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).

ARBOs Remain Covid-free

Agrarian Reform Beneficiary Organizations (ARBO) in Sarangani, Sultan Kudarat, Maguindanao, and Lanao del Sur Provinces remain covid free. This is the result of the ARBO covid-19 quick assessment conducted by SEDPI on April 20-24, 2020.

While some ARBOs have completely stopped operations, 36% or ten (10) out of twenty-eight (28) participating ARBOs continue to provide services to farmers in their communities. These services include irrigation, farm machinery rental, catfish culture, animal dispersal, and farm monitoring.

ARBO farmer members still manage their individual farms. However, due to the strict implementation of the community quarantine, senior citizen farmers are unable to do so.

Pambansang Mananalon, Mag-uuma, Magbabaul, Magsasakang Pilipinas, Inc. Farmers Association (P4MP-FA) of Upper Katungal in Tacurong City, reported that they have temporarily stopped their microfinance services since members failed to pay their dues due to the lockdown. At the same time, the farmers’ economic activity is put on hold because of restrictions in selling produce and other goods in the market.

One ARBO in Sarangani, Alkikan Vegetables Growers Association (ALVEGA), continues to consolidate vegetables funnelling it to a local bagsakan and a huge grocery in General Santos City. On the other hand, Upper Biangan Farmers Association (UBFA) who offers micro insurance services has twice provided relief goods and cash assistance to their members. Only three (3) of the twenty-eight (28) ARBOs have received assistance as an organization from their local barangay and municipal government.

During this quarantine period, some ARBO members in Cotabato, Maguindanao, and Lanao del Sur have volunteered in the Bantay Covid initiatives of their barangays by manning border outposts.

Update 3: Community assessment and recommendations for support to microenterprises and the informal sector during and after COVID-19

SEDPI is a group of social enterprises that provide capacity building and social investments to development organizations and directly to microenterprises. We serve ~8,000 microenterprises in Agusan del Sur and Surigao del Sur, two of the poorest provinces in the Philippines.

Most of our members, about nine in 10, are women with an average age of 42. These women are typically into vending, farming, fishing, dress making, selling food, and livestock backyard raising.

Community assessments

Every week, since the community quarantine was imposed on March 15, 2020; SEDPI conducted community assessment research with its members. These were conducted on March 15, March 30, April 5 and April 14; through rapid survey via text messaging and calls with our members.

The rapid community assessment aims to determine the economic impact of COVID-19 on our members and to have a clearer picture of what transpires on the ground. We asked our members the following:

Status of their livelihood – unaffected, weakened or stopped
Experience symptoms of COVID-19
Access to government assistance
Support needed after the community quarantine

Impact of COVID-19 to microenterprises and informal sector

All microenterprises were negatively affected due to COVID-19. Immediately after the community quarantines were announced, 34% of microenterprises stopped their livelihood. After two weeks this spiked to 51% and slightly recovered to 41% after a month of lockdown.

Some microenterprises reopened their livelihood because they need to earn income to have enough budget to buy rice at the minimum. They sourced locally-available inputs to do this and were able to sell banana cue, camote cue, cassava cake and rice cakes among others.

Majority of microenterprises or 59% reported that their livelihood weakened. Of which, 59% and 31% reported significant and severe weakening of livelihoods resepectively.

Supply chain disruption; inability to deliver goods and services; and prohibition to open non-essential businesses were the main reasons given for stopping or weakning of their livelihoods. With families having to stay home and most business remain closed, there are very few buyers of their products and services. Most barangays prohibit entry of non-residents which prevent others from going to work.

Exposure to COVID-19

An encouraging finding in the rapid community assessment is that only 2 of the 6,071 respondents are persons under monitoring. This may be a positive sign that the community quarantine is effective in containing the rapid spread of the virus.

The quarantine period was extended to April 30 and the question now is how much longer can the poor endure its negative effects to their livelihoods. Many of them are saying that they might die first of hunger before getting infected with COVID-19.

Access to government assistance

It is important to consider the well-being of low-income groups and provide them with enough economic support and social safety nets during this quarantine period. The government’s cash assistance and emergency relief is very much needed on the ground to help them survive.

Only one of ten microenterprises or 11% were able to receive cash assistance; and 60% received relief goods from the government as of April 14. This is an improvement of 1% and 17% respectively from the previous week showing marginal improvement in access to government assistance.

Those who received cash assistance got PhP3,000 to PhP4,000. Most of them received PhP3,600 cash assistance through the 4Ps program of the Department of Social Welfare and Development.

Relief goods received were composed of rice, canned goods and soap. Most of those who received these said that the supply will only last them for 1-2 days. Most of the respondents or 82% also expressed that the PhP5,000 cash assistance will not be enough to cover their daily needs in the next two months.

