Microfinance Archives - Page 7 of 16 - Social Enterprise Development Partnerships, Inc.

DAR Project Reaches 19,000 Poor Households

By: Hazel Atienza

The Department of Agrarian Reform Micro Agri Loan Product (MALP) was an integrated credit delivery project for Agrarian Reform Beneficiaries (ARBs). The program aims to intensify and fast track the provision of microfinance services to target clients (ARBs/ARB households and rural women) to finance their agri-based enterprises through capable partner MFIs. Having access to formal financing was one of the major achievements of the project for the ARBs. By the end of the project, there is already a total of PhP356.2 million in loan portfolio from 18,987 ARBs, ARB households and rural women. This amounted to a total of PhP86.6 million in savings and share capital generation. Market Linking, access to crop insurance, and access to agri-extension services were the other important milestones of the project.

Social Enterprise Development Partnerships, Inc, (SEDPI), the chosen service provider for the project, extended capacity buildings services to 23 Microfinance Institutions (MFIs). Through the 23 MFIs, the ARBs were not only able to access formal financing which allowed them to no longer borrow capital from informal money lenders with very high interests; they also had an avenue where they could put their savings during peak income seasons.

SEDPI also incorporated market linking as an essential design of the product. In the course of the intervention, several partners of MALP expressed keen interest in the area of value chain financing as well as market linking. These organizations saw the importance of the system and planned to institutionalize it not only for MALP. In fact, a key insight during the conduct of MALP is the importance of market linking especially for organizations with strong existing micro-agri product.

One of the highlights of the entire MALP intervention in terms of market linking is the intervention with Alalay Sa Kaunlaran Inc. (ASKI). SEDPI linked ASKI with Organic Options Inc. (OOI), a marketing and trading company for agricultural products. ASKI developed a partnership with Organic Options where OOI will buy the produce of farmers under MALP. The agreement also includes provision of assistance for the farmers to transition from conventional farming to organic.

SEDPI was also able to link the MFIs to Philippine Crop Insurance Corporation (PCIC). Insurance is a critical financial product that must be accessed by farmers to protect them from risks incurred by unexpected circumstances. Through the MFIs, the crop insurance, including other insurance products from PCIC, was made more accessible to the ARBs and the farmers. Seventeen MFIs are now underwriters, with 2 MFIs processing their underwriter application. The rest opted to become agents. The remaining MFIs opted to explore other risk mitigating measures such as the Agricultural Guarantee Fund Pool (AGFP).

Agricultural extension services allow provision of knowledge and technical know-how on farming. Through the project, MFIs were linked to Municipal Agriculture office and key topics such as pest management and fertilizer application were the most requested in addition to knowledge on vegetable farming.

The project proved to provide a win-win situation both for the farmers and the MFIs. Farmers were empowered through the interventions mentioned hence the need for capital and more savings would also increase providing more business for the MFIs.

Why Financial Literacy is Crucial to Microfinance Staff

by Denise Subido

Microfinance Institutions (MFIs) face a myriad of issues in running their day-to-day operations. One problem they are constantly faced with is delinquency. Delinquency is a prevaling problem that has negative repercussions for an institution. One peculiar finding, however, is that when there is delinquency, there are also cases of fraud. In fact, SEDPI President and CEO Vince Rapisura states, “One hundred percent of our MFI clients experiencing delinquency problems also have problems on fraud.” When MFIs address fraud, they could also address their delinquency problems.

Fraud happens when there is heavy financial burden on an MFI staff. MFI staff who were caught to have committed fraud cited that they needed money because they were experiencing emergencies in the family. This shows, then, that financial need comes from the fact that personal money is not properly managed.

Given this reality, it is crucial that MFI staff are well-versed in personal financial management. Financial literacy trainings for MFI staff can achieve this goal. It promotes people to make better personal financial choices to manage day-to-day expenses, prepare for emergencies, and take advantage of opportunities to achieve financial goals. These trainings can help equip staff with skills and knowledge to manage their personal finance.

