By Dennis D. Estopace
Reporter
GIVING farmers and agricultural producers access to microfinance could greatly embolden Philippine society’s battle against poverty, according to Professor Ronald T. Chua of the Asian Institute of Management.
Speaking at the launch of a group organized by former President Corazon Aquino—PinoyME, a consortium of bankers, business, and microfinance institutions—Chua said 68 percent of families government surveyed in the year 2000 said their main source of income was from nonwage sources.
“There were only 32 percent of Filipino families earning P60,000 and less a month who said that their main source of income came from wages.” The other 68 percent who are into enterprises will apparently need social support via micro financing, the aim of PinoyME.
Citing the Family Income and Expenditure Survey by the National Statistics Office seven years ago, Chua said that of the families polled, 54 percent of those earning more than P60,000 a month cited their main source of income as wages. Only 10 percent of this income class said that they earn from agricultural entrepreneurial activities while 36 percent said income comes from activities not related to farms.
Among those earning less than P60,000, however, 37 percent said they earn from agricultural entrepreneurial activities. “This means that any microfinance initiative couldn’t ignore the agriculture sector.”
Chua noted that the data also reflects “the failure of society to provide meaningful and gainful employment to its people.” This is what he emphasized at the launching of Aquino’s PinoyME consortium, which is primed to help through microfinance some 5 million poor Filipino families with its P5 billion capital expected to be paid-in in the next 5 years.
Chua said that while current efforts to bring microfinance services—credit, savings, investments—to the poor are notable, gaps remain. “For one, very few MFIs venture to lend to growing enterprises requiring over P50,000 in capital, as well as in agriculture-related financing.”
Chua, according to PinoyME executive Victoria Garchitorena, is “the acknowledged guru of microfinance in the country.”
He estimates that some P2 billion to P5 billion in loans had been made available to some one to 2 million households. “But these are people with formal access to these services, located mostly in urban and peri-urban areas.” And the “loan design suits those with regular cash flow.”
“We have to change our mindset about the poor,” said Chua, adding “it is not true that they don’t save and, ergo, can’t pay. I can give you tons of evidence to prove that the poor are not helpless and should be avoided by lenders like banks have avoided them.”
Citing the 2004 poverty threshold of P13,113 monthly household income, Chua said that a household that borrows P5,000 could pay the principal at P200 a week or P40 a day on a 12-percent interest within a 25-weeks payment scheme.
In addition, he said assuming the household posts a net earnings a week of P100, the family could still posts an 8-percent increase in household income. “The poor are no different from you and me in terms of benefitting from access to financial services.”
PinoyME said there is “a need to make available P25 billion to provide average microloans of P5,000 to each of the 5 million clients” the group is targeting. The group’s brochure noted that some 300 to 500 MFIs—consisting of nongovernment organizations, rural banks, and cooperatives—remain inadequately capitalized to lend to more clients.
“The current reach of microfinance is a tiny drop in a big bucket,” said Chua.
http://www.businessmirror.com.ph/01242007/headlines03.html
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