Recommendations during community quarantine

Hasten government cash assistance and relief

The government needs to hasten release of cash assistance and relief goods to microenterprises and the informal sector. These will alleviate their burden and enable them to survive the community quarantine.

Prohibit interest accrual on MSEs loans

Interest accrual for loan of micro and small enterprises during the quarantine period should be prohibited. On April 3, Ateneo-SEDPI Microfinance Capacity Building program released a position paper regarding this.

The continued charging of interest during community quarantine is socially unjust since this gives additional burden to microenterprise and small enterprises at a time when they can barely survive. This is an unnecessary additional expenses that will make their lives even harder during the rebuilding and recovery phase.

Mass testing

Prioritize mass testing to suspect and probable COVID-19 individuals who belong to low income groups, especially in urban centers, where spaces are cramped and transmission could happen faster.

Free testing services should be provided to make sure that transmission in low-income groups is prevented and managed properly. Local government units should have isolation areas for PUIs and PUMs to prevent the spread of the disease in rural and urban poor communities.

Recommendations immediately after community quarantine

The rapid community assessment showed that 77% of respondents request for cash assistance to restart their livelihood after the community quarantine. Many of the members or 35% would still need relief goods, especially food, immediately after the quarantine and A few or 12% need work to have source of income.

Cash assistance to restart livelihoods through MFIs

Request for cash assistance to restart livelihoods should be coursed through microfinance institutions (MFIs) to eliminate dole-out mentality. The cash assistance should be given, at the minimum, as 0% loans to microenterprises and the informal sector.

MFIs are well positioned to provide this intervention since they would need to support the rebooting of the livelihoods of their client base. The cash assistance will be collected alongside restructuring of existing loans of clients so that financial service delivery will continue.

Bail out MFIs

MFIs access funds from commercial banks and government financial institutions that they extend as microcredit to low income groups. Based on the Consultative Group to Assist the Poor’s (CGAP) estimate, an 85% repayment rate in MFIs would only have sufficient cshflow to last in the ext six months.

The impact of the pandemic will surely negatively impact repayment rates of MFIs. Based on the figures of those negatively affected, SEDPI estimates that it repayment rates in the next three months after the quarantine period may hit as low as 20% to 30%. Due to this, most MFIs will experience liquidity problems.

Government should intervene and infuse capital in the form of equity to MFIs to fund the proposed cash assistance intended to restart microenterprise livelihoods. Another way of doing this is to temporarily convert debt obligations of MFIs from commercial banks and especially from government financial institutions to equity to ease pressure in debt repayments.

MFIs will eventually pay this equity back to the government, perhaps event at a premium, once they recover from the crisis. SEDPI strongly suggests moving away from debt-based development assistance since interest will ultimately be passed on as additional burden to microenterprises and the informal sector.

This strategy is similar to the bailout of governments to large financial institutions during the 2008 financial crisis. If governments are willing to bail out large corporations, they should also be willing to do the same to MFIs that directly help those at the bottom of the pyramid.

Pay for work programs

Development organizations and government should provide pay-for-work programs to spur local economic development. This will create temporary employment and give purchasing power that will augment efforts to restart of livelihoods.

0% SSS and Pag-IBIG calamity loans

Microenterprises and informal sector who are members of SSS and Pag-IBIG could benefit from the calamity loans offered. Per published policy of these two organizations, members are allowed to borrow calamity loans against their personal contributions.

The interest rate for calamity loan is 5.95% for Pag-IBIG and 10% for SSS. It is highly recommended to bring the interest on the calamity loans to 0%, since these are drawn from personal contributions of members anyway.

Recommendations for the long term

Ease in access to identity documents

Access to government basic services starts with identity. The Philippine Statistics Authority should streamline processes for low-income groups to get government identification documents such as birth certificates, marriage certificates, and licenses.

Greater financial inclusion

It is also important to focus more on financial inclusion to make sure that bank accounts are opened for all low-income families so that they can easily access cash transfers and cash relief in times of disaster. This will ensure that funds truly land in the pockets of low-income groups, and could potentially reduce corruption and patronage politics.

Universal disaster insurance

It is also high time to have universal disaster insurance since the Philippines ranks high in the World Risk Index. This will make us better prepared for disasters and pandemics in the future.

The scheme will provide funds to affected communities, especially low income groups, to cope with the disaster and to rebuild livelihoods. Having disaster insurance will eliminate the need for low income groups to beg for government assistance from politicians.

Tap vast network of MFIs

Microfinance institutions are rooted well in communities and have vast networks that penetrate even the most remote areas. This makes them suitable for information dissemination as well as for distribution of government assistance.

