Social Enterprise Development Partnerships, Inc.

SEDPI Assists Bank of Makati in Microfinance Start-up

Aspiring to extend its reach to the greater majority of Filipinos, the country’s largest rural bank in terms of assets—Bank of Makati, Inc.—is tapping into the microfinance banking industry this year. To further enhance its capacity as a microfinance institution, Bank of Makati partnered with SEDPI for an 8-day management training conducted from April 29 to May 9, 2013.

The Branch Manager Microfinance Training Program was held at the BMI principal office in Makati, attended by 19 participants. SEDPI delivered topics on fundamental principles of microfinance, delinquency management, character and capacity-based lending, financial analysis, and risk management. What is perhaps unique to SEDPI’s training program is its flexibility to suit the learning needs of its participants, catering even to those with minimal or no background in delivering financial products and services to small savers and, as BMI coined, the “new enterprising generation”.

All SEDPI trainers delivered interactive sessions. The discussions enabled an environment where participants can synthesize their own experiences and knowledge in banking and loans with newly imparted concepts. This was a crucial part in correcting some practices that are potential threats to organizational growth. Finally, all trainees underwent an examination to assess their technical skills in microfinance principles. Graduates of the program will receive a certificate of completion from the Ateneo de Manila University’s Development Studies Program.

SEDPI is proud to contribute to Bank of Makati’s mission in providing economic empowerment to more Filipinos. As its tagline reads, “Malalapitan, maaasahang kaibigan,” the bank’s new venture holds promise not only for the institution, but for its future microfinance clients as well.

SEDPI Wins Bid from Small Business Corporation

On April 23, 2013, the Small Business Corporation (SBC) awarded a project to SEDPI to conduct capacity building to two microfinance institutions. The project involves two microfinance institutions under the Rural Microenterprise Promotion Program (RuMEPP). RuMEPP is funded by the International Fund for Agricultural Development (IFAD) to promote entrepreneurship by developing existing microenterprises and developing new ones.

A component of RuMEPP is the Microenterprise Financing facility for Rural Development which is a nationwide wholesale financing program for microfinance institutions with focus on the 19 poorest provinces of the Philippines. SBC is a major stakeholder in the program as the wholesale lender of funds to qualified microfinance institutions.

The two microfinance institutions included in the project are Fatima Multipurpose Cooperative in Leyte and Bibak Multipurpose Cooperative in Kalinga Apayao. The two organizations will undergo capacity building under SEDPI. There will be two components of the capacity building – organizational appraisal; and technical and mentoring assistance

SSEVI Extends 0% Loan to GFC Farmers

In response to the needs of GFC farmers for provisions of farm equipment and greenhouses, SSEVI extended a PhP300,000 zero rated loan to GFC farmers. GFC is a social enterprise that implements community shared agriculture. It supports around 20 farmers in Capas, Tarlac by directly linking them to socially aware and health conscious consumers in Metro Manila. SSEVI provides technical assistance to GFC and at the same time an equity investor.

Through the loan, it is hoped that GFC farmers will be able to at least maintain their level of production even in summer when water is scarce and during the rainy season. It would hopefully enable them to adapt to climate change through the loan and technical assistance from GFC. The loan is zero rated since based on the cash flow analysis of the farmers personal finance, the farmers would not be able to bear the cost of funds due to low productivity. In the next one to two years, interest would be charged to the farmers once they get to the level of increasing their productivity. This would make the product design market-based and sustainable in the long run.

The loan product is flexible. There is no fixed amount of installment or amortization to the farmers. Instead, 15% of the value of their sales to GFC will be used as payment. This will ensure that the farmer will still have enough take home pay to provide for the needs of their households. With this system, the loan term varies from one year to two years depending on the loan size and the productivity of the farm. Loan collection is done every week when farmers deliver their vegetables to GFC.

Before loans were released, SSEVI conducted financial literacy training to the farmers to ensure that they have knowledge on savings, budgeting and debt management. The training was conducted on a makeshift venue with only a beach umbrella as shield from the sun. One participant said that she was sometimes distracted by the animals and birds around. In spite of this, most of them said that they learned how to budget better and realized the importance of saving for emergency. They also said that the SSEVI staff clearly explained the concepts. Denise Subido and Clarice Crisostomo, Senior Program Officer and Program Officer respectively, delivered the training to the farmers. The farmers gave them a perfect evaluation.

