PinoyME Foundation

Microfinance brings about ‘transformation’ in rural areas

Adela Adapo's family was among those whose lives were transformed by the partnership of PinoyME and KPMFI.

“Above all, they are vehicles for restoring the dignity and self-worth of the downtrodden. They are strengthening the fabric of our society by restoring spirituality, national pride and core family values in thousands of humble homes,” she said.

The PinoyME Foundation (PMEF)—a social investment entity, which she established to catalyze the growth of microfinance—continues her legacy by striving to achieve these by sharing financial knowledge and capacity building services from experts, creating a market for microenterprises by promoting collaboration between fledgling businesses and corporations, and by providing funds to MFIs so that they may sustain the undertakings of microentrepreneurs.

PMEF was established to act on funding for MFIs, which is most critical, especially for those operating in agricultural areas where challenges are engendered by a “cycle of poverty”. In Mindanao, Ariel “Ayi” Hernandez and the Katilingbanong Pamahandi sa Mindanao Foundation, Inc. (KPMFI) brave these challenges with PinoyME as they exhaust all efforts to transform poor families into successful microentrepreneurs.

Rural poverty and the social investment fund

Fighting poverty in agricultural areas is a task fraught with challenges. The microfinance practitioner already confronts a frustrating dearth of access to resources—from potable water to medical services. But this is even exacerbated by the glaring mismatch between farmers’ seasonal incomes with expenses that need to be met every day.

Farmers only earn income during harvest time, and yet they must spend every day for food, children’s tuition, and other school expenses. To make ends meet, they borrow from loan sharks, and hence are already mired in debt long before they harvest their crops.

KPMFI addresses this challenge by bringing about opportunities for farmers to earn for their daily expenses. Ayi Hernandez says, “KPMFI intervenes, and breaks the cycle of poverty by introducing daily, weekly or monthly income for farmers.”

PinoyME also contributes to this effort through the social investment fund (SIF), which is pooled from public donations. The SIF allows PinoyME to support microfinance initiatives in higher-risk areas like in rural communities where stormy weather threatens harvests, and may affect the settlement of loans.

The livelihood opportunities brought about by the partnership of PinoyME and KPMFI include backyard broiler businesses for farmers in Gingoog City and the Municipalities of Claveria and Magsaysay, Misamis Oriental. This allow the farmers to earn an average additional income of P3,500 a month, which they can now use for everyday expenditure.

The more industrious and enterprising ones can bring in more as they receive an average of P4,000 per 1,000 chickens. KPMFI also ensures profit by linking the farmers with Sr. Pedro, one of the biggest lechon manok franchises in the country with over 250 branches nationwide.

“We fight the cycle of poverty by simply providing them opportunity,” said Hernandez. “If the farmer would have a monthly seasonal income, this will now be a surplus that one can save up or set aside for the education of the children.”

Transformation goes beyond income

Hernandez shares the belief of Tita Cory and PinoyME that transformation should be goal of microfinance. He explains, “Profit is important, but more important is how the beneficiary of the project was transformed along the way.

“It’s not just the income that you’re transforming; it’s the person. Kasi may nangyayaring ang laki ng income pero wala naman na-save. I think that’s understandable for people who live in poverty or a hand-to-mouth existence all their lives. When they get the money, they just spend it.”

KPMFI inculcates the values of discipline and an entrepreneurial attitude through “forced savings and strict monitoring of their performance.”

“Transformation is what will keep them going even after the intermediaries have left,” said Hernandez. “If we fail to transform then we have failed as intermediaries.”

“We will work until those we are helping have felt what it is to be disciplined growers, to have that vision to see that they can fight poverty.”

Sweet Success for PinoyME, Antique Cooperatives Partnership

Sugarcane farmers benefit from AFCCUI programs such as training and financial intermediation.

The seeds of AFCCUI were planted in 1963 when Mill Hill missionaries introduced the cooperative movement in Antique. Fifteen of 21 cooperatives joined hands in 1969 to establish AFCCUI to help strengthen cooperatives by providing services such as training, consultancy, financial intermediation, and networking. Its initiatives have generated a positive impact not only in the development of cooperatives, but also in lives of the members and other Antiquenos.

Aside from yielding profits for the farmers and banana chips producers, AFCCUI also has its own Microfinance Lending Program, which has empowered people like Richard Cajurao and Valentine Bolivar with micro-businesses that continue to flourish. Cajurao, who is married and has a child, acquired Php 3,000 from AFCCUI in 2007 as additional capital to start a sari-sari store. His business has expanded, and he has even bought a multi-cab as service vehicle. Moreover, his saving deposit has grown from Php 150 to 7,000.

Bolivar, who has two children, also availed Php 5,000 as additional capital for a sari-sari store in the municipal wet market of San Jose, Antique. The business has flourished, and has even allowed him to buy a house and lot.

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PinoyME, Petron Fuel Changes in Limay, Bataan

The Sulong KaBarangay volunteers.

Decades after the 2nd World War, the residents of Limay, Bataan are still seeing their share of struggles—this time caused by a pervasive poverty, which is atrociously widespread in the Philippines. Much like the heroes of Bataan, however, the community is taking a stand against poverty and creating livelihood opportunities with a little help from the Petron Foundation, Inc. (PFI) and the PinoyME Foundation.

Community-driven development

Luz Almazan, a community development specialist who is working with the Limay residents, explains the living conditions there: “A significant portion of Limay’s land area (about 26%) is still devoted to agriculture. Major agricultural produce is rice followed by vegetables, mangoes, bananas and rootcrops. Farming is still a source of income especially for long-time residents of the municipality. Some are also into livestock production, particularly hogs, poultry, and goats. Limay also lies along the Manila Bay and some residents rely on fishing for their livelihood. They are experiencing though a decline in the fish catch as a result of depleted natural resource.”

She adds: “While there are various opportunities for livelihood in Limay, majority of the residents within the Petron Bataan Refinery’s (PBR) fenceline barangays of Alangan and Lamo remain poor.”

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Accenture volunteers enable automation of MFIs

Every microfinance practitioner knows it requires more than funds to generate an impact in poverty alleviation. Lifting lives from poverty calls for dedication and patience—you have to be selfless in sharing your talents and knowledge.

It is hence inspiring to meet people like Alexander Anden, Jennifer Meily, and Mia Taroy—Accenture Philippines volunteers who are taking time off work to contribute their expertise to make microfinance a more successful tool against poverty.

Accenture is a global company that provides consulting services in business process outsourcing. Accenture has been active in the Philippines since 1985, and now employs about 20,000 staff in the country.

Alex, Jennifer, and Mia are the first batch of Accenture staff who will serve as pro bono consultants to MFIs seeking to automate their existing operations and client information. They are currently providing technical advice to help automate accounting and collection systems and data backup and documentation processes for Bicol MFIs to achieve greater efficiency.

They also served as the resource persons for the management information system (MIS) training.  MIS is a general term for the system of organizing and managing information about one’s business operations. The training seeks to provide MFI workers with a perspective on how to apply information technology to this essential aspect of microfinance operation.

Dan Songco, president and CEO of the PinoyME Foundation, explained:  “The training gives the MFIs a perspective on what it takes to have an automated system. PinoyME has conducted trainings like this before, but without the consultant we were not able to track its effect on the operations of the MFIs.”

“This is a unique intervention because no one else is doing this. We’ve had a lot of discoveries in our past training workshops, and one of them is how important the MIS is to both the MFI and the client. If you have a weak system, you would not know if your MFI is already suffering losses. That