Prioritize support and assistance to the bottom of the pyramid

We may be already enjoying the positive effect of the commuity quarantine to prevent the sudden spread of COVID-19. However, its negative economic impact especially to vulnerable sectors such as microenterprises and the informal sector, is undeniable.

To sustain and complement the gains of the quarantine, priority and free mass testing to low income groups is needed. This will hopefully flatten and at the same time shorten the curve.

Government should hasten delivery of cash and relief assistance to low income groups to alleviate the burden of low income groups. MFIs could complement barangay level legwork for information dissemination and distribution of government assistance with its vast network and penetration in rural areas.

To ease the economic burden of low income groups, the government should stay true to the intent and spirit of the Bayanihan Act, that prohibit accrual of interest and other fees during the quarantine period.

Immediately after the quarantine period, to help jumpstart the economy, the government could provide pay for work programs; and provide cash assistance to microenterprises through MFIs. It could bailout MFIs to ensure continued delivery of much needed microfinance services to the poor.

The proposed 0% calamity loans of Pag-IBIG and SSS could provide much needed relief to microenterprises and the informal sector. In the longer term, structural challenges could be addressed through providing ease in access to identity documents, broader financial inclusion, and universal disaster insurance.

When we channel resources to help microenterprises and the informal sector, we make our nation better poised to recover faster from the negative effects of COVID-19.

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.

SEDPI inks partnership with SSS to bring social safety nets to low income groups

“SEDPI believes that the marginalized sector should be the first to enjoy the benefits of government services,” Vince Rapisura, SEDPI President, said in a statement on the occasion of its Memorandum of Agreement signing with Social Security System (SSS). “Our partnership with SSS will realize this so that low income groups will benefit fron social safety nets of the government,” he added.

Social Security System (SSS), a government-owned and controlled corporation, provides social security protection to all self-employed persons and other qualified Filipino workers against hazards of disability, sickness, maternity, old age, death and other contingencies. On May 2019, SSS signed a memorandum of agreement with SEDPI to intensify the coverage of workers in the informal sector. SEDPI is now accredited and authorized to receive and screen non-collection and collection related transactions for SSS.

Members and their families are now provided easy and convenient access to SSS services through SEDPI. Previously, the service is extended only regular and associate members of SEDPI, as well as their family members, who are at the same time self-employed or voluntary members of the SSS. With the agreement, non-SEDPI members can now also course their voluntary contributions to SSS through SEDPI since it is an authorized collection agent of the institution.

SSS promotion thru SWePP

The Social Welfare Protection Program (SWePP) is the consolidated market-based and indigenous microinsurance and social security program of SEDPI which aims to provide security and financial safety net to members through adoption of various insurance schemes. With the agreement making SEDPI a collection agent, SSS now becomes one of the social security programs under SWePP. Through SWePP, SSS is further promoted to communities and individuals.

Membership to SWePP is open to Filipinos of legal age. Interested individuals should fill up an application form to become SEDPI members. Once filled up, SWePP services could be offered to them. The forms are available online or in SEDPI offices. These are also available during SWePP orientation programs in community gatherings and events of SEDP..

SEDPI members who avail of SWePP may course their voluntary contributions to SSS through SEDPI. It will also assist members in processing claims or benefits from SSS.

SSS promotion to Overseas Filipino Workers (OFWs)

As part of SEDPI’s commitment to promote SSS to marginalized sectors, the organization conducted training events with SSS representatives locally and abroad. Approximately 1,500 microenterprises attended training events promoting SSS in Agusan del Sur and Surigao del Sur. Abroad, around 2,230 participants, mostly domestic helpers, attended training events promoting SSS in Macau, Abu Dhabi, Dubai Doha, Bahrain, Egypt and Singapore. Recently, a series of trainings promoting SSS was held in different countries including Bahrain, Qatar, South Korea, Egypt, Spain, and Switzerland, where around 1,730 OFWs attended.

Most of the events abroad were in collaboration with the Philippine embassies, consulates, Philippine Overseas Labor Office (POLO) and Overseas Worker Welfare Administration (OWWA). The events became an opportunity to encourage Filipinos to patronize SSS and realize the benefits it offers.

Milestones and prospects on SEDPI’s partnership with SSS

At present, more than 800 individuals are registered with SSS thru SEDPI. Their contributions amount to more than PhP390,000.

Last June 2019, SEDPI conducted a training among its staff on the implementation of its SSS service. Targets on SSS registration were also set during the training.

SEDPI looks forward to register and make its members, especially OFWs and microenterprises, to become active members of SSS. With its 8,500 member microentrepreneurs and 500 member OFWs, it plans to register at least 3,000 of these member-clients and investors to remit a total of PhP1.0 million in contributions 2020.

