Category: Microfinance

Small Business Corporation (SBC) commissioned Social Enterprise Development Partnerships, Inc. (SEDPI) to conduct training on Cooperative Standards for its management staff from Northern Luzon on December 11, 2018 in Baguio City.

SEDPI Senior Program Officers, Ms. Florence Adviento and Ms. Francesca Gacer-Magallon, facilitated the one-day training for thirty (30) participants.

The training discussed the different types and categories of cooperatives, standard chart of accounts for cooperatives, and performance standards, specifically COOP-PESOS. This aimed to build the capacity of SBC participants to be able to understand the different cooperative standards advocated by the Cooperative Development Authority.

SBC is a government financial institution with the primary responsibility of implementing comprehensive policies and program to assist micro, small, and medium enterprises (MSMEs).

SBC has created several programs geared towards providing financial access, financial management, and capacity building to MSMEs. These programs include wholesale lending to smaller financial institutions, cooperatives, and foundations; retail or direct lending to MSMEs; guarantee programs for larger banks to cover MSME loans without collateral; and financial management, and capacity building for rural banks, and MSME clients.

With the training on Cooperative Standards, SEDPI, the premier capacity builder in the fields of social entrepreneurship, microfinance, and financial literacy, hoped to bring its experience in microfinance operational audit to help SBC achieve its ultimate goal of providing quality financial products and services.

The training garnered very good evaluation from participants for the topics (4.27 out of 5); and delivery (4.36), knowledge and skills (4.34), and over-all skills of resource persons (4.34).

If interested in a customized training on microfinance for your organization, email Ms. Dimples Sacdalan-Pateño at dimples.sacdalan@sedpi.com.

On December 28, 2018, the Department of Agrarian Reform (DAR) awarded a multi-million project to SEDPI to implement a component of the Italian Assistance to Agrarian Reform Communities (ARC) Development Support Program (IARCDSP).

DAR implements the IARCDSP as one of its foreign-assisted projects which is funded under the loan agreement executed with the Government of Italy. The project aims to address poverty as well as to contribute to the acceleration of the peace process in Mindanao in support to the development objectives of the Millennium Development Goals, particularly the goal for the alleviation of poverty.

SEDPI will work on the component on Agricultural and Enterprise Development Support (AEDS) of the project. This component is comprised of activities to pursue livelihood development through the enhancement of agricultural productivity and development of agriculture-based enterprises. A Microfinance sub-component is included in the AEDS component.

SEDPI will be addressing the microfinance value-chain providing technical support and links between the different stakeholders involved in IARCDSP microfinance component. The project areas include 35 ARCs in four (4) provinces of Regions XII and Autonomous Region of Muslim Mindanao (ARMM). The provinces are Sarangani and Sultan Kudarat in Region XII, and the provinces of Maguindanao and Lanao del Sur in ARMM.

More than 150 Agrarian Reform Beneficiary Organizations (ARBOs) or Farmers’ Organization (FO) will be assessed to come up with at least 35 ARBOs/FOs to be assisted as microfinance organizations capable in managing a sound revolving fund/social finance system inclusive of a wide number of Agrarian Reform Beneficiaries (ARBs).

SEDPI, in partnership with Ateneo de Manila Microfinance Capacity Building Program, is mounting a two-day training event entitled “Innovations and Trends in Inclusive Finance”. The course will present recent trends on financial product design and delivery; innovations in operational policies; institutional policies of successful microfinance institutions; and lessons learned on how to cope with disasters and mitigate climate change.

The training aims to provide capacity building training to policy makers and implementors of credit programs in improving the delivery of pro-poor financial services towards financial inclusion of marginalized sectors.

To register, please fill-out the form below.

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.

By Carlo Niño Yacob

Organizations regularly include capacity-building in their development plans. This have become an essential human resource strategy because it aims to improve, if not sustain, the level of knowledge and skill needed by its employees in the performance of their functions. In the case of microfinance institutions, capacity-building interventions are done mainly as a requirement for compliance or due to a perceived need. MFIs would often find themselves choosing between public-run or customized trainings. What is the difference?

Public-run trainings, by virtue of being public-run, are trainings that are conducted to serve the general need of the public. It prioritizes breadth of knowledge that is applicable for most. On the other hand, customized trainings provide attention to the distinct practices of organizations. It goes in-depth with interventions being rendered.

During public-run trainings, capacity-building providers aim to deliver general topics to encompass the wide audience. In this regard, the event could also be an avenue for networking with other organizations. Some MFIs bring delegates to these events for the primary purpose of engaging in best practices sharing. Organizational learning, aside from what is imparted by the resource speakers, is spurred by organization-to-organization interaction. In terms of fees, public-run is cheaper compared to customized ones.

For customized trainings, a prior assessment of the organization would be carried out to understand what interventions it needs and how to deliver them appropriately. This means gathering enough information about the systems, processes, policies, and personnel so that these can be integrated to the lesson. With this focused scope, areas for improvement can be easily identified and discussed during the training itself, thus, making the intervention more beneficial and impactful to the organization.

The management needs to take into consideration the institutional needs and objectives to be able to identify the appropriate training for the organization.

By: Bea Arnela 

Agricultural and Rural Development for Catanduanes, Inc. (ARDCI) recently celebrated its 17^th founding anniversary last September 11, 2015. The festive day started with a Thanksgiving Mass and was followed by a colorful parade around the town of Virac. Hundreds of ARDCI members gathered in the Virac Sports Complex to join the fun-filled celebration. Senator Francis “Chiz” Escudero graced the event and gave an inspirational talk. The members enjoyed various games and raffle draws. Toward the evening, the ARDCI staff, management, and valued guests continued the celebration in the Virac Town Plaza. During the area presentations, the members showcased their talents through impressive production numbers. The event aptly ended with vibrant fireworks display.

ARDCI acknowledged distinguished partners with the ARDCI Uswag Award and SEDPI was a proud recipient of the recognition.

ARDCI has plenty of reasons to be grateful and to celebrate. Since the organization’s establishment in 1998, it has stayed true to its commitment to empower its members, primarily poor households, by providing financial services such as microcredit and micro-insurance. With its members growing close to 100,000 households, the organization now operates in 47 branches in ten provinces. In 2014, ARDCI began its operations in Mindoro and Marinduque with five and two new branches respectively. The organization recorded a remarkable 35.95% growth in number of active clients and 33.18% growth in loan portfolio on the same year.

Bicol region’s largest MFI has continuously strived for growth and progress. It has not always been an easy journey for ARDCI. Before the organization forged a partnership with SEDPI in 2007, ARDCI was struggling with its poor financial performance and net loss for four consecutive years prior. SEDPI helped ARDCI to improve its performance through providing Technical and Mentoring Assistance. The management’s tireless efforts and dedication in the partnership goals paid off. It was not long before ARDCI started posting positive income again and regained the support of donors and funders for its financial needs.

Until this day, ARDCI persistently works on its financial performance as shown in the table below.

In terms of Portfolio Quality, ARDCI was able to maintain its PAR Ratio within the industry standard and is fully provided in terms of loan loss provision since 2013. Sustainability measures were also generally outstandingly high. Overall, these indicators accompanied by notable increase in outreach, suggest that the organization is financially sound and healthy.

ARDCI takes pride in sustaining and flourishing its grassroots-led development initiatives not only in microfinance operations but also in its social services programs. Throughout the years, ARDCI provides unwavering committed service and looks forward to more wonderful years with its member and partners.