In addition, MFIs should also create policies that enable and encourage staff to practice good personal financial management. Some policies that do so are automatic savings with the institution; adding counterpart from the institution to the staff’s savings; providing adequate insurance protection to the staff and their family; and an option for the staff to increase their SSS contributions.

Once these policies are put in place and are coupled with financial literacy trainings, staff can become better equipped to manage their own finances. This will direct them to be able to better handle financial emergencies and will, eventually, give the staff peace of mind since they are now able to achieve financial freedom. The staff can then have more focus at work and will no longer need to turn to desperate measures just to make ends meet. An added benefit to this is that the staff will also patronize the financial products of the institution.

Last November 12, the Social Enterprise Development Partnerships, Inc. (SEDPI) conducted an Innovation Meeting with the top management of Ramon Aboitiz Foudation, Inc. (RAFI) – Microfinance. RAFI Microfinance is the microfinance and entrepreneurship focus of RAFI. They provide financial products such as loans, savings, and insurance to low-income households in Cebu, Bohol, and Leyte. During the innovation meeting, the team found that their staff needed interventions in terms of financial literacy. RAFI-MF aims to improve the financial literacy of their clients, but their staff, however, are not financially literate. This needs to be addressed first so that they can walk the talk in terms of financial literacy.

Vince adds, “MFI staff can serve better in delivering pro-poor financial products services if they are financially stable. They become true examples of financial empowerment and they can actively share their personal experiences to their clients.”

Financial Literacy for CASS Beneficiaries

by Carlo Niño Yacob

Carlo Yacob, SEDPI program officer, delivering a sesion to CCT beneficiaries in Siargao Island

The Climate Adaptation Support Services (CASS) project intends to develop communities in Siargao Island, Surigao del Norte, toward climate-resiliency through economic empowerment. Climate Change Commission (CCC) in collaboration with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) implements CASS. With financial support in the form of cash transfers coming from the government, it was imperative for the beneficiaries to be educated first on how to appropriately manage funds prior the disbursement. For this specific purpose, the Social Enterprise Development Partnerships Inc. (SEDPI), the service-provider hired to conduct the efforts, delivered financial literacy courses for the CASS beneficiaries. Capacity-building was deemed necessary to ensure that the families of the beneficiaries have the proper knowledge and skills to build-up sustainable financial resources in case of emergency situations such as natural disasters and calamities.

To accomplish this task, financial literacy trainings which focused on personal finance were conducted in four municipalities – Del Carmen, Pilar, San Benito, and San Isidro. The attendees were instructed on the importance of personal fund management, the intricacy of managing expenditures, the principles behind setting financial goals, the various advantages and disadvantages of having loans and savings, the acceptable uses of loans and savings, the different kinds of loan products, the proper way of knowing debt capacity, the efficient tracking of loan payment schedules, the different types of savings, the suitable places to store money, the different kinds of insurance products, and the various institutions that offer these financial services.

Discussions and workshops were delivered to impart knowledge to the participants. To complement these, printed financial literacy handbooks that highlight important points were also distributed. By and large, the various interventions conducted were positively received with messages of gratitude and praise. In the Municipality of Pilar, a participant expressed, “Mahusay po, salamat salamat po sa inyong panahon! (Terrific! Thank you for your time!)”. Another participant from the area also mentioned, “Ser and Ma’am, salamat sa inyong pagsasabot kay dahan ang nakat-onan nako kon unsa ba pagpasikot sa panginabuhi. (Sir and Madam, thank you for the talk. It has taught me how to handle by business)”. She was referring to how the program has helped her in managing livelihood.

Most of the participants expressed appreciation on savings, loans, and insurance sessions. A participant remarked, “Natutunan sa insurance para mayroon maasahan sa pangyayari na emergency or pagkamatay, kalamidad. (I was taught that insurance would be reliable in times of emergency, death and calamity)”. In the area of Del Carmen, an attendee noted, “Naiintindihan po namin kung paano magbudget ng pera at pagcontrol ng pangungutang. (We understood how to budget money and control loaning.)”.