Shelter for all: SEDPI partners with Pag-IBIG Fund to benefit more micro-entrepreneurs

“SEDPI’s partnership with Pag-IBIG Fund is a step closer to the organization’s vision of financial empowerment and financial inclusion for Filipinos,” Vince Rapisura, SEDPI President said when asked how the partneship is relevant to nation building.

The organization’s members consist of self-employed individuals in the informal sector with need for improved social protection and access to decent and affordable housing. This led SEDPI to agree to act as the conduit through which Pag-IBIG Fund membership shall be provided to its members.

“With this collaboration, decent and affordable housing is now reachable to all SEDPI members who belong to low income groups in Agusan del Sur and Surigao del Sur, two of the poorest provinces in the Philippines,” Vince Rapisura added.

Home Development Mutual Fund more popularly known as Pag-IBIG fund seeks to improve the quality of life of Filipinos by providing them sufficient shelter, an integrated nationwide provident savings, and housing through the mobilization of funds for shelter finance. It is mandatory for all Filipinos with monthly income of at least PhP1,000 to become Pag-IBIG Fund members. In addition, it is not only for formally-employed but also for self-employed and those from the informal sector.

SEDPI recognizes the value of Pag-IBIG Fund membership and the benefits of savings and home financing it provides for its members. Moreover. Pag-IBIG Fund and SEDPI agreed to jointly work in providing Pag-IBIG Fund membership for the self-employed members of SEDPI towards providing them access to provident savings and decent and affordable shelter financing through Pag-IBIG Fund’s programs.

Information dissemination

Since the agreement has been in place, Pag-IBIG Fund and SEDPI have been assisting each other in disseminating information and increasing awareness on the benefits of Pag-IBIG Fund membership. Pag-IBIG Fund has rendered orientations for the members, personnel and officers of SEDPI and has provided information materials such as leaflets, posters, tarpaulins, audio-visual presentation files and similar items on Pag-IBIG Fund membership and benefits.

SEDPI, on the other hand, displayed tarpaulins, posters and leaflets on Pag-IBIG Fund membership and benefits in conspicuous areas of its units and areas. It distributed and made available Pag-IBIG Fund program leaflets during its regular meetings and provided a timeslot in its meetings for the playing of audio-visual presentations on Pag-IBIG Fund membership and benefits, whenever feasible. SEDPI also made its own promotional materials for Pag-IBIG membership, which comes in various forms — articles, videos, etc.

Pag-IBIG also became part of SEDPi’s Social Welfare Protection Program (SWePP), a consolidated microinsurance and social security program which aims to provide security and financial safety net to members through adoption of various insurance schemes.

Interested members must fill out the SWePP application form at the SEDPI MF office or during SWePP orientation programs in community gatherings and events. SWePP with Pag-IBIG is available to SEDPI members who are existing Pag-IBIG members.

SEDPI conducted training events to promote Pag-IBIG locally and abroad. In partnership with Pag-IBIG Fund, approximately 1,500 microenterprises attended the events promoting Pag-IBIG in Agusan del Sur and Surigao del Sur. Abroad, 2.230 participants, mostly domestic helpers, attended financial literacy training that promotes Pag-IBIG in Macau, Singapore, Bahrain, Qatar and United Arab Emirates. The events became an opportunity to encourage Filipinos to patronize Pag-IBIG and realize the benefits it offers.

Registration and membership

Pag-IBIG Fund and SEDPI also assisted each other in the membership registration of SEDPI’s members to Pag-IBIG Fund. To facilitate this, Pag-IBIG Fund trained SEDPI’s authorized representatives in the membership registration process and conducted membership registration for SEDPI’s members.

In the agreement, Pag-IBIG Fund is to provide SEDPI members of their statement of membership savings (contributions) which include their contributions and the corresponding dividends earned annually.

Pilot housing project

A very exciting part of this partnership between SEDPI and Pag-IBIG Fund is the pilot housing project. SEDPI shall undertake a pilot housing project to benefit qualified SEDPI members. SEDPI shall provide or identify land that can be developed as its housing project for its member-beneficiaries capable of paying housing loan amortizations and who possess good moral character.

SEDPI will identify qualified members based on eligibility requirements provided in the Pag-IBIG Fund’s housing loan program and enter into a collection servicing agreement with Pag-IBIG Fund for the collection of the monthly housing loan amortization of the member-beneficiaries.

For its part, Pag-IBIG Fund shall extend individual housing loan to qualified SEDPI member-beneficiaries of the proposed housing project. It shall also enter into a collection servicing agreement with SEDPI for the collection of the monthly housing loan amortization of their member-beneficiaries and assist SEDPI in coordinating with other key shelter agencies for the successful implementation of the proposed housing project.

In 2019, SEDPI already procures a small lot in Rosario, Agusan del Sur that will serve as the pilot site. It is cureently undergoing negotiation for another lot in municipality of Veruela in the same province.

