Microinsurance: Abot-kayang klase ng insurance

Pinaka-essence ng insurance ang pooling of risks over a large number of similar units such as households, persons or businesses. Inispread natin ang risk para yung financial loss ay hindi lang sa atin tatama.

Insurance should not be treated as an investment

Hindi dapat pinagkakakitaan ang insurance dahil hindi ito investment. Para itong bayanihan, you are protecting against financial loss. Hindi financial gain ang habol dito kundi protection from financial losses. Nagbibigay ng proteksyon ang insurance ng katumbas na halaga sakaling mawala ang isang bagay.

Ang insurance ay involved with exchanging the uncertain prospect of large losses for the certainty of small, regular premium payments. Nagbabayad ang maraming tao at pino-pool natin. Ibig sabihin, nagbabayad tayo ng malilit para kapag may tinamaang isa sa pool na ‘yon ay may matatanggap to compensate for the loss.

Sa mga pagkakataong may biglang mangyari sa‘yo na hindi maiiwasan, kahit paano ay makakatulong sa mga mahal mo na may pagkuhanan sila sa ganyang pagkakataon. Yan ang insurance. Sana malinaw na malinaw yan.

Microinsurance defined

Ang microinsurance ay nakapaloob sa batas natin under RA 10607, otherwise known as the Amended Insurance Code. Ito ang definition na nakapaloob sa ating batas. It meets the risk protection needs of the poor. Ang target nito ay iyong mga nasa laylayan, mga low-income households kaya micro ang tinatawag diyan.

Ayon sa batas, ang premiums, fees and charges ng microinsurance does not exceed 7.5% of the current daily minimum wage. Sa PhP570 na daily minimum wage dito sa NCR, PhP42.75 ang katumbas nito. Kung gagamitin ang 260 days na average number of annual working days, hindi dapat lalagpas sa PhP11,115 kada taon.

Ito ang sinasabi sa ating batas na mga benefits na makukuha sa microinsurance: ang guaranteed benefits should not exceed 1,000 times of the current daily minimum wage. Katumbas ito ng PhP570,000 kung gagamitin ang parehong rate sa itaas.

Microinsurance for OFW family members

Very relevant ang microinsurance sa mga OFWs, dahil ginagawa silang “insurance” ng mga kamag-anak dito sa Pilipinas. Puwedeng ikuha sila ng microinsurance para hindi mga OFWs ang gagawing insurance policy.

Mas mura kasi ito. Magbabayad ng maliit na premium ang OFW para icover ang kanilang family members. Kapag may nangyari sa kanila, yung insured amount ay makukuha ng mga beneficiaries mula sa insurance company. Mapuputol ang dependency of family members sa OFWs.

Microinsurance for protection

So, there mga besties, ito ang detalyadong discussion ng microinsurance.  Laging tandaan na nag pagpaplano ng maaga ay isa sa pinakamagandang decision para kinabukasan mo at ng iyong mga mahal sa buhay.

Kinds of insurance

Pooling of risks over a large number of similar units such as households, persons or businesses ang insurance. Pinaghahati-hatian ng maraming ang risks – tulad ng kamatayan, pagkakasakit, aksidente, kalamidad – para ang financial loss ay hindi pasan lamang ng iisa kundi ng marami tao.

Term insurance
Upon death of the insured, may benefits paid to beneficiaries ang term insurance. May matatanggap na benefit sa mga beneficiaries kapag namatay ang insured. Ibig sabihin nito, kailangang may mamamatay (yung insured) para may tatanggap nito.  Gusto n’yo ba ang claim na ito?  Siyempre hindi, di ba? Kung sa akin lang, gusto ko buhay ako!  Pero yan ang reyalidad sa buhay na hindi maiwasan. That goes without saying, lahat tayo ay mamamatay. Mangyayari at mangyayari ‘yan, kaya dapat lang na paghandaan.  Sino ba sa atin ang hindi mamamatay?  Kung breadwinner at may mga dependents, dapat kumuha ng term insurance. Pero kung walang dependents, hindi kailangang kumuha ng life insurance.

Disability insurance Benefit paid to beneficiaries upon disability o pagkabaldado ang disability insurance. Ibinabayad sa mga beneficiaries kapag yung insured ay ma-disable. Again, ito ay para sa mga breadwinners at may mga dependents.