SEDPI Books PhP4M worth of Projects for 1st Quarter

Social Enterprise Development Partnerships, Inc. (SEDPI) started 2013 with an influx of clients. For the first quarter of 2013, the SEDPI booked a total of approximately PhP4 million worth of capacity building services. This is a third higher than the target of the social enterprise for the quarter. There were a total of eight projects that were booked for the period.

Organization	Project Description	Location
Bank of Makati	Microfinance trainings to the bank’s management staff in preparation for expansion	Metro Manila
Climate Change Commission Gesellschaft für Internationale Zusammenarbeit	Environmental conditional cash transfer Subsector research Financial literacy trainings	Siargao Island
Department of Agrarian Reform	Training and Manual Development for DAR lawyers	Metro Manila, Davao, Cebu, Cagayan de Oro and Rizal
Institute of Social Entrepreneurship in Asia	Case study of Center for Agriculture and Rural Development (CARD) Mutually Reinforcing Institutions through SEDPI CEO	Laguna
Oxfam International	Training on Making Markets Work for the Poor Subsector Research Social Enterprise Ideation for Water, Sanitation and Hygiene	Maguindanao
People’s Alternative Livelihood Foundation, Inc.	Organizational Appraisal to Improve Microfinance Operations	Sorsogon
Progressive Bank	Technical and Mentoring Assistance to Improve Microfinance Operations	Iloilo
Simbahang Lingkod ng Bayan	Anti-Discrimination	Baguio

The projects with the Climate Change Commission and Oxfam International account for approximately 70% of the total contracts. SEDPI typically allocates 60%-70% of total contract cost for administrative expenses. With the projects booked, SEDPI GSE hopes to contribute to fulfilling its mission; and to contribute to the body of knowledge in the development sector.

Social Return on Investment of SEDPI’s Financial Literacy Program for OFWs

One of the problems that most OFWs have encountered over the years would be having a hard time to return to the Philippines from what they originally planned. Most of them usually stay abroad over an extended period of time. The reason behind this longer stay abroad lies in the fact that most OFWs cannot seem to manage their financial resources properly. They do not accumulate enough savings. On top of that, many OFWs are overindebted. All these are pressing issues that prevent our fellow OFWs from coming home to the Philippines and be with their loved ones, even after staying abroad for more than 10 or 20 years.

To address these problems experienced by the OFWs, SEDPI developed a financial literacy program. This program aims to equip OFWs with the necessary knowledge to become financially independent individuals who are capable of realizing their financial goals both for themselves and their families. This is achieved by teaching them the importance of saving and investing, and the proper financial management techniques for them to achieve financial stability. SEDPI envisions this program to help the OFWs increase their savings, obtain health insurance for unforeseen circumstances, pay off their non-productive debts, invest their money and set up their own businesses after accumulating three to six months’ salaries worth of emergency fund.

This service provided by SEDPI is undeniably valuable to the OFWs and their families. Our study shows that after attending SEDPI’s financial literacy program, each OFW saves around PHP 3,850 more every month or about PHP 46,000 more savings every year; each also pays off an average of PHP 49,000 worth of debt each year, which translates to around PHP 7,000 of savings in interest per year; each also invests an average of PHP 87,500 per year in various investment vehicles, which leads us to an average earnings of around PHP 6,500 per year. Furthermore, each OFW provides around PHP 15,000 of salaries to employees per year by giving them jobs. These represent the social benefits that SEDPI’s financial literacy program provides to each OFW. This adds up to an average of around PHP 74,500 per year worth of benefits per OFW who participates in the program.

