning in stronger currencies which allow them to buy (and save) more pesos.

Obviously, it’s not how much you earn, it’s how much you save.

Financial planning is not only about increasing your income.

Here is a guide to financial planning for those who live and work abroad.

OFWs are sometimes tagged as modern-day heroes. They sacrifice the time with their family for a better life. Behind the pictures and the social media posts lies the truth –being an OFW isn’t easy.

OFWs move their lives to settle into a country they know little about and immerse themselves in a whole new culture, language, traditions, and people. Such challenges may be rewarded with a better income.

Obviously, best thing to do is to maximize your earning capacity. Saving and investing are keys to when the time comes, you can go back home to the Philippines with wealth both in terms of finances and experience.

View original article here.

‘Emotions preventing OFWs from financial success’

By: David Lozada

sedpi learning wealth financial literacy training — BETTER BUDGETING. Around 60 overseas Filipino workers in Hong Kong participate in financial literacy training by SEDPI and the Ateneo School of Government. Photo by David Lozada/Rappler

A financial expert says many overseas Filipino workers send most of their earnings to their families – and fail to save for themselves – because they feel emotions such as guilt and shame

HONG KONG – What emotions are preventing overseas Filipino workers (OFWs) from achieving financial success? What needs to change?

For Analyn Regulacion, a domestic helper in Hong Kong for more than 5 years, it was guilt.

“My relatives would blackmail me emotionally, especially my siblings, to give them financial support. If I don’t give them money, they would make me feel guilty. I would cry by myself because I couldn’t help them,” a teary-eyed Regulacion recalled. (READ: Changing mindsets: Teaching financial literacy to OFWs in HK)

She added: “I left the Philippines when my child was only 3 months old to work abroad. I was able to send all my siblings to school but I realized I was left behind. I wasn’t saving for myself.”

This is common for many OFWs, who usually send most of their earnings to their families back home. In March 2016 alone, OFW remittances hit a record-high $2.7 billion.

According to the National Economic and Development Authority (NEDA) in 2012, the Philippine economy cannot do without cash remittances from its overseas workers. Cash sent to the country, the World Bank also noted, is a “key factor” for the Philippines’ resilience.

Emotions blocking financial success

Aside from guilt, Social Enterprise Development Partnerships Inc (SEDPI) president and CEO Vince Rapisura said fear, anger, envy, and shame also prevent OFWs from being financially independent.

“Because of shame, for example, we tend to cover up reality with luxuries we cannot afford. We want to save our family name by tolerating bad financial habits and solving other members’ financial problems,” Rapisura said during a Financial Literacy, Leadership, and Social Entrepreneurship (FLSE) workshop for OFWs on Sunday, May 29.

Envy is another problem, according to Rapisura, as OFWs may feel discontent with their achievements and compare these with other OFWs’ accomplishments.

“Focus on how people achieve things and not what they achieve. Take time to also recognize and congratulate yourself,” he said. (READ: What you need to know about overseas Filipino workers)

To help counter bad financial habits, Rapisura encouraged OFWs to focus on positive emotions – courage, joy, and contentment.

Financial stages

EYE-OPENER. Domestic helper Analyn Regulacion says learning financial literacy will help her end her stint as an OFW in Hong Kong. Photo by David Lozada/Rappler

During the workshop, Rapisura showed OFWs a guide to help them monitor their resources – the so-called financial life stages.

“The financial life stages provide a guide for people to assess their financial health. It provides a framework for people to understand what to prepare financially to enjoy a full and meaningful life,” he said.

Based on the framework, workers are encouraged to start saving from 21 to 22 years old, when most people enter the workforce.

The financial independence stage, when passive income is expected to increase to up to 10%, comes at 23 to 25 years old.

The growth stage, from 26 to 45 years old, is when passive income is expected to grow from 11% to 50%.

The stabilization stage, when the highest income is enjoyed and expenses start to decrease, is from 46 to 60 years old.