Credit Insurance
Kung may utang tapos, kumuha ng credit insurance para kapag namatay ay hindi maipapasa sa estate ang utang. Ang insurance company ang magbabayad ng utang mo, in case na may mangyari sa iyo.  Kaming mga may-ari ng financial institution na nagpapautang sa mga micoenterprises ay ikinukuha naming sila ng credit life insurance. So that in case na may biglang mangyari sa kanila ay hindi na kami tatakbo pa sa mga naiwang kamag-anak na maningil sa utang ng yumao.

Crop Insurance
Protection for poor crop yields and natural disaster recovery ang crop insurance. Ito ay ibinibigay kung mayroong natural calamities o di kaya’y natural disasters na tatama sa mga magsasaka tulad ng bagyo, pagbaha, drought, peste at marami pang iba.

Health Insurance
Medical coverage for illness and injuries ang health insurance. Kapag naospital o di kaya ay inoperahan, ang health insurance ang magkocover ng mga gastos sa hospital.

Property Insurance
Protection para sa damage, destruction and theft of household assets ang property insurance. Kung nagmamay-ari ng sasakyan, bahay, inventory ng business o warehouse, puwede itong iinsure.

Agrarian Reform Beneficiaries in Sultan Kudarat Receive Millions Worth of Agri-Inputs from DAR – IARCDSP

Pandemic or not, farmers in Mindanao tirelessly till the soil. This is why the Department of Agrarian Reform, together with SEDPI, continue to work while majority of the population are on a standstill to bring the most awaited agri-input investments from the DAR – Italian Assistance to ARC Development Support Program (IARCDSP) to our farmers. 

Five (5) Agrarian Reform Beneficiaries and Farmers Organizations in Sultan Kudarat received the first tranche of the promised agricultural inputs that shall kickstart their agricultural businesses supporting farmers in their Agrarian Reform Communities (ARC).

Josephine Balicaw, officer of Marguez United Irrigators Farmers Association (MUIFAI) in Pag-asa ARC, couldn’t help but shed tears when around PhP1.5M sacks worth of inputs were unloaded from a 10-wheeler truck and brought to what was once an empty warehouse. They have been preparing for this through the capacity interventions of SEDPI and now the moment has come for them to put theory into action. 

 

Josephine Balicaw, third from left, together with other officers and members of Marguez United Irrigators Farmers Association in Pag-asa ARC.

In the same way, Noria Gapor, officer of Sigay Ka Tamontaka 4 Association (SKTFA) from Kutawato ARC, was reeling with disbelief when she was told that all the sacks were to be offloaded and not brought elsewhere. “Akala ko ilang sako lang para sa amin. Lahat pala!” (I thought we’re only getting a few sacks of inputs but we’re getting them all!), said Gapor.

It is quite an emotional experience as well for our farmers in Naldan Creek Irrigators Association (NCIA) in Lambayong ARC, Kalayaan Communal Irrigators Association (KCIA) in Lutayan ARC, and Taguisa Agrarian Reform Beneficiary Multi-Purpose Cooperative (TARBMPC) in Lebak ARC. For these ARBOs, now that the inputs are here, they will be able to provide farmer-friendly agri-input financing, farm machineries rental, and hauling services to fellow farmers in their community.

This is one of the foreign- assisted projects being implemented by the Department of Agrarian Reform and funded under the loan agreement executed with the Government of Italy. This project involves not only millions worth of agricultural inputs, farm machineries and equipment, hauling trucks, but also intensive capacity building training on microfinance management tools and monitoring & evaluation systems spearheaded by SEDPI. 

There is a total of 35 Agrarian Reform Beneficiaries/Farmers Organizations involved in the DAR – IARCDSP Project covering Sarangani, Sultan Kudarat, Maguindanao, and Lanao del Sur Provinces. 

 

Challenges of investing in Bitcoin

Bitcoin is a digital currency that uses blockchain technology. It is located in a computer network, meaning it is only accessible through a network such as the Internet.

Bitcoin is unregulated

In the event of a grievance or dispute, there is no institution to turn to as the governing body of all transactions. The lack of centralized regulation means there is no way to verify legality of purchases or trades made online.

In January 2017, Bangko Sentral ng Pilipinas stated in BSP Circular 944 that it does not endorse Bitcoin as a legal tender. However, it provided guidelines for digital currencies. Although it did not outlaw digital currencies, it remained partial to the Philippines Peso.

