SOMETIME in the mid-80s, news about what (now Magsaysay awardee) Mhd Yunus and his Grameen Bank were doing started filtering back here.
From what I gather from talks I had with several people in the late 80s, interest about how such a venture could be set up here had piqued the curiosity of different people. One of them, if I remember, was Bruce Tolentino, then an Undersecretary or Assistant Secretary at the Department of Agriculture.
Without my realizing it, one other agency in government decided to get off the high horse and put up a similar program, albeit, with local flavor.
Remember my previous blog post about one of my favorite people, the late Mamita Pardo de Tavera? Well, it seems that the Department of Social Welfare and Development had already begun to explore the possibility of bringing the Grameen concept over here, minus the trappings of a bank. When the good woman transferred to the Philippine Charity Sweepstakes Office (PCSO) to serve as its chairperson, she brought along with her a trusted Undersecretary, Linda Valenzona, plus a coterie of trained social workers. Me, I only had toyed with the concept, and like a typical alpha male, kept mulling the idea over and over in my mind. These women did what I believe many women are best at: They just went ahead and did it. So, while drawing up the parameters for the online lottery project, I kept looking over my shoulder to see what these busy women were doing in this new field of microfinance.
The group in the PCSO set up a small fund in low nine figures — a much more intelligent and beneficial project than those blasted ambulances that almost never got used as ambulances — as a seed fund. The social workers were trained especially to work with poorer people in the rural areas. The basic model of using groups of five was retained, with each group or different sets of fives placed under a sponsoring NGO. The NGOs took over the task of training, monitoring, following up, etc.
Basic accounting skills and fundamental knowledge of banking procedures followed. The end result? Linda and her group were happy to report to Mamita that the groups all managed to pay back, or, even with slight delays, paid in full. And the amounts given out for projects were typically Grameen-sized: very small. Happiest were the NGOs when they were told that they could recycle the funds into new groups of five but with the provision that the present groups they were working with would serve as trainors.
I bumped into present PCSO chairperson Serge Valencia a couple of months back in birthday party of a mutual friend. When I asked him, he said they were not running the project anymore. He was surprised to learn from me that the social workers brought over by Mamita were still there, and could mobilize in an instant. I wonder if he will take the cudgels for this project.
June 16th, 2008 at 7:37 pm
[...] back, in one of my earlier blogs about microfinance in this country, I was reminded by a reader of the early pioneering work in this area by Dr Jaime [...]
December 11th, 2007 at 10:46 pm
[...] of the comments to my initial blog post on microfinance were very helpful indeed. First of all, allow me to state for the record that I have been absent [...]
December 5th, 2007 at 9:53 am
Sorry, I forgot to mention that my blog is “Questions and Challenges”, at http://melcartera.wordpress.com.
I raised other points about Philippine society in the particular post I’m referring to. All these points lead to my conclusion—we have to “short-circuit” the process!
Shalom!
Mel
December 4th, 2007 at 8:18 pm
I re-read the comment of Mel C and have to say that I totally agree with his or her observations. In the case of a southern based coop that functioned like a well-run NGO, we found that they were given some equipment precisely to produce soap, since they were in a coconut area. We did some quick computations and found that without the donation, they would not have made money if they had to amortize the cost of the equipment. At any rate, the coop did have many other undertakings that showed they were more than just recipients of largesse. The coop was making money overall, and it reminded me of the their potential given the existence of very big agri concerns in Europe that are actually coops, and which control huge swathes of their respective economies.
December 4th, 2007 at 8:13 pm
As the saying goes…we learn new things every day. From friends and interested observers. At least, I am very happy that this piece of microfinance, esp the kind that targets the poorest of the poor, generated interest. I say mea culpa and take my hat off to ASHI. That is why I put the word “possible”, because I sort of remembered that a couple of groups pioneered the Yunus model, but I had a typically senior moment and could not remember them. I salute the formal institutions that have taken up the cudgels for microfinance. My friend Ted Lineses, good going! I also got to talk to another classmate, Dado Jose of BPI, and queried him about their support for smaller banks going into microfinance. One of these banks is owned by friends of mine and based in Mindanao, the Green Bank of the Andaya family, that is a model for an institution run along professional lines. The comment on a govt institution like PCSO not being exactly the right institution to start or sustain such a program is correct, because the success of such projects is the ability to sustain and be faithful to it in the long term. When I was helping Chairman Roberto T Villanueva in that one year we had in the CCPAP, I tried my best to push funds into the NGOs instead of the traditional route through government. Some multilaterals and bilateral institutions agreed, but work had to be done, esp with home-country rules. At that time, we managed to get funds into PBSP and the budding Negros Development Foundation. But the Dec 89 coup cut all of these short, and many of the investment and funding commitments promised vanished into thin air the week after. Pity
December 3rd, 2007 at 11:44 am
Hi!