Moreover, several participants also included their impressions on the manner of facilitation of the trainings. They exclaimed, “Okay ang mga speakers excellent, nakakaintindi kami at malinaw ang pang-explain. (Excellent speakers, we were able to understand and explanations were clear)”. Another participant commented, “Puro excellent ang nilagay ko kasi marami akong natutunan at masaya ako dahil sa inyong mga lecture (I put all ‘excellent’ (in the evaluation sheets) because I learned a lot and I am happy because of your lecture.)”.

After these financial literacy trainings have been delivered, local government units in charge are expected that cash transfers would be initiated as soon as possible. It is hoped that the beneficiaries would apply their learning once this has ensued.

SDFI’s Net Income Soars by 46% in 2015

SEDPI Development Finance, Inc.’s (SDFI) net income jumped by 46% from PhP3.44 million in 2014 to PhP5.03 million in 2015. This is the highest net income of SDFI on record. The surge in net income is on the back of modest asset growth of only 9% that is an indicator of a more efficient use of resources.

Revenues generated for the year increased by 5% while expenses declined by 2% for the same year. The increase in revenues and decrease in expenses resulted in a robust growth of the financing company’s bottom line.

There was only a slight increase in revenues due to the low interest rate environment in the Philippines. SDFI used to extend loans at an average of 13% per annum, now it only extends 11% per annum on average. It could hardly compete with commercial banks that extend 5% to 8% per annum to microfinance institutions. Commercial banks mobilize very low interest-bearing deposits from the public while SDFI mobilize investments from OFWs that gives up to 6% return per annum. This is to fulfill SEDPI’s mission to provide better returns to its investors who are mostly domestic workers overseas.

In spite of the slower growth in assets, SEDPI was still able to exceed its target. It targeted total assets of PhP250 million while actual total assets stood at PhP267 million. SEDPI is gearing up to achieve its target to grow to PhP350 million for 2016. The recent approval of a fresh line of credit worth PhP30 million from Union Bank will enable it to achieve this goal. It will also pursue a more active role in mobilizing social investments from Overseas Filipino Workers as well as young professionals in the Philippines.

The growth in equity outpaced growth in liabilities for 2015. Growth in equity was 16% while growth in liabilities was only 7%. This is a good position to be in since capital adequacy is strengthened to 27%. The banking industry standard is only 10% for the capital adequacy ratio. A good capital adequacy ratio means that the company is able to better serve its long term obligations from creditors.

For 2016, SEDPI hopes to further strengthen its financial performance as it tries to empower more Filipinos through its products and services.

Challenge of Integrating Crop Insurance in Agricultural Financing

By Romeo Arahan Jr.

SEDPI recently concluded the MFI Credit Support to Agri-production and Enterprises of Agrarian Reform Beneficiaries or ARB Households and Rural Women in the Program Beneficiaries Development Model Areas project of the Department of Agrarian Reform (DAR) on July 2015. During the contract period, SEDPI was able to formulate micro-agricultural loan products (MALP) to 23 MFIs that participated in the project. These MFIs are geographically diverse, catering to agrarian reform beneficiaries all over the Philippines.

One of the agreements during the project was for MFIs to provide crop insurance to their clients. Most of the partner MFIs were very keen in accessing crop insurance because of the risk mitigation benefits it provides to the clients’ farming activities in the event of natural calamities. SEDPI provided training to the MFIs on the importance of crop insurance and how this could be integrated in their financial products.

One of the main challenges of integrating crop insurance in agricultural financing products of MFIs is the notable lack of crop insurance providers in the country. SEDPI was only able to initiate linkage of the MFIs to the Philippine Crop Insurance Corporation (PCIC). Its crop insurance is the dominant product in the market right now. Its limited capitalization of PhP2 billion in 2013, hinders its growth in providing crop insurance to a wider range of clientele. In addition, private insurance companies, such as Malayan and CARD, are still undergoing pilot testing of their insurance products. As a result, MFIs and ultimately their clients have limited options on choosing crop insurance products that are more appropriate to their needs.