Digital currencies holds promise in revolutionizing the banking system. However, the system still needs to undergo major changes.

Things to consider before investing in Bitcoin

When deciding whether to invest in Bitcoin, you need to consider the fact that no single institution or individual sets the price of Bitcoin. Traders – buyers and sellers of Bitcoin set the price or value of Bitcoin.

Central banks work to stabilize values because of the pervasive effects of currency changes. Unlike the Philippines Peso, the value of Bitcoin is not prevented from rising in value or dropping in value too quickly. The Bitcoin market sets the price based on trust.

Bitcoin wild swings

In January 2009 when the Bitcoin first came out, its value was virtually nothing. It first registered value a year later at approximately USD0.003.

Bitcoin was trading at USD750 in January 2017 and rose to its historic high of USD19,780 on December 17 in the same year. That’s a wild meteoric rise of 2,537% increase in value.

Bitcoin versus PHP

Currencies, such as Bitcoin and the Philippine peso, should be stable for it to be widely used. These should have the ability to provide confidence that the money they have could purchase a set value of goods and services over long periods of time.

One way to compare stability of a currency is to compare its exchange rate with another currency. The closer the change rate is to zero, means relative stability of the currency. Conversely, the farther the change rate to zero, means more volatility.

Let us compare the exchange rate of the Philippine peso and Bitcoin against the US dollar.

 

December 2015 December 2020
PHP to USD 0.0210 0.0208
BTC to USD 419.0000 19,383.0000

In the past five years, from December 2015 to December 2020, the change in value of the peso against the US dollar is -0.96% of -1%. Bitcoin, in the same period had a change rate of approximately 4,526%!

 

Stability of Bitcoin versus Philippine peso

Let’s dig a little deeper and check the change on annual basis for the same five year period. The table below shows the actual exchange rate of the peso and Bitcoin to the US dollar in the past five years on an annual basis.

 

2015 2016 2017 2018 2019 2020
PHP to USD 0.0210 0.0202 0.0200 0.0189 0.0197 0.0208
BTC to USD 419.0000 973.0000 1,2833.0000 3,729.0000 7,300.0000 19,383.0000

The table below summarizes the change rate of the peso and Bitcoin against the US dollar on an annual basis in the past five years. It clearly shows that the Philippine peso is far less volatile and is a far more stable currency compared to Bitcoin.

 

2016 2017 2018 2019 2020
% PHP to USD -4% -1% -6% 4% 5%
% BTC to USD 132% 1,219% -71% 96% 166%

Taking a look at the annual change rates of the two currencies, it is easy to see the stability of the fiat money compared to Bitcoin. Investors are more certain of the value of the Philippine Peso compared to the value of Bitcoin. Bitcoin is similar to a rollercoaster gone mad in its volatility.

Currencies should be stable

Because Bitcoin is so volatile, it promises high growth but it also poses the danger of slumping to extremely low values. For the typical person on the street, there is a need to be certain that the value of their money is retained throughout the years.

Furthermore, there is no certainty in how much an investor will receive from Bitcoin. Based on past data, an investor trading $1,000 into Philippine Pesos will receive between PhP45,000 and PhP50,000 in the next year. However, Bitcoin has no such certainty. On November 24, 2020, it was valued at PhP924,000. Two days later, it was valued at PhP821,000.

The certainty of fiat money can be projected into years whereas the volatility of digital currency means that days and even weeks can yield wildly different valuations. This makes it difficult to use Bitcoin for business and is part of the reason it has not been adopted into mainstream exchanges. Fiat money is more stable and predictable.

Bitcoin versus PSEI

The Bitcoin market is actually even more volatile than the stock market. Given Sir Vince’s strict guidelines for investing in the stock market, he poses even stricter guidelines for investing in Bitcoin.

The table below shows the volatility of the Philippine Stock Exchange Index (PSEI) with Bitcoin and the Philippine peso.

 

2016 2017 2018 2019 2020
% PHP to USD -4% -1% -6% 4% 5%
% BTC to USD 132% 1,219% -71% 96% 166%
PSEI -2% 25% -12% 3% -8.%

Bitcoin is not an investment

Bitcoin should not be considered an investment. Rather, treat it as a currency or a medium of exchange. If you base your investments on the possibility of large payouts due to extreme volatility, you are engaging in speculation.