May I excerpt here my post in my blog, “How to Help Improve Philippine Society?” In that post, I suggested some ways by which representatives from business, education, etc., may short-circuit the current system whereby the poor are kept dependent on dole-outs from government and other institutions, keeping them malleable and thereby perpetuating the patronage system.
One primary shortcoming of NGO’s and banks currently involved in microfinance is that very VERY FEW customers are not really helped long-term, a great majority fail to grow, and many just go from one NGO or microfinance institution to another securing loans from one business cycle to another.
Here’s one point I raised in my blog:
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4) IMPORTANT: The training in entrepreneurship should not be just the old “Livelihood training programs” such as soap-making, candle-making, detergent manufacture, etc. These have been tried for years and found wanting, with very few exceptions. This is because the people who are trained in these livelihood skills all start producing soap, or processed meat, or candles, or whatever, all at the same time, and compete with each other and ultimately kill each other’s businesses quickly (while the NGO’s and mission organizations which conducted the livelihood programs feel self-satisfied with finishing their targeted programs for the year and send self-congratulatory reports to their foreign partners and supporters, complete with numbers and photos, to ask for money for more programs next year—while the people they have “trained”, and who have killed each other’s businesses, look for other “skills” and other NGO’s from whom they can borrow capital again, to try again and again…). The help should include the provision of solid and actual marketing contacts, establishment of cooperatives, etc. Through cooperative ventures, the people band together instead of killing each other (one possible setup would be for certain persons or families to take care of the soap supplies, another of the processed food supplies, another of the garments supplies, etc). Through marketing contacts (if possible, marketing CONTRACTS), the people are enabled to actually sell the products or services which they have been trained to provide. A big problem with current livelihood trainings is that the beneficiaries have no contacts, means, training, or skill to properly and profitably market their products and services, and they all compete and kill each other selling within the same community.
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Shalom!
Mel C.
November 28th, 2007 at 2:45 am
i have read yunus’ book. my mother was already doing this years before yunus’ book came out. when she died, she left us a small notebook with a list of borrowers. we decided to forgive the debts. her business died with her but someday, i will revive it.
November 27th, 2007 at 8:17 pm
Hi Digs,
Microfinance has gone a long way since then. Many NGOs and rural banks have embraced the Grameen approach to group lending. Of equal prominence is the growth of individual lending through the ASA approach (also from Bangladesh) and MABS or Microenterprise Approach to Banking Services. I have been involved in MABS since 2003 and have worked with over 20 banks in setting up their MABS operations with some degree of success. There is still so much to do but we keep plodding along.
November 27th, 2007 at 2:28 pm
I am interesting to start microfinance/business/loan for the poor family in my country.
I still learning by myself and reading the news online.
It can change the community if we can run regularly.
thanks
November 27th, 2007 at 10:06 am
PCSO, a “charity” sweepstakes office owned and run by government, can never be a sustainable microfinance institution. People will always have a perception of PCSO that will militate against a more commercial, market-oriented, financial relationship between “lender” and its “poor customers”.
November 27th, 2007 at 9:26 am
My son a councilor is very concerned about the many poor in our city of Navotas and believes that Microfinance is a powerful tool to help them based on the story of Dr. Yunus and his Grameen Bank. Plus it is now a US$9B industry that includes Citigroup and other giant banks as participants. We want to introduce this in our city and we need help. Could you help us out. Advise, leads and information will be a big help.
Thank you very much.
November 27th, 2007 at 8:36 am
From my view, the beginnings of microfinance intitutionalization in this country was in College, Laguna sometime in the early 70’s when Nobel Laureate Muhammad Yunus whose brainchild is now known as Grameen Banking was attending meetings as a member of the IRRI (Int’l Rice Research Inst.) Board of Directors. My college buddy, Dr. Generoso Octavio, under the guidance of Dr. Yunus, started a successful pilot research project using the classic Grameen Banking Approach which became institutionalized as Ahon Sa Hirap, Inc. (ASHI) with offices at 76 Eight Ave., Cubao, Quezon City. This is the pioneering microfinance NGO in the Philippines, now with more than 25,000 members, 130 staff in 14 branches nationwide and a loan portfolio of more than P220 million. All this started with 5 mothers taking credit of P1,000 each and dutifully assumming resposibility for their economic development. Some 2000 of these beneficiary members are on track to become millionaires. Their success are literally dramatic rags to riches stories, which should inspire anyone who hears about it through your newspaper and other media. Then all the nation will know the gospel to the poor is indeed being preached in the country.