The threat of climate change is impending. It is important for the government to play a more active role in crop insurance to ensure protection of farmers’ livelihood and food security in the country. As a start, it should increase the capitalization of PCIC so that it could absorb serve more farmers and cover more geographic areas. The government could also provide incentives for private insurance companies to provide affordable and effective crop insurance products. It should also continue subsidizing premium payments of farmers on crop insurance similar to a project it implemented with DAR and PCIC previously. These are just small steps towards making crop insurance a robust industry in the Philippines.

Adopting Technology to Improve Microfinance Efficiency

By: Bea Arnela Parungo

RAFI Microfinance (RMF) has constantly been revolutionizing their operations through breakthrough innovations. Last April, RMF upgraded its Management Information System (MIS) to improve efficiency in operations. On-field account management and record-keeping using the mobile application eliminates redundancies and reduces total work load. Instead of recording in collection sheets, the field staff encodes the data directly on the application thus updating the system automatically over the internet. Previously, the field staff has to fill out the collection sheet and upon arrival in the branch; the support staff would input the data on the system. Most microfinance institutions have this same practice.

RMF’s new MIS encourages client interaction. Clients receive a system-generated SMS for every payment-related transaction. This notification gives assurance to the clients by informing them that their payment was received and correctly recorded. An SMS-based customer care group monitors all the incoming and outgoing text messages. This SMS system also lets the members send inquiries and complaints if there is any discrepancy in the payment made and the amount recorded in the system. At times, RMF clients even send thank you messages and express appreciation for the SMS notifications. All the feedback received by the customer care group are consolidated and forwarded to the branches regularly.

Aside from improved operations efficiency and better customer service, the system also serves as an internal control measure. The system limits the chances and opportunities for fraudulent activities. At any time, the branches and the main office can generate real-time operation reports. Furthermore, the client will be notified if there is an error in recording their payment. If a payment is not encoded in the system, the client will not receive a payment confirmation message. All clients are required to have a mobile number on file and they are well-informed about the SMS notification efforts. So far, there are no loopholes identified in this new system.

Before rolling out the new MIS, RMF setup a transition plan. Information and promotional materials were prepared. Training courses and forums were conducted. Communication procedures were also delivered to inform the clients of the changes that will affect them. Every now and then, e-mail blasts are sent to the staff for system-related updates and reminders.

Implementing an MIS upgrade to all of RMF’s 23 branches was not an easy journey. As with any other endeavors that entail change, one of the major challenges was dealing with resistance. According to Mr. Edwin T. Marfil, RAFI’s IT Manager, his team made sure not only to highlight the benefits of the new system but more importantly to make everyone fully understand how the new system works. Internet connection is also another concern since the system is an internet-based program. Some of RMF’s areas of operation have very poor internet signal. The field staff then may use the offline mode feature of the mobile application. Once back in the branch or anywhere with a stable internet connection, the data saved offline will then sync on the server.

Purchasing a first of its kind MIS system in the country, the mobile devices of the field staff, and establishing a support infrastructure for this new MIS all come at a cost. In addition, the IT Team remotely monitors the operations from the main server. There is also a data back-up mechanism and regular and preventive maintenance costs to keep the system up and running. When asked about the expenses involved in adopting a new MIS, Mr Marfil said that the great benefits of using the new MIS outweigh the costs. “In the long run, it is more expensive to lose clients.” he added.

RAFI is very progressive in terms of technology. Mr. Marfil pointed out choosing the proper technology platform as a key to effectively support operations. Collaboration between the IT Team and the RMF Team together with the full support of the top management made this innovation possible. RAFI aims to continuously improve their operations and find ways to serve their clients better.

CCC Launches Community of Practice

By: Miguel Roberto Parungo

Knowledge Management Strategy Manager Donnalyne Sanidad introducing the Climate Change Community of Practice.