Advantages of the partnership

For those with maximum monthly compensation of PhP5,000, monthly savings with Pag-IBIG Fund is PhP100. With the partnership between SEDPI and Pag-IBIG Fund, however, members of both institutions only need to pay PhP20 per month or PhP5 per week. Contributions are paid during weekly group meetings held within the barangay where the members live; it saves them costs in visiting the nearest Pag-IBIG Fund branch, which is one town away, at best.

As members, they gain access to Pag-ibig Funds affordable housing program. This gives them the opportunity to avail housing loan as much as PhP450,000 with only 3% interest per annum. This loan amount will already give them enough funds for purchase of lot or house and lot, house construction, or home improvement which can be paid up to thirty (30) years.

Milestones and prospects

At present, SEDPI was able to register more than 2,500 member-beneficiaries with contributions amounting to around PhP400,000. SEDPI has now also already submitted several applications from its members for the availment of various Pag-IBIG benefits.

With the continued support of Pag-IBIG Fund, SEDPI anticipates more of its members and even non-members to be encouraged to become member of both Pag-IBIG and SEDPI. The organization looks forward to more microentrepreneurs benefiting from the programs of Pag-IBIG Fund.

SEDPI pioneers impact investing fora in 9 countries

“I found Vince Rapisura on Facebook and he constantly discusses being a social investor. Through him, I learned that investing can create more value than just mere profit. We can select investments that have a conscious goal of making a positive impact on society,” said a social investor in an online forum.

Impact investing are investments made to companies, organizations and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return. In 2019, SEDPI was able to facilitate several fora in different countries on impact investing. The fora provided alternative investments that have positive impact in the quality of life of marginalized communities in the Philippines.

Furthermore, it provided avenues on how Overseas Filipino Workers (OFWs) could participate in impact investing while protecting their wealth and achieve their financial dreams. Vince Rapisura, president of SEDPI, shared his investments in social enterprises and microfinance institutions and elaborated on how OFWs can participate in these investments. He also showed the financial performance, social impact and repayment history of each investment option.

SEDPI’s impact investing fora were able to reach more than 900 participants in major cities around the world including Hong Kong, Milan, Rome, Dubai, Abu Dhabi, Macau, Tokyo, Singapore, Doha, Madrid, and Barcelona. It was able to gain new social investors and supporters by helping OFWs focus their attention not only in making profits but also putting social and environmental indicators when makinh financial decisions.

Vince Rapisura always reminded social investors, “Impact investing is investing with a heart.” SEDPI will further its engagements with OFWs as well as with other organizations to reach more investors for its ventures that surely has positive impact in poor communities in the Philippines and in the society, in general.

SEDPI joins key financial stakeholders in Finovation 2019

Social Enterprise and Development Partnerships, Inc. (SEDPI) is the country’s premier capacity builder in the fields of social entrepreneurship, microfinance and financial literacy. SEDPI, represented by its founder and president Vincent Rapisura, joined eCompareMo’s Finovation 2019 to contribute to a clearer and more solid path towards greater financial inclusion.

He served as the moderator of the first roundtable discussion, which provided insights into the problems and solutions to increase financial inclusion. Panelists included Pia Roman-Tayag, BSP Managing Director, Center for Learning and Inclusion Advocacy (CLIA), Mags Surtida, Asia United Bank Group Business Head for Credit Cards and Acquiring First Vice President, Harvey Libarnes, Smart Communications Inc. Financial Service Head Vice President, Hamilton Angluben, Cashalo General Manager, and Stephanie Chung, eCompareMo Co-Founder and CEO. Each panelist shared their individual and organization’s efforts towards financial inclusion among consumers.

Speaking for SEDPI’s constituents which are microenterprises and microentrepreneurs, Vince Raoisura brought to the table a question on why microfinance loans are still not on the eCompareMo’s platform. To which Ms. Chung from eCompareMo answered, “We are actually prepared to work with microfinance. We are so happy that they’re here and we have already made steps towards reaching out to them. Our goal is not just education, but financial inclusion.”

Several topics were further discussed in the next discussions. These include working together to empower more consumers and the need to protect borrowers. In conclusion, the panelists all reiterated their commitment in pushing for the advocacy of financial inclusion and education, especially to the unbanked populations.

Strengthening farmer organizations Mindanao to alleviate poverty and accelerate peace process

Mindanao is considered one of the wealthiest islands in the Philippines in terms of natural resources. It boasts plenty of natural resources, producing 40% of the country’s food needs (OECD, 2013). Further, one-third of the island’s land area is considered agricultural (Francisco, 2017).

