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.