In an effort to create more relevant discussions on the issues of climate change, the Climate Change Commission (CCC) launched the Climate Change Community of Practice (ccc-cop.org) last December 18, 2015 at Novotel in Araneta Center, Cubao, Quezon City. The Community of Practice (CoP) serves as a platform in storing and disseminating climate change data to the public. The goals of the website is to make applicable, accurate, and trustworthy research materials and best practices in climate change adaptation and disaster risk management readily available to the public at large.

The website is under the GMMA Ready Project, which aims to increase the capacity of stakeholders for effective disaster risk management and climate change adaptation. The project is implemented by the National Disaster Risk and Reduction Management Council – Office of Civil Defence (NDRRMC-OCD). It is funded by the United Nations Development Programme (UNDP) and the Australian Aid Program (AusAID). The partners who are responsible for the project are the Climate Change Commission (CCC), Metro Manila Development Authority (MMDA), Housing and Land Use Regulatory Board (HLURB), and the Collective Strengthening of Community Awareness on Natural Disasters (CSCAND). CSCAND is comprised of the Mines and Geosciences Bureau (MGB), National Mapping and Resource Information Authority (NAMRIA), Office of Civil Defence (OCD), Philippine Atmospheric, Geosciences, and Astronomical Services Administration (PAGASA), and the Philippine Institute of Volcanology and Seismology (PHIVOLCS).

The contents of the CoP website were accomplished with the assistance of Social Enterprise Development Partnerships, Inc (SEDPI). With the assistance of SEDPI, CCC will be marketing the website to the Local Government Units, specifically those located in the Greater Metro Manila Area (GMMA). This strategy hopes to create ease of access for the general public to resources that will improve local and national climate resiliency.

As a portal of information, the CoP provides credible, reliable, and science-based information from government sectors and subject-matter experts. The website also promotes sharing of information from public and private sectors. Visitors of the site can get reliable information, readily available at their fingertips.

Website Features

During the website launch, Knowledge Management Communication Specialist Donna Sanidad showcased the many different features of the site.

The CoP hopes to make preventive information readily available and digestible, so that it can be disseminated even before disasters happen. Local government units can then be empowered to take action, since they will have access to reliable information that they can use to make plans and educational materials.

Disaster Risk Reduction Management Portal

The website contains multiple pages on disaster preparedness, response, and recovery with disasters such as tropical cyclone, storm surges, floods, el niño, landslide, volcanic eruptions, tsunami, and earthquakes. The public can access resources which they find relevant in their localities and apply protocols that they find relevant in their areas.

Knowledge Sharing

One unique feature of the KM-CoP website is an interactive section through which knowledge and information, skills, or expertise in the fields of disaster risk reduction management and climate change adaptation is exchanged among communities.

You can apply as a contributor and impart your knowledge and share your expertise while learning from other experts. Help communities grow by answering questions from the public

Resources for Local Government Units

Another benefit of the CoP is access to information on climate change adaptation and mitigation strategies for local development planning. One will be able to find case studies and relevant publication on climate change adaptation and mitigation strategy implementations at local levels. Read on the tools on monitoring and evaluation of climate change adaptation and mitigation strategy for LGUs.

Membership in the Communities

Being part of the communities will give you access to resources from various national and local agencies in the fields of Human Security, Food Security, Ecological and Environmental Stability, Sustainable Energy, Knowledge and Capacity Development, Water Sufficiency, Climate-smart industries and services, Monitoring and Evaluation, Gender Mainstreaming, and Financing.

Get access to the website through ccc-cop.org.

Pulilan LGU Adopts Mobile Money

by Denise Subido

Today’s world is made smaller and more convenient through the use of technology. What was once impossible or inconvenient can now be done with one touch on your mobile phone. In the Philippines, 80% of households have at least one mobile phone. Aside from making calls, texts and use of internet, mobile phones can also be used to make payments through the use of mobile money. This has the potential to make lives more convenient.

According to the World Bank, mobile money is the provision of financial transactions through a mobile device. This encompasses a range of services which includes, but is not limited to, payments, finance, and banking services. Through mobile money, transactions that used to take up time and effort can now be done anytime and anywhere, with the help of a mobile device.