Despite these considerable assets, the island has continuously been a place of armed conflicts and security threats. Some of its regions also consistently rank among the poorest in the country. Regions IX, X, XII, and the Autonomous Region in Muslim Mindanao (ARMM) registered above 39% poverty incidence in 2015 (Gavilan, 2017).

The situation in Mindanao challenges all sectors of Philippine society to act and think of solutions to solve poverty and the issue of peace and security. The government and civil society must work hand in hand in implementing programs for the people of Mindanao.

Solving poverty and accelerating the peace process

SEDPI recognizes this challenge and made efforts to look for potential partnerships that aim to address poverty as well as to contribute to the acceleration of the peace process in Mindanao. Through its partnership with the Department of Agrarian Reform (DAR) and funding from the Government of Italy, SEDPI is implementing various components of the Italian Assistance to Agrarian Reform Areas Development Support Program (IARCDSP).

As contribution to the attainment of the Sustainable Development Goals or the global goals, the project serves as a tool to solve poverty and hasten the peace process in Mindanao. In particular, the project aims to contribute to the improvement of the living conditions of about 53,000 households in 35 identified Agrarian Reform Areas (ARCs) in 26 municipalities located in the provinces of Sarangani, Sultan Kudarat, Maguindanao and Lanao del Sur.

To fulfill this contribution, SEDPI, and its partners employ the strategy of integrated area development approach wherein ARCs feature the combination of necessary infrastructure, organization or institutional, agricultural, and enterprise development support to produce incremental growth in productivity and income among farmers.

This high-level strategy is broken down into interrelated and comprehensive components, all contributing to the attainment of the overall objective.

SEDPI aims to deliver six project components to identified Agrarian Reform Beneficiaries Organizations’ or Farmers’ Organizations (ARBOs/FOs) as part of the project:

improved assessment system;
increased capability to prepare and submit feasible and sustainable business plans in the field of micro-finance services;
strengthened capacity to be endowed with revolving funds and or social micro-finance instruments;
increased business knowledge to effectively manage their own business development;
increased chances for endowment of existing and newly created revolving funds and social micro-finance instruments; and,
improved capability to implement innovative products

Three out of these six components have already been achieved by SEDPI.

Improving agricultural assessment systems

In improving assessment systems of various ARBOs/FOs, SEDPI conducted various consultation meetings. From February 15 to March 15, 2019, initial consultation meetings were conducted to gather all the shortlisted ARBOs and inform them of the project, including their potential role and participation.

After these series of meetings, SEDPI returned to selected ARBOs/FOs to assess their fit and alignment with the project. SEDPI developed an organizational appraisal tool for its assessment. The tool is a principle-based management assessment of the readiness of ARBOs/FOs to implement micro-enterprises effectively integrated into value chains and sustainable micro-finance operations.

The principles ensure pro-poor market development. The principles are high impact, cost-effective, market-driven, sustainable, and specific and focused interventions. Within a month, 71 ARBOs were appraised in 35 identified ARCs.

Based on the appraisal, the ARBOs involved in the project commonly have equipment and facilities rental as the primary service to their members. The machinery, equipment, and infrastructure rented out were mostly donated to them by government agencies. Findings also include weak market development among the operations of the ARBOs and a lack of human resource capacity to support engagement in the project.

Further, only 15 ARBOs have current microfinance operations with the most extensive operation, not even at PhP1 million in loan portfolio. Through several consultations with DAR and representatives from the Italian government, SEDPI was able to finalize the model of assessment and self-assessment tool for the ARBOs/FOs.

The tool establishes the baseline performance of the ARBOs/FOS through two rating indicators – micro-enterprise development rating and micro-finance operations rating. These indicators are developed revolving around micro-enterprise development and micro-finance principles against fundamental management areas and management functions.

Increasing farmers’ capability through business plan preparation

After the thorough appraisal and analysis of the chosen ARBOs/FOs, SEDPI endorsed the 35 ARBOs from the four provinces of Sultan Kudarat to take part in the DAR IARCDSP as lead ARBOs. Additionally, 7 ARBOs/FOs that exhibited high potential to adopt micro-finance due to their sophistication in microenterprise implementation were endorsed to take part in the capacity building interventions without extra cost to the project.

Following the endorsement and eventual selection of ARBOs, SEDPI proceeded with rounds of business proposal consultations which aim to collect and validate all vital information on feasible business ventures of the ARBOs/FOs from March 30, 2019. The consultations drew out the agricultural problems experienced by the community, proposed solution, its details, and impact. The group identified agriculture-related problems that farmers experienced, their causes and effects.

Some of top problems identified were:

lack of access to financing;
expensive cost of inputs;
low selling price of produce;
absence of transportation to bring goods to higher value markets;
lack of farm machineries to be used for land preparation; and,
pests and natural disasters or calamities.