The ultimate goal is to achieve financial freedom at the age of retirement or 60 years old.

Many of the 60 OFWs who attended the workshop expressed disappointment over their savings while working abroad.

“I was able to help my relatives while I was the one feeling miserable away from them. I realized I should be helping myself [attain financial independence] first,” Regulacion said.

Most important asset

Rapisura emphasized that while OFWs need to support their immediate families, they should, first and foremost, take care of themselves.

“Remember that your most important asset is yourself. Build your courage and gain the confidence to be self-sufficient and self-reliant,” Rapisura said.

He added: “At our age, money management is a life skill that we should be able to master to gain financial freedom in the shortest possible time.”

For OFWs like Regulacion, the workshop was an eye-opener.

“There are so many things I should have been doing the past years. I did not have any financial plans before this session but now I know how much I should be saving. I now have a target of when I will end my work here in Hong Kong and go back home,” she said.

The event was held in partnership with the Ateneo School of Government (ASoG), Wimler Foundation, UGAT Foundation, and the Overseas Filipinos’ Society for the Promotion of Economic Security (OFSPES). After completing tasks in other online courses and modules, OFW participants will be awarded a diploma on FLSE by ASoG. – Rappler.com

View Original Article here.

PALFSI’s Inspiring Road to Recovery

by Angelo Naidas

People’s Alternative Livelihood Foundation of Sorsogon, Inc. (PALFSI) started its microfinance operation in 1997, servicing the rural areas of Sorsogon. By 2003, the organization experienced growth with outreach of 10,000 clients in 15 municipalities in the province of Sorsogon.

In 2005, PALFSI partnered with Ayudahan Livelihood Foundation of Zamboanga (ALFZI). The two organizations pooled in investments for the microfinance program that operated in Zamboanga. At first, the partnership had promising results but natural calamities and mismanagement resulted to a crisis that almost closed down PALFSI’s and ALFZI’s operations. The microfinance operation in Zamboanga was not able to address delinquency problems. ALFZI eventually left the partnership. This left PALFSI to take over the entire operations and settle obligations with donors and funders.

Since then, the institution went on a downward spiral. The operational losses incurred in Zamboanga forced them to write off a significant amount of their outstanding portfolio. The write-off together with bloated liabilities led to technical bankruptcy in PALFSI’s books. This is means that liabilities are larger than assets and there is large likelihood that the organization may not be able to fulfill its obligations to funders if drastic measures are not taken.

SEDPI started the rehabilitation of PALFSI in 2013. Through SEDPI’s organizational appraisal, a series of interventions was strategically planned out to turn the institution around. The main intervention for the institution focuses on stabilizing its financial performance. To do this, SEDPI along with PALFSI management set up a meeting with their creditors to negotiate and restructure its current obligations. The result of the negotiation was a success as PALFSI’s external creditors agreed to a two year moratorium which gives PALFSI enough time to recover and eventually pay their external debts. The other interventions conducted to complement PALFSI’s recovery and institutional growth includes, strategic planning, financial management, human resource development, client selection, internal controls, and product development.

Since then, PALFSI has been experiencing gradual improvement with its financial performance. It posted a positive net income in 2014 after experiencing three straight years of net losses. PALFSI is also has enviable Portfolio at Risk (PAR) ratio which hovers between 0-2% throughout 2015 and early 2016. SEDPI established milestones to PALFSI and when it achieved these milestones. SEDPI Development Finance, Inc. (SDFI) released loans to enable PALFSI to expand and grow its portfolio.

The PESO rating of PALFSI significantly improved since SEDPI started its interventions with them. PALFSI’s current PESO rating improved to 72 points out of a possible score of 100. In 2013, PALFSI’s PESO score is only 45. The PESO rating is a scale used in the microfinance industry to describe performance of microfinance institutions. With this pace, PALFSI is set to attain positive equity by June 2016.

This is proof that with the right capacity building program and appropriate financing strategies, SEDPI can turnaround organizations so that they can continue benefitting the poor.