This was the premise for the project of the United States Agency for International Development (USAID) entitled Scaling Innovations in Mobile Money (SIMM). The project aimed to propagate the use of mobile money in various financial transactions so as to increase access to financial services in areas that lack access to banking facilities. The project advocated the usage of mobile money for transactions in order to make these faster, cheaper, accessible, and more efficient.

One of the pilot partners for the project is the local government unit (LGU) of Pulilan, Bulacan. For Pulilan, the specific transactions that were included in the partnership were payments for utilities and salaries of the government employees. Instead of receiving salaries in cash, these are debited directly to their mobile money accounts and can be used to pay transactions or can be withdrawn using an ATM card linked to their mobile money account. Through the project, Pulilan LGU employees were given mobile money accounts with BPI Globe BanKO, a mobile-phone based savings bank. BPI Globe BanKO was also the conduit for utility payments, particularly for water and electricity bills. Constituents of Pulilan were also encouraged to open accounts with BPI Globe BanKO in order for them to pay their utility bills using mobile money.

Nikole Alicer, Monitoring and Evaluation Specialist under the project, said that, “As of date, the Municipality of Pulilan, Bulacan has been successfully using the new electronic payroll system via mobile money for two years since launching of services in August 2013. Notably, BPI Globe BanKO has reported that among their payroll accounts, Pulilan accountholders show the highest level of activities.”

Utility payments and salary disbursements are now made more secure, convenient and cost-effective in the municipality of Pulilan. Precious time is saved that brings down opportunity and economic costs when mobile money is used. Nikole added, “M-money offers an innovative, secure, cost-effective transaction, digitally especially for those in the far-flung areas. It also offers greater ability to track financial flows in line with the government’s thrust towards greater transparency and accountability in financial transaction.”

From June 2013 to December 2014, SEDPI delivered training sessions under the project. SEDPI, as the partner capacity-builder in the project, ensured that the LGU employees were able to understand how to use mobile money to their advantage. SEDPI delivered financial literacy trainings to the employees, highlighting mobile money as a crucial tool for managing personal finances.

Enabling Access to Government Social Security Services through Microfinance

by Romeo Arahan Jr.

It is ironic that the poor get social security through microinsurance from microfinance institutions first before they are able to access government-mandated social security benefits. Based on SEDPI’s research, 90% of microfinance clients have access to microinsurance from MFIs while only 10% have access to Social Security System (SSS), PhilHealth and Pag-IBIG. The public sector’s social security programs are less accessible than the private sector’s.

The important benefits of government-mandated social security services are home ownership, pension for retirement, and access to health services. These social security services address basic needs that lighten the financial burden of the poor. The lack of access to these social security services hinders the poor to enjoy these benefits and exclude them from social welfare.

Mariel Vincent Rapisura, president and chief executive officer of SEDPI, facilitating “innovative meeting” with employees of Ramon Aboitiz Foundation, Inc., (RAFI) said that MFIs are in the best position to bridge the social and financial inclusion gap. “MFIs can apply as collection agents of government-mandated social services to augment current microfinance operations,” he said. “Forging strategic partnerships with government agencies enable both MFIs and government to achieve poverty eradication through financial inclusion. These are good client retention and client expansion strategies for MFIs.” he added.

MFIs benefit as collection agents since they earn up to 7% of the amount collected. “They can design savings products that enable the poor to save and afford payment to government social security services. Aside from the commission they earn, MFIs also benefit from this additional liquidity.” Rapisura explained.

Through savings product development and acting as collection agents MFIs are able to provide access to government social security services to the poor. This is an excellent opportunity for MFIs to attain financial sustainability while at the same time addressing social and financial exclusion.

SEDPI conducts “Innovative Meetings” to microfinance institutions. It is a service that aims to come up with social innovations – doing things differently that create both social and economic value. The innovative meeting service with RAFI Microfinance was held on November 12, 2015 in Cebu City.