Speculation is not a valid investment strategy because it is considered as gambling.

 

Cryptocurrencies: Where does Bitcoin come from?

Should you be investing in Bitcoin? Will it sustain its massive gains? Is it safe to invest in it?

A lot of people have become curious about Bitcoin again since its perceived value is near historic highs the past month.

What is Bitcoin?

Bitcoin is a cryptocurrency. Other popular cryptocurrencies include Bitcoin Cash, Litecoin, Ethereum, Binance Coin, Tron, and many others. They have their own exchange rates and places where they can be traded or purchased.

The controversial cryptocurrency mysteriously came into being as an invention or “gift” from Satoshi Nakamoto, who released white papers detailing the rules of Bitcoin. However, the individual or institution known by that presumed alias has not come forward to claim credit and to this day remains anonymous.

To put the origin of cryptocurrencies into context, the 2008 global financial crisis revealed the ugly truth about our imperfect banking system – oppressive and inaccessible to the poor. Many noted that only the rich benefit from the banking system.

The average person receives cents when they make deposits into the bank, and the only people who have the ability to access those funds are the rich. Traditional banking system is intrinsically capitalistic — favors profit that benefit the top 1% of society.

This gave rise to cryptocurrencies that attempt to challenge the current banking system. They were established to address inequities in favor of a secure, democratic and efficient financial system.

Crypto versus fiat

When we refer to cryptocurrency, this is only one type of money. Currencies like coins and paper money, also called fiat currencies, are printed by the central bank of each country. These central banks create the rules for using their currency.

For the Philippines, the central bank is the Bangko Sentral ng Pilipinas (BSP).  Other countries have their own versions and rules, such as the Federal Reserve in the United States; Reserve Bank of India; and the European Central Bank among others.

How does money gain value?

For example, the PhP100 bill costs about PhP3 to print, so why is it worth PhP100? That value is what we as a society have agreed on and trust to hold its value. We further trust that value because it was issued by the government and serves as its legal tender. It guarantees that the value of bills and coins are its face value rather than the amount spent to print it.

Role of central banks

Central banks determine how much money is in circulation and decides when to print and how many. All global currencies are guaranteed by their government as legal tender.

Because money issued by the government is guaranteed by the government, typically countries with stronger economies have more trusted central banks and have stronger currency value. Countries like Japan, Korea, U.S.A, as well as the United Kingdom, which are more developed, have “hard currencies.” In comparison, the Philippine Peso is not as strong (“soft currency”).

Central banks seek to stabilize the value of their currency. BSP doesn’t want the value of the Philippine Peso to be too volatile in either direction.

During the Asian financial crisis, the value of the peso devalued. The peso lost 45% and was devalued against the US dollar. It fell from PhP24.5 to PhP35.61 in a matter of two months. The worth of the money was essentially halved.

To avoid such volatility, central banks intervene in the market. They buy or sell currency in order to adjust the supply of money, which stabilizes exchange rates.

No central bank regulates Bitcoin

On the other hand, cryptocurrencies are decentralized. There is no governing body that regulates its prices and enforces its rules.

Cryptocurrencies are bought in peer-to-peer networks or exchanged. Theoretically, anybody could establish a digital currency so long as they have a peer-to-peer network. But whether or not the currency is trusted is another issue. The value of cryptocurrencies is agreed upon by those participating in the market.

The peer-to-peer network of cryptocurrencies is very similar to the Philippine Stock Exchange, or the stock market. There is a network specific to facilitating the exchange and purchase of each cryptocurrency.

Need for stability in Bitcoin

Rapid devaluation of currencies are avoided to establish trust and integrity among market players in the economy. Gradual increase and decrease in the value of a currency is preferred over wild swings which is a typical characteristic of cryptocurrencies.

Until Bitcoin reaches the trust level that would make it stable and immune to wild swings, its commercial use will be very limited. This will make it stuck as a speculative asset class that would go against its aim create a secure, democratic and efficient alternative financial system.

 

Blockchains: Where does Bitcoin come from?

If central banks print currencies, where does Bitcoin come from?

Blockchain

Bitcoin enigmatically appeared in the Internet. Satoshi Nakamoto, its unknown originator, used blockchain technology in order to create Bitcoin.