Customized trainings to directly address capacity building needs of ARBOs

These challenges and all the data collected and validated became the foundation of SEDPI in designing training modules that will equip ARBOs/FOs with skills in writing and preparing their business plans to be submitted for the evaluation of Italian Technical Assistance (ITA).

Modules were anchored on adult learning methods combined with lectures and workshops to gather information based on the business plan format provided by Etimos, SEDPI’s counterpart civil society organisation in Italy. The training also served as a venue to provide field-based assistance to the ARBO for the preparation of the business plan. The trainings were implemented from June and November of 2019.

SEDPI covered the foundations of business plan preparation by including sessions on external analysis, market analysis, business model for micro-enterprise, and marketing. A total of 35 business plan preparation training sessions were conducted.

The training sessions intended not just to effectively educate ARBOs/FOs through lectures but also through actual writing workshops. By the end of the training, ARBOs/FOs were able to draft initial business plan proposals for SEDPI’s, DAR’s, and Etimos’ review. There were 107 business proposals crafted from 42 ARBOs/FOs in 35 ARCs.

The proposals submitted may be sorted into three (3) categories: (1) Input Supply; (2) Market Consolidation; and, (3) Equipment Rental. Close to majority of the business proposals involve agri-input supply store. The next most common category is the provision of rental farming equipment, while 22% of the proposals submitted involve market consolidation, such as provision of packaging materials and consolidation of agricultural products.

Upon review and consultation with DAR Microfinance Project Implementation Team (PIT), four major investments were approved across all of the ARBOs/FOs. These are agri-inputs, small hauling truck, small farm machineries, and office equipment support. PIT issued budgetary allocation on these four investments with the notice to proceed for the preparation of business plans.

Right after the business plan preparation training, the field-base assistance on business plan preparation was also conducted. Field-base assistance was extended to 35 lead ARBOs that covers the entire ARC. It serves as an in-depth review and training of members of the ARBOs/FOs in the ARC. A total of 492 participants attended the training sessions and field-base assistance from the 35 ARCs.

After the training and field-base assistance, SEDPI team met with various project stakeholders to present initial business proposals and to finalize the content of the business plans. The team met with Etimos, and DAR multiple times via face to face and online meetings in August and September 2019.

The series of meetings and consultations provided better outline and strategies on how to continue with the business plan preparations. SEDPI went back again to the 35 ARCs for validation, revision, and finalization of initially submitted business plan proposals. The validation meetings were simultaneously held across Sarangani, Sultan Kudarat, Maguindanao, and Lanao del Sur provinces.

Strengthening farmers’ capacity for revolving funds and microfinance

As part of the initial findings of SEDPI, one vital component for ARBOs/FOs’ sustainability is skills transfer and capacity building on handling and managing revolving funds and social finance instruments. After the consultative and iterative process of preparing the business plans, a series of activities were held to raise awareness at all levels inside ARBOs/FOs on the importance of implementing a sustainable, self-replicating, and monitored microcredit and microfinance system.

SEDPI employed two approaches to meet this objective: plenary workshops and a more intimate mentor-learner session called Technical and Mentoring Assistance (TAMA). TAMA is delivered on a mentor-learner approach as SEDPI social entrepreneurs closely supervise and monitor an institution’s progress towards sustainability. TAMA, which is also a Filipino word for, correct, aptly means setting things right.

The first two training workshops were conducted in October 2019. These workshops aim to stimulate an awareness raising campaign on the utility of microcredit self-managed schemes for ARBOs/FOs. The first workshop outlined the Fundamentals and Principles of Microfinance, which was simultaneously conducted in Cotabato City and General Santos City on October 23 to 24, 2019. The second workshop was on Character and Capacity-Based Lending, conducted simultaneously on October 24 to 25, 2019 in Cotabato City and General Santos City.

After these workshops, the first TAMA was conducted from November 4 to 14, 2019. A total of 390 participants were involved in the first TAMA. SEDPI teams visited the different ARBOs to check on the agreements and assignments set on the first two workshops. Three more TAMA sessions are scheduled for 2020.

The first TAMA talked about strengthening internal capacities of the ARBOs/FOs. They were also invited to attend the succeeding workshops. The third workshop was Financial Product Design and Development conducted on December 10 to 11, 2019 in General Santos City while the fourth workshop talked about Delinquency Management conducted on December 11 to 12, 2019 in General Santos City.

On average, the training sessions were rated excellently by the participants. The average rating of the training sessions is 4.72 out of 5. The logistical arrangements, such as food, session venue, and powerpoint presentations, were also rated excellently with 4.64 rating. Finally, the resource persons were rated 4.77 out of 5. The overall evaluation for the field-base assistance for business plan preparation is excellent at 4.71 as well.

