Social Enterprise Development Partnerships, Inc.

A total of 15 participants coming from several microfinance institutions in Northern Luzon attended the “Fundamentals and Methodologies of Microfinance” training held at the Nueva Segovia Cosortium of Cooperatives in Vigan, Ilocos Sur on January 28-30. The training is the first offering for 2008 of the Ateneo-BPI Partnership to provide capacity building services to microfinance stakeholders.

The participants gave the training resource persons a rating of 4.75 out of a highest possible score of 5.00. A participant from the Santo Domingo Development Cooperative said that “the topics were all delivered very well and the training is really of great help to our organization.”
In 2006, the Bank of the Philippine Islands and the Ateneo de Manila University started a pioneering partnership to build the capacity of microfinance institutions. The partnership aims to upgrade the technical capacity of microfinance institutions to enable them to absorb greater amount of funds used to reach out to a greater number of poor people; and provide immediately applicable tools to microfinance institutions for better implementation and operational policies. The partnership has two components. These are the conduct of regional trainings in pre-selected key cities within the Philippines; and facilitate the access of microfinance institutions to BPI’s capacity building loan.

Since the inception of the partnership, the trainings held in key cities of the Philippines were able to reach out to 88 microfinance institutions attended by 217 participants. An average of 20 participants attended the trainings.

To usher the new year, SEDPI conducted a five-day study tour entitled “Microfinance Immersion: A Study Tour of the Philippine Microfinance Industry” for Nigerian government agencies. The government agencies come from the Central Bank of Nigeria, Nigerian Deposit and Insurance Corporation, Ministry of Finance, and the National Association of Small and Medium Enterprises.

The participants visited five organizations that represent the various players in the Philippine microfinance industry – Bank of the Philippine Islands, Inner City Development Cooperative, People’s Crdit and Finance Corporation, Peace and Equity Foundation, and Siargao Bank.
The participants visited the headquarters of the Bank of the Philippine Islands where they were greeted by Mr. Josais dela Cruz, Vice-President for BPI’s microfinance unit. Mr. dela Cruz presented to the participants how BPI started its wholesale loan and capacity building loan for microfinance institution. He also presented different guarantee schemes that BPI has used in partnership with other foreign banks to secure the wholesale loans for microfinance. After visiting BPI, the participants visited Inner City Development Cooperative to learn more about how microfinance provides the grassroots access to financial services. They went on field to interview the management staff of the cooperative as well as interact with microfinance clients.

The associate director of the Peace and Equity Foundation, Mr. Ric Torres, presented to the Nigerians the various strategies and projects that the foundation used to reduce poverty using microfinance as one of the components. The President of the People’s Credit and Finance Corporation also interacted with the participants with the end view of sharing how the Nigerian government could set up a fund for microfinance institutions by sharing the Philippine experience. Ms. Lucille Sering, Vice-President of Siargao Bank, also shared her successes and challenges in running a microfinance program in the rural area.

Overall, the participants were pleased with the study tour and remarked that they have seen a lot of strategies that they could emulate back in Nigeria.

In December 2006, ARDCI’s financial performance was so dire, it was at the brink of collapse. In the same year, it has realized its fourth consecutive year of net losses. The morale of the staff is low and everyone was watching ARDCI that was once the envy of a lot of MFIs in the Philippines.

The Agricultural and Rural Development for Catanduanes, Inc. operates microfinance in four prvinces in Bicol, one of the poorest regions in the Philippines. In 2007, it forged partnership with SEDPI to turn around its ailing performance. SEDPI provided Technical and Mentoring Assistance to ARDCI in January 2007.

After braving inevitable change in the organization, ARDCI is now enjoying the fruits of its labor. The table below shows the drastic improvement in its performance.

Financial Performance	Dec 2006	Dec 2007	Nov 2008	Standard
Portfolio at Risk	27%	4%	2%	<5%
Adequacy of Loan Loss Prov.	41%	100%	100%	100%
Administrative Efficiency	38%	43%	41%	<20%
Operational Efficiency	47%	47%	45%	<30%
Operational Self Sufficiency	98%	101%	123%	>120%
Loan Officer Productivity	280	204	276	>300
Financial Self Sufficiency	92%	96%	111%	>100%
Return on Assets	-1%	0%	7%	> Inf
Return on Equity	-1%	1%	16%	>T-Bill
PESO Rating	46	53	86	85

Overall, the organization has experienced outstanding improvement in operations as evidenced by a number of milestones. These milestones are: (1) drastic improvement of the portfolio at risk ratio while maintaining the original value of loans outstanding; (2) increase in collection efficiency as shown in the increase in revenues; (3) decrease in operating expenses mainly due to the decrease in personnel costs in spite of introducing staff incentive schemes; and finally (4) breaking the trend of four consecutive years of net losses.

These improvements have not gone unnoticed. Donors and funders who deserted ARDCI in its turbulent times and ceased release of funds have now returned to support ARDCI’s financial needs. More importantly, other organizations are starting to look up to ARDCI as a model in transforming and improving microfinance operations.

All these were made possible due to the dedication and efforts made by management under the leadership of Mr. Danilo Tiburcio and his able support and operations team led by Ms. Alma Villanueva and Ms. Belen Teves. Without them, the achievements of ARDCI would have not been possible. Mr. Tiburcio’s management team led ARDCI in (1) installing information system that provides accurate and timely information crucial to decision making; (2) improved financial products; (3) rallied the staff to perform better; (4) arrested delinquency and installed policies, systems and procedures to prevent the recurrence of delinquency; (5) improved communication channels within the organization among others; and (6) tightened internal controls and internal audit.

Two years after having launched the Ateneo Diploma Course in Microfinance, 35 graduates were conferred the Diplon in Microfinance in December 2008. Most of the graduates are Nigerians and only 5 Filipinos were able to complete the Diploma.

The graduates we able to pass written exams and successfully completed projects to showcase their learnings in the Ateneo trainings.

It is expected that for 2009, more will be conferred with the Diploma in Microfinance. The first batch of graduates is a manifestation of Ateneo’s commitment in supporting the microfinance industry.

PEF is a non-stock, non-profit organization that provides financial support to projects that respond to the problems of poverty and marginalization. The Foundation envisions empowered communities that: have basic needs of life; are engaged in sociocultural and economic activities; and participate meaningfully in local governance. PEF addresses the needs of the urban and rural poor by providing civil society organizations that help them with development financing and technical assistance, and promoting appropriate technology and networking with all relevant stakeholders.

Through PEF’s support, SEDPI implemented a Training and Mentoring Assistance to four organizations in Southern Luzon. Also, a subsector research to identify the appropriate interventions needed to support coastal-based microenterprise was also implemented through SEDPI in Iloilo, Bohol, and Eastern Samar. SEDPI social entrepreneurs were instrumental in crafting project proposals to CORDAID and UNDP. PEF eventually won the bids and ended up with USD1 million from CORDAID to fund microfinance institutions in Mindanao and PhP20 million from the United Nations Development Programme to fund communities that adopt renewable energy. PEF also commissioned the services of SEDPI to conduct impact assessment to clients of three microfinance institutions that they have supported all over the Philippines.