However, not all PHP 74,500 of benefits per participant is attributable to SEDPI. This is because there are other factors that might influence the behavior of these participants such as other seminars they may have attended. In the study, each participant is asked how much of each benefit can be attributed to SEDPI’s financial literacy program on a rating scale of 1-10 (with 1 being the lowest attribution to SEDPI and 10 the highest) After taking this into consideration, the average resulting benefits per participant are as follows: PHP 42,000 increase in savings per year, PHP 5,000 of interest saved per year from earlier debt payments, PHP 4,200 gained per year from investments made, and around PHP 3,000 worth of salaries generated per year, which translate a total of around PHP 54,200 worth of benefits per participant per year. If we multiply that by around 120 OFWs that SEDPI trains every year, we would end up would around PHP 6,500,000 worth of benefits per year that the financial literacy program provides to the OFWs and to society. If SEDPI maintains this number of participants for the next 5 years, it will generate PHP 32,500,000 worth of benefits, which translates to a present value of around PHP 27,800,000 after discounting it using a rate of 5.5%.

The result above is quite encouraging, and if the investments (around PHP 1.3 million) made for the program is taken into account, we can see that the financial literacy program is promising, as it yields us a social return on investment (SROI) of around 21 over the next five years (27.8 million worth of social benefit divided by 1.3 million of investment). This means that for every peso invested in the financial literacy program, it generates a social return of around 21 pesos in the next five years.

However, this SROI ratio is still low as compared to what the program really generates. This ratio just gives us a conservative estimate or the least amount of social benefit the program will generate. This is because there are still many other benefits that the OFWs get which was not included in the computations of the study. For example, if the OFWs are able to send their children to school because of the additional 42,000 pesos per year, it would have an even greater impact. Or, because the OFWs are now paying off their debts earlier, they experience less stress and less sleepless nights—this clearly is also a benefit for the OFWs. Furthermore, the OFWs are now able to invest their own money, which will probably be used when they retire. This stable retirement that can be brought about by these investment funds is also a benefit for them. Lastly, OFW participants are taught to avail of health and life insurances so that their savings will not be wiped out in case there are unforeseen events, which surely also has a benefit for the OFWs. All these benefits are not included in the study because they are quite difficult to monetize and the limited time that was given to the researchers. No matter, it cannot be denied that these benefits, if monetized, can greatly increase the SROI ratio that has been shown above.

With regards to the financial aspect of the program, the study took into consideration the cash flow related to the program. Cash flow is divided into two parts, cash inflows and cash outflows. When computing the cash inflow, training fees for the program and the indirect cash flow from the net income that the Sustainable Investment Fund (SIF, this is where some OFWs invest in). Cash outflows on the other hand are comprised of the cost of travel, cost of living of the trainers, etc. The values for these cash flows are the projected over the next five years. The study ended up with the net financial loss of about PHP 3,400,000, which is quite insignificant compared to the 27.8 million worth of benefits the OFWs receive.

Even though it seems that SEDPI is conducting the financial literacy program at a financial loss, this is still acceptable for the company as long as the social impacts are experienced by the OFWs. SEDPI generates financial income from the OFWs when the OFWs are ready to invest in SEDPI. This takes 18 months to two years. The OFW investment in SEDPI is leveraged with loans from commercial banks. For every peso that OFWs invest in SEDPI, SEDPI can borrow an additional four to five pesos. This increase the available funds for SEDPI to reinvest in microfinance institutions and social enterprises. Thus, even if the financial literacy operates at a financial loss in the short term, SEDPI greatly benefits in the long run.

Based from the study conducted, it can be seen that the financial literacy program indeed serves as a give back to the society. Amidst the losses, SEDPI still chooses to run the program because of the many endless possibilities for creating impact and its ability to touch people’s lives.

Service Learning Program Group (ACC 35, 2 BS ME)

Perry Ang
Jeanel Co
Annika Chua
Carolyn Ramis
Kyle Velasco

Financial Literacy for OFWs in HongKong

Last March 9 and 10, 2013, SEDPI provided financial literacy trainings to 68 Overseas Filipinos in Hongkong. The sessions were given in partnership with OFSPES, Ateneo School of Government and Wimler Foundation as part of the Leadership and Social Entrepreneurship (LSE) Program. The 2-day event was held in Fenwick Pier, Wan Chai, Hong Kong.

