ADB cites good prospects in PH microfinance
By Ted P. Torres, The Philippine Star
Posted at 07/12/2013 8:21 AM | Updated as of 07/12/2013 8:21 AM
MANILA, Philippines - The Asian Development Bank (ADB) has cited as
"highly relevant, highly effective, high efficient, likely sustainable,
and significant" its microfinance project in the Philippines which it
funded through a $150-million loan.
In a report released yesterday, the multilateral funding institution
said it extended a $150-million loan for the country's Microfinance
Development Program in 2005. At the end of the program in 2008, the
number of active microfinance clients in the country doubled from 2.4
million in 2006 to 5.5 million. During the same period, about 2.6
million jobs were created.
The ADB said the program took a wider view of microfinance than simply
lending.
This included helping to increase the number of microfinance
institutions that offered micro-savings and micro-insurance services.
There were six mutual benefit associations (MBA) offering microinsurance
to 518,307 policyholders.
Data from the Bangko Sentral ng Pilipinas (BSP) indicate that there are
four million families responsible for microloans amounting to P41 billion.
"ADB helped the Philippines expand its use of microfinance and learned
some valuable lessons along the way," it said.
Microfinance, or the provision of financial services such as loans to
poor families, is recognized as a potent method of directly improving
the lives of those most in need. When managed correctly, these small
loans can be used to build small businesses and develop other
income-generating activities that have a long-lasting impact.
"The program helped make microfinance institutions in the Philippines
more sustainable by assisting in the adoption of performance standards
by government regulatory agencies and those doing business related to
microfinance," the ADB said.
These standards promoted legal and ethical practices within the
microfinance industry, whose clients can be vulnerable to exploitation.
Working in coordination with the Philippine government, the program
promoted the use of electronic banking, particularly with mobile phone
technology. This lowers costs and saves time for microfinance clients,
who often make multiple small loan payments a month. Rather than
physically visiting a microfinance office, or relying on a go-between,
the client can pay quickly and cheaply using their mobile phone.
It also helped create new legislation, bolster a government regulatory
agency and produced a consumer protection guidebook that helped improve
the oversight of the industry and while increasing the financial
understanding of clients.
There are now 200 banks and another 2,000 microfinance institutions
(MFIs) in the Philippines servicing at least seven million microfinance
clients.
The ADB said the Philippines is considered one of the countries in Asia
with a relatively developed microfinance industry that provides
financial services to the low-income sector.
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