Blockchains are democratized “public” ledgers. Ledgers are the recordkeeping books that accountants and bookkeepers typically use. Thus, blockchains are one method of record-keeping.

Because blockchain is public, everyone can access it. Democratized means there is no single institution that administers the recordkeeping– there are many.

Conventional banking system

If a person in Dubai were to send remittance to the Philippines, their bank would first verify their identity and confirm that they received money to be sent to the Philippines. The bank in Dubai would then contact the Philippine bank to send the value requested.

The Philippine bank undergoes a similar process of verifying that money was received and that the recipient exists and is who they say they are. This process of record-keeping requires people and technology and incurs costs. The remittance sender is typically charged a fee and the remittance receiver often receives less than what was sent to cover these costs.

Banks act as middlemen in financial transactions. With this role, they charge fees which is expensive especially to low income groups, the majority of the population.

In the case of blockchain, there is no need to go through banks. It eliminates these expensive middlemen and allows direct transactions with anyone who have access to the technology.

Recordkeeping

To ensure correct recordkeeping, multiple devices are used in the blockchain around the world in anetwork. They simultaneously record and verify the transaction.

If even a single of these devices in the blockchain were not to match, then the entire transaction would be invalidated because it is no longer consistent is the network. This prevents fraudulent recordkeeping to occur and upholds the integrity and accuracy of the network.

Blockchain is efficient

Using blockchain through the internet, the middleman is eliminated, and transaction fees would be reduced. It would be a cheaper system compared to the current system of incurring bank fees.

Blockchain keeps your privacy

Typically, banks require proof of identification in order to proceed with transactions. This makes transactions traceable in order to prevent money laundering and financing of terrorist activities.

Contrary to conventional banking, blockchain is anonymous. The anonymity of blockchain means that there is no need to furnish proof of identity, as the blockchain goes through its own verification method.

However, scammers and criminals were the first to take advantage of the anonymity of cryptocurrency transactions. This resulted to many cryptocurrencies linked to illicit financial transactions that continues to paint cryptocurrencies in bad light.

Use of blockchain

Cryptocurrency is just one use of blockchain. As a secure, efficient, and tamper-proof method of recordkeeping, blockchain can be used to verify any type of interaction. Its uses could range from government use, insurance, international trade, health care, and real estate, etc.

Admittedly, blockchain is a very powerful technology that could be used for social good. However, when used by the wrong hands, it could also be equally used to the detriment of society.

SEDPI’s Group Yearly Renewable Term Insurance

SEDPI offers Group Renewable Term Insurance (GYRT) in partnership with CLIMBS, a service more catered to common Filipino households.

Term insurance provides protection against emergencies for a specific period of time. As lifetime coverage is not always needed, term insurance provides cheaper premiums with larger benefits. On average, investment-linked insurance schemes charge PhP80,000 in premiums.

For the same PhP1 million coverage, individual term life insurance premiums can be as low as PhP5,500 for ages 21-30 and cap around PhP21,000 for ages 51-60. SEDPI’s Group Yearly Renewable Term has PhP500,000 life benefits and PhP500,000 accident benefits. For ages 18-60, the premium is PhP4,000. This makes it even more affordable compared to individual term insurance policies. Due to its affordability, participation in group insurance is high.

Group insurance means that one contract is issued to cover a group of people. In this case, SEDPI is the policyholder. As a SEDPI member, one is entitled to access this group insurance program, even if they are abroad.

OFWs dealing directly with Philippine-based insurance agents are constrained by a lack of international selling licenses. Since SEDPI is the policyholder an directly deals with CLIMBS, OFWs can participate in the insurance program. Eligibility is determined by membership to SEDPI, and the process does not require rigorous underwriting due to the large number of members.

Yearly Renewable insurance indicates that the insurance protection coverage is active for one year. The annual premium must be paid in order to restart coverage for the following term.

The group’s performance based on mortality rates is evaluated each year. A higher mortality rate may mean a higher adjusted premium the following year, but a lower mortality rate than average can lead to a lower premium for the group.

SEDPI members in Mindanao have exhibited lower mortality rates, and SEDPI is in negotiations with CLIMBS to lower the premium for this group.

Enter keyword GYRT on Vince Rapisura’s Facebook messenger to join.