The training sessions focused on financial literacy specifically for remittance senders. The sessions delved on topics such as the stages of migration, importance of personal finance, managing expenditures, creating a savings plan, and socially responsible investments. Participants were taught the basics of financial education and some rules of thumb on financial housekeeping. They were also given readily available tools that they can use, such as personal balance sheet, cash flow, and financial planning worksheet. As anticipated, financial literacy guru and SEDPI President Mariel Vincent Rapisura shared his experience in his road to financial freedom and the lessons he learned while setting up his own social enterprise.

Although sessions on financial literacy had previously been delivered in Hong Kong, the training was so well received that it had to be repeated. The current batch of participants came from all walks of life – from Filipinos in Hong Kong for work, to Filipinos who have been awarded resident visas. This just proves that financial education is indeed important to attain one’s financial goals.

The one-on-one training event is part one of the financial literacy sessions. After this, the participants will be enrolled in a follow-up online course powered by Ateneo de Manila University-Development Studies and edu.20.

“Thank you very much to both of you! Nakaka-inspire po (It’s inspiring).” gushed one training participant after the sessions. Another explained that she never realized the worth of her assets until she was taught to write them down in their personal balance sheet. SEDPI Senior Program Officer Denise Subido joined Mr. Rapisura in the training event. The trainers were well received and were both rated excellent. One participant added that the event was, “a very enjoyable learning experience!”

CRBC Middle Managers Undergo Training on Financial Analysis

Last March 7 – 9, 2013 SEDPI trained the middle managers of Community Rural Bank of Catmon (CRBC) on Financial Analysis in Catmon, Cebu. The course aims to equip the participants with knowledge and skills that would enable them to format basic financial statements, compute for basic financial ratios, utilize these ratios to analyze financial performance of the bank and propose solutions based on the analyses. The training was delivered as a part of the technical and mentoring assistance that SEDPI provides to CRBC.

With plans to expand and deepen its outreach in their current area of operation, CRBC recognized the need to capacitate their middle managers on how to further make sound managerial decisions based on accurate analysis of their financial performance. Through this, the middle managers will be able to understand more deeply the impact of operational processes to their performance. During the three-day training, the participants were also introduced to the industry standard of a number of important financial measures such as portfolio quality, efficiency, profitability and financial structure.

One of the participants mentioned that the training allowed them to understand financial statements which they were not adept with prior to the training. Another participant also added that the activities, which made use of their own financial statements, are a great help in terms of providing a format and step by step actions that they can follow when they compute for succeeding financial performance of the bank.

Both trainers from SEDPI, Ms. Emilenn Kate Sacdalan and Ms. Enid Madarcos, received excellent ratings from the participants.

SEDPI Prex Talk on Discrimination

The Philippine Association of Administrators of Student Affairs (PAASA), Inc., in cooperation with Simbahang Lingkod ng Bayan (SLB) held the 4th Interactive Youth Forum. The forum’s theme was “Citizenship by Good Example (CGW): Engaging the Youth Towards the Promotion of Human Dignity and Peace Through Confronting Discrimination.” It was held on February 14-16, 2013 at the Venus Parkview Hotel, Kisad Road, Baguio City.

This forum tackled issues and concerns regarding various forms of discrimination. It will also be a venue for both students and student affairs practitioners to plan concrete actions to confront discrimination through engaged citizenship and youth empowerment.

SEDPI’s President and CEO, Mariel Vincent Rapisura, was a resource speaker for the event. He shared his experience and thoughts on gender sensitivity and the lesbians, gays, bisexuals and transsexuals (LGBT). Mr. Rapisura introduced the concept of Sexual Orientation and Gender Identity. A lot of times, LGBTs fall prey to discrimination because of their sexual orientation and/or gender identity. The many ugly implications of discrimination include stereotyping, invisibility, marginalization, stigma, inequality and persecution among others. He stressed that we live in a world of diversity. Sexual orientation and gender identity should not be used for unequal treatment and discrimination. These should be discussed. At this juncture, Mr. Rapisura thanks the organizers and PAASA that provided a venue for the youth to know about sexual orientation and gender identity.

Mr. Rapisura also shared things that the youth can do to combat discrimination. These include awareness raising; push for the development of inclusive (school) policies; organizing; policy advocacy; documentation; alliance building and networking; and mainstreaming. To make the presentation more personal and engaging, Mr. Rapisura shared his love story.