062107: Cory Aquino-led foundation to hike lending to microenterprises to P5B

By Jennifer A. Ng

Reporter

SILANG, Cavite—A not-for-profit organization led by former President Corazon Aquino is seeking to help microfinance institutions (MFIs) increase their lending to microenterprises by 150 percent to P5 billion as a way of reducing poverty, particularly in the countryside. PinoyME Foundation said in a press briefing here Wednesday that while the microfinance industry in the country holds great potential, it has yet to fulfill its promise of becoming a potent vehicle for reducing poverty in the country. “Actually, funding is no longer an issue. What we need is for MFIs to scale up their operations in other areas,” said Jesus P. Tambunting, chairman of Planters Development Bank and a member of the board of trustees of the foundation. PinoyME noted that only a few big institutions, which account for around 70 percent to 80 percent of lending to the MFIs, can absorb the available funds. Tambunting noted that the market for MFI lending is now at P24 billion. The foundation also noted that most microfinance funds are not going to the poorest parts of the country and that resources have been concentrated in urban areas. To address this and encourage MFIs to scale up, PinoyME chairman Deogracias N. Vistan said the foundation has initially set aside P250 million to lend to MFIs, and other bulk lenders like commercial banks and thrift banks which are interested in going into the microfinance sector. Vistan said the funds were coursed through PinoyME by the Philippine Business for Social Progress (PBSP). The amount was sourced from the United States Agency for International Development. PinoyME will charge an interest rate of between 9 percent and 14 percent. “Apart from their financial needs, we are also ready to provide nonfinancial services to assist MFIs in becoming more effective in delivering services to the poor,” he said. Danilo Songco, president and chief executive officer of PinoyME, said the foundation is eventually looking to develop financial instruments like bonds and securities to create a robust financial market for the poor. PinoyME discussed in detail its microenterprise initiatve during the Silang Seminar sponsored by the International Rural Reconstruction Movement (IRRM). IIRR president Miguel Luz said the seminar this year brought together experts from Asia to develop rural enterprise programs that contribute to the growth of local economies.

 

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