SEDPI’s Social Welfare Protection Program

SEDPI offers the Social Welfare Protection Program (SWePP), where members can avail microinsurance coverage for their families in the Philippines or themselves. SWePP is a consolidated microinsurance and social safety net program and provides security and protection to low-income SEDPI members.

As a hybrid form of insurance, it adopts formal, informal, and government social insurance programs. It partners with a formal insurance provider, has a damayan portion, and also partners with government agencies – Social Security System (SSS) and Home Development Mutual Fund’s Pag-IBIG or Pag-IBIG.

SEDPI serves to make government services more available to poorer communities. Low income households, which make less that PhP240,000 a year; microenterprises such as farmers and fisherfolks, and OFW family members are recommended to get SWePP.

SWePP provides (1) CLIMBS Life Insurance, (2) access to SSS and Pag-IBIG, and (3) Damayan for fire and calamity assistance. SEDPI is in talks with PhilHealth to include health insurance in the future.

SWePP benefits include up to PhP80,000 life and accident insurance from CLIMBS; and PhP5,000 for fire protection and PhP500 worth of relief goods from the damayan component. These benefits are offered for an annual membership fee of PhP720.

SEDPI is an accredited collection agent of SSS, meaning that payments can be remitted through SEDPI to be paid to the SSS. Becoming a member of the SSS and making one contribution entitles members to a PhP20,000 death benefit. The minimum contribution is PhP360.

For a one time payment or contribution, SSS provides lifetime benefit of funeral protection. With three contributions per year, members are eligible for sickness and maternity benefits.

If a member makes 36 payments before the age of 65, they are given lifetime coverage for disabilities as well as additional death benefits. If a member makes 36 payments, then up to the age of 60, they can also enjoy unemployment benefits.

Making 36 to 119 contributions will gain the benefit of a lump sum pension. Making at least 120 contributions will give the benefit of monthly pensions. Vince Rapisura, SEDPI Group President, recommends that members aim to make approximately 500 contributions to their SSS. More contributions equal higher pensions.

SEDPI’s is also an accredited collection agent of Pag-IBIG. When one becomes a member of Pag-IBIG, one contribution every six months provides a PhP6,000 death benefit.

Pag-IBIG is a complement to retirement funds of Filipinos because of its high dividends. As the national savings program of the government, members are eligible to receive their total accumulated value, which is equivalent to personal contributions, employer contributions, and your dividends. The returns are promising, and they compound.

Pag-IBIG also grants access to socialized housing loans at a 3% per annum interest rate, up to a maximum of PhP580,000. OFWs are charged market rate, but this amount typically hovers around 5% – 7% per annum. Up to PhP6 million can be loaned.

For its microfinance operations in Mindanao, SEDPI is planning socialized housing projects for its members in partnership with Pag-IBIG. It has already acquired 7.1 hectares of land and is in the process of acquiring 4 hectares more in the provinces of Agusan del Sur and Surigao del Sur. Construction and development are planned for 2021.

Never too small for hope (sari-sari store) – International Day of Rural Women 2020

Ms. Mary Jane Selecia, sari-sari store owner in Manguindanao, Philippines.

Mary Jane Selecia is a mother of five who lives in a rural community in Upi, Maguindanao in the Philippines. She runs a sari-sari store (corner store) in her community. COVID-19 has significantly affected their household and community.

To mitigate the spread of COVID-19, the government imposed community quarantine measures which includes physical distancing, movement restrictions, suspension of classes, and conduct of awareness campaigns on infection, prevention, and control measures (IPC). To cushion the socio-economic impact of the quarantine, subsidies were provided to households to complement their existing resources.

The government subsidy reminds Mary Jane that her household needs to maximize their savings. “My shop is bringing in one-third of the profit. I would earn around P4,000 (US$ 82) and now I am fortunate if I make P1,000 (US$20) a week. We invest P3,000 (US$ 61) a week just to keep the store running,” she said. Their household requirement for a month is estimated at PhP 9,000 (US$ 185) and was previously covered from the sari-sari store’s profits.

Borrowing money is becoming a vicious cycle for Mary Jane, “We have no savings and the income we make for our businesses go towards repaying our loans from relatives and friends. It seems like we are borrowing to pay over and over again,” she said.

Relief information is even more scarce when in the remote mountainous areas like Tinungkaan. The interventions in Mary Jane’s town were constrained to the Department of Social Welfare and Development (DSWD) conducting a survey to determine the poorest population in the village.

