A toast to financial inclusion

A toast to financial inclusion

ALL those who matter in the local microfinance industry converged recently at a Bangko Sentral ng Pilipinas (BSP)-sponsored summit not only to exchange views on ways to improve the provision of financing to sectors in the society that needed it most but also to celebrate the Philippines being named among successful countries in the field of financial inclusion.

At the National Microfinance Stakeholders Summit held April 5, nearly 300 microfinance industry leaders gathered including Rural Bankers Association of the Philippines (RBAP) President Cora Miller.

Microfinance generally involves the provision of credit to poor and low-income households who are normally turned away by banks and have limited access to credit and a secure and safe place to save.

Microfinance loans are often used to expand the activities of the economically active poor while deposit services help poor and low-income households save for the future and build their assets.

RBAP is a staunch advocate of financial inclusion. It launched the Microenterprise Access to Banking Services (MABS) in 1998 with support from the United States Agency for International Development (USAID) with the main goal of expanding access to financial services for Filipinos in the countryside by assisting the rural banking industry with its 2,700 branches and other banking offices to more effectively reach out and service more clients.

The RBAP-MABS program began in Mindanao, where it initially provided training and technical assistance to rural banks but has since expanded to support rural banks nationwide.

The program is now focused on assisting rural banks to expand the range of financial services offered to meet a range of important needs in the countryside. In addition to microfinance loans and deposit services, these new services include micro agri-loan strategies, housing microfinance services, microinsurance, money transfer and micropayment services, as well as mobile phone banking services.

RBAP expects a significant increase in the microfinance services being offered by their member banks especially under the positive direction of the current Aquino administration, which is showing its support for the private sector to expand access to financial services. To counter political patronage of the past, for instance, the Aquino administration indicated plans to revamp pro-private sector microfinance policies.

President Aquino has stated open support for the “National Strategy for Microfinance” that limited government institutions’ microfinance activities to wholesale lending to banks rather than encouraging or supporting direct government lending programs. This policy also supported a strong focus on the importance of savings services for the poor.

Such a government policy redirection is just in time as the microfinance industry which forecasts growth in deposits and various new initiatives such as agriculture-related microfinance products, microinsurance, and greater access to mobile money platforms.

“The advent of expanded financial tools such as providing savings and micro insurance to the unbanked sector will be drivers for microfinance growth,” BSP Deputy Governor Nestor Espenilla Jr. said during the Microfinance Stakeholders Summit.

He said the BSP is now partnering with other government institutions and stakeholders in developing and regulating these up-and-coming microfinance products.

At the summit, leaders of the industry highlighted issues such as preventing credit pollution and over-indebtedness as a result of multiple borrowings.

To achieve such aims, rural banks and other microfinance institutions have stressed the need for a comprehensive credit information system, the strengthening of consumer protection and enhancing financial literacy of clients.

Microfinance services, according to the latest BSP data, are offered now by over 200 banks providing microfinance services to over 900,000 clients with the entire rural banking industry now managing close to 5 million micro-deposit accounts with balances of below P15,000. These combined numbers demonstrate why rural banks are becoming one of the largest and most important providers of microfinance services in the country.

The recent summit was inspired by the consistent high ranking of the Philippines in an international survey of countries with microfinance industries by the Economist Intelligence Unit (EIU).

In EIU’s “Global Microscope on the Microfinance Business Environment,” Philippine microfinance was cited as best in the world in terms of regulatory framework, and second best performing in terms of overall business environment. The recent ranking of the country in the survey was an improvement from 2009 when the Philippines was number three in overall business environment.

The summit gained from presentations of two international experts, Dr. Alfred Hannig from the Alliance for Financial Inclusion that provided an international perspective on the importance of instituting policies that work and the value of peer-to-peer learning in order to help shape the global landscape for microfinance and financial inclusion, and Dr. Elisabeth Rhyne from the Center for Financial Inclusion at ACCION International who spoke on the microfinance client protection principles and the present the global initiatives of the Smart Campaign in promoting consumer protection.

The summit was capped by a ceremonial signing of the Practitioners’ Commitment to Safe, Sound, Sustainable and Consumer-Friendly Microfinance by the participants and a ceremonial toast to the industry by BSP Gov. Amando Tetangco.

Financial inclusion is expected to become a stronger philosophy for industry with the just concluded summit.

--
---------------------------------------------
CARLOS ANI - SEEDFINANCE Corporation - http://www.seedfinance.net
Email: carlosani@seedfinance.net
Landline: +63495010127 Cellphone: +639152919580
DEVJOBS - http://www.devjobsmail.com
PHILDEVFINANCE - http://phildevfinance.posterous.com http://phildevfinance.wordpress.com
CONSULTING - http://www.carlosani.com
My Clippings - http://www.myclipps.posterous.com
------------------------------------------