Collaborating for sustainability

SEDPI continues to prepare and implement various components of the project. For 2020, SEDPI and its partners plan to build a collaborative environment for ARBOs/FOs to effectively implement, manage, and sustain their business plans. The activities set include the implementation of three more TAMA sessions; conduct of various training sessions on specific business and financial management including loan delivery management and monitoring & evaluation technics; and, implementation of the multiple sessions to scale-up and develop innovative Microfinance products.

SEDPI is confident that by 2020, ARBOs/FOs can make a more lasting impact in their respective communities. The activities are designed not only to develop new skills or capacity of farmers’ organizations but more so to highlight the potential role of farmers as changemakers and as active contributors to the national economy.

These activities are seeds that are planted to solve poverty in Mindanao better and to provide alternative platforms against armed conflict. Through the fruitful partnerships of SEDPI, DAR, the Italian Government, and Etimos and with the commitment of all ARBOs in the various ARC, a new Mindanao will emerge.

LENDING A HAND, BUILDING CAPACITIES: SEDPI conducts trainings on product design and delinquency management with ARBOs

“We must all be solution-oriented,” said Florence Adviento, one of the trainers from SEDPI, at the beginning of the discussions.

With the statement above as tone-setter, the Social Enterprises Development Partnerships Inc. (SEDPI) successfully conducted a 3-day series of trainings with 38 Agrarian Reform Beneficiaries Organizations (ARBOs) coming from provinces of Sarangani, Sultan Kudarat, Maguindanao, and Lanao Del Sur.

The trainings were made possible with the support of the Department of Agrarian Reform (DAR) through the Italian Assistance to Agrarian Reform Communities Development Support Program (IARCDSP), last December 10-12 at the East Asia Royal Hotel, General Santos City.

The trainings consisted of lectures and discussions on four major topics, namely: delinquency management; and financial product design and development. Various workshops and activities were done to fully engage the participants so as to impart valuable knowledge and develop necessary skills in them.

The trainings seek to equip ARBOs with necessary knowledge and skills in providing microfinance services to their members and other farmers in their respective agrarian reform communities (ARC).

“Ultimately, the trainings aim to aid in the implementation of the program and the achievement of its overall objective which is to contribute to the improvement of the farmers’ living conditions,” said SEDPI president Vincent Rapisura. He reiterated the objective in the discussion on the project components and project flow of the DAR-IARCDSP. This served as the gateway to succeeding more specific and more targeted discussions.

Product Design and Development

“What’s good about these products and services is that it benefits not only ARBO members but even non-members. The whole community will enjoy the benefits,” said an ARBO official in Bisaya.

The first day of the trainings focused mainly on financial product design and development. Particularly, it helped the participants craft their product brand as well as develop specifications and features for their microfinance products such as insurance, savings, and loan. The discussions had been very interactive as participants raised their questions and clarifications, to which the lead discussants generously answered and responded.

Vincent Rapisura discussed one of the highlights of the first day of training — SEDPI’s Social Welfare Protection Program (SWePP). SWePP is a consolidated microinsurance and social security program that combines public, private, and non-profit strategies to provide optimum social protection benefit to its members.

The program provides social insurance protection up to PhP80,000.00 per client, as well as calamity and fire assistance through partnerships with various institutions including Social Security System (SSS) and Pag-IBIG Fund.

Delinquency Management

“The importance of repayments is explained really well in the discussion. We’ve learned that best incentive that the members could get from his or her repayment is being able to loan again. It is important to maintain good standing in the organization,” an ARBO official said.

The second day of trainings gave much weight to delinquency management discussions. Specific topics included the borrowers and microfinance institution’s perspective on delinquency; financial shields of delinquency; measuring delinquency; governance: roles of board and management; and remedial management and growth strategies.

The discussions brought about a fruitful and insightful exchange between the lead trainers and the participants. Highlights include importance of savings as financial shield to delinquency; workshops on the portfolio at risk ratio and past due rate; and discussion on governance and the defined roles of the management.

The third and last day of trainings was dedicated to discuss the measures of financial analysis and most importantly, the action plans. The trainings concluded with the participants as well as all the institutions present united in having high hopes for the program and the positive impact it will have on the lives of the stakeholders, most importantly on the farmers sector.

Training evaluation

SEDPI prides itself in delivering excellent and innovative capacity buildings services. Both trainings delivered to the ARBOs were rated as excellent in all aspects – trainer, topics, logistics, food and lodging.

Follow up

After the training, technical and mentoring assistance will follow to make sure that ARBOs are able to implement lessons learned during the training. A team of SEDPI staff will coach and visit each ARBO to check on assignments and agreements made during the training.

Through this method, financial service delivery of the ARBO to its members and the ARC as a whole will improve that will hopefully lead to the improvement of the quality of life of farming households in the four provinces.