Mary Jane’s husband works as a Barangay Secretary and his work became an unexpected lifeline, “We did not need to apply for the Social Amelioration Program (SAP) because of my husband’s job. We are also beneficiaries of the Pantawid Pamilyang Pilipino Program (4Ps),” she explained.

The SAP has given qualified families P5,000 to P8,000 per month for two months. “We bought one sack of rice. The remaining money is additional capital for our store,” she said.

Farming has augmented the dwindling income of the household. “Our alternative sources of income are planting vegetables and raising farm animals. The small farm supports us while providing us with food. We are often forced to consume supplies from the sari-sari store,” she explained.

Stock in her store is already limited because of the limited supply in Noro, where she buys her supplies. Transportation cost for each of the trips to Noro is now P100, which is an exacerbated cost during the lockdown.

Everyday expenses have become a challenge for her community. “There is a decline in sales because many of our neighbors and customers do not have work,” she said. As the COVID-19 situation evolves, Mary Jane adapts to provide food on the table for her children and access to basic commodities in her community.

This case study on the plight of microenterprises in the Philippines was selected for the International Day for Rural Women (15 October 2020). It was originally shared across the Asian Disaster Preparedness Center (ADPC) platforms for the International Day for Rural Women

Here are the links:

Cambodia– Website: The Grain of the Matter
Link: FacebookTwitter

Link: FacebookTwitter

The Philippines
– Website: Never too Small for Hope
Link: FacebookTwitter

Never Too Small for Hope- Part III (Service Economy)

Cover

Federic Caneta / Resident of Cebu City – Furniture Maker 

The miter saw is silent in Federic Caneta’s workshop. The carpenter has a cabinet and a couple of shelves from commissions that were canceled because of the lockdown. His monthly projects vary with demand, “I make furniture on a custom-made or pre-order basis. Orders would range from P8,000 to P15,000 a month. There has been no demand since the enhanced community quarantine.” Never Too Small for HopeHis daughter, Rica Caneta, is a private school teacher. She has been helping him sell some of his works, “I made a hanging cabinet and a storage cabinet with the extra wood from the previously commissioned projects. I sold them for P2,500 and P3,000 respectively. Rica is working from home so she takes some time to promote my pieces through social media.” The average monthly salary for a carpenter is P16,800. Profits come from down-payments upon the order or balance payments upon delivery. Federic is concerned that he might not have supplies to continue the few online sales, “I had one piece that I was not able to complete. I was unable to obtain the needed materials due to travel restrictions. Some customers have also canceled their orders.”Never Too Small for HopeFederic’s son, Drake, is an animal handler and is supporting the family through these times, “My children are providing financial support we need. Our monthly expenses are usually P10,000 which was primarily covered through my business.” He has discovered the potential of taking his business online to help it grow, “I would need around P10,000 to buy materials for future orders. Online sales have made me realize that professional guidance in promoting our business would really help it expand.”

Chierrie Villarosa Marces / 29 years old / Resident of General Santos City- Pisonet 

When life gives you the Internet, make digital solutions for your business. Chierrie Villarosa Marces owns a small Pisonet (pay-by-the-minute computer and Internet shop). The lockdown has forced her to close her shop so she is selling goods through digital networks, “I have closed the pisonet since mid-March. I am focusing on online trading which includes buying and selling dry goods, food items, and other basic commodities.”

Online sales are the only means of income for Chierrie, “I make around P200 for every P1,000 I invest in online selling. I have been doing it for some time but even that has experienced a decline.” Her customers have stopped ordering dried foods, “Basic goods and essential commodities such as fruits and cooking ingredients are the priority now. We own a tricycle that we use to transport orders. Travel restrictions have made getting the goods from my supplier difficult.” NeverHowever, these sales do not provide stability for the pisonet. Filipinos spend the most time on the Internet around the world, averaging in at 10 hours per day. Her Internet business had expanded to printing, scanning, and photocopying services, “I would make around P25,000 every month from the pisonet. The expenses would be around P8,000 for the Internet and electricity bills. My direct suppliers have been generous enough to offer freebies on their services for now.”

Chierrie is struggling to make ends meet, “Our household expenses are about P10,000 every month. I am grateful to the government for providing us with rice, meat, canned goods, and other staples.” She is worried about restarting the business once the community quarantine is lifted, “I estimate that we will need at least P5,000 to restart the pisonet. It would cover two months of our Internet bill. We can manage the cost of computer maintenance and business equipment.”

John Cuvin / Resident of Naga City – Laundry Shop 

John Cuvin, his wife, and his mother are bonded in their dream to be business owners, “My wife owns a beauty salon and my mother has also had a number of businesses.” He established a laundry shop, JJS Suds Laundry Service as a lucrative business opportunity. Dry cleaning and laundry services ranked second in the service industry, providing business opportunities for 18% of entrepreneurs. John’s monthly expenses amount to P25,000 as he provides support for his family, “My wife and mother live in different provinces and I would pay for their utilities and my mother’s caretaker. I want to provide them with financial support.”

Never Too Small for HopeJJS Suds is a connection to the local community, “We would normally have 30 to 50 customers a day before the lockdown. We are lucky if there are five customers these days. Our daily revenue would reach up to P15,000 per day and that target is now P5,000.” John has had to cut corners to adapt to the new normal, “We had seven workers on a daily basis and now there are only two at any given time. The store is only open for limited hours because customers no longer come in late at night. It has led to slower service delivery. We have also started using electric fans.”

Basic supplies have become much harder to procure. His team promotes the use of dryer sheets when the fabric conditioner is short on supply- “Wholesalers have increased the price of fabric conditioner and liquid detergent from P10 to P11 per sachet. Sometimes we have to buy them from the local retailers for P17. The dryer sheets would be available for P500 per box but they are not locally available. We sell each sheet for P10.”Never Too Small for HopeCommunication is a constant with John’s regular clientele. The staff coordinate with customers on Facebook. John has also decided to bring the business to his regulars, “We also support our personnel needs by helping with the laundry and delivery. The shop currently relies on delivery modality to remain operational. Finding alternative solutions is necessary to keep the business running.”

Although business expenses were high, John would earn between P30,000 to P50,000 a month, “I spent around P120,000 which included the P50,000 for my staff’s salary on a monthly basis.” He anticipates support or policies in order to relieve the challenges they are facing, “It would be really helpful if the government could provide financial support to cover the salaries of our staff, and postpone rent collection or allow us to pay it in installments.”

Pureza Elopre Granario / Resident Naga City – Sari-sari store 

Opening Pureza’s shop is necessary for survival but also puts her family at great risk, “My husband and mother-in-law are both over 50. I worry that I might bring the virus home.” Work is scarce for her husband who is a plumber. “We are fortunate that profits from the store are still P800 to P1,000 per day.”

The green and white awning in her shop have been a part of her neighborhood’s fabric for years, “My supplies get sold easily. Before the quarantine, sales were mostly liquor and sodas. Customers now want canned goods and frozen foods which ensure that they can stay at home. Sales of phone credit are always in-demand and have gone up by 20%.” Pureza maintains is systematic when it comes to buying stock for her shop, “We have to go at a specific time and day so that we can avoid the long lines. There is still a queue but any steps we can take to be cautious are necessary.”

A savings and investment scheme supports small businesses from any shock in income flow. Pureza is fortunate to have enough to restart her business. She estimated that P10,000 was enough to restock her full inventory, “I was a part of the Social Amelioration Program (SAP) through which I received P5,000. We used the money to purchase additional inventory for the store.” Her mother-in-law has also contributed to the shop. “She gave me a P2,000 loan which I used to buy coffee, sugar, and soap.”Never Too Small for HopePureza’s shop is her saving grace during the uncertainty, “We need P9,000 for our household expenses and about P7,000 for the store.” The store is a constant for her. Its history in the community mirrors Pureza’s presence and determination, “We reinvest all of our profits into the shop. I’m obtaining inventory through other channels because I want to see my store grow despite the circumstances.”

At APP, we focus on the vulnerable sectors of our society in our development initiatives. MSMEs are among the priority sectors of our national chapter, Philippine Preparedness Partnership’s (PHILPREP) and its targets in local program activities. PHILPREP has developed these case stories to amplify the voices on the ground, especially during the COVID-19 pandemic. It seeks to amplify human stories to raise awareness on how disasters affect the most vulnerable communities.

This article was developed in partnership with the Asian Preparedness Partnership (APP). More information about APP may be found using this link: Asia Preparedness Partnership (APP).

Click the links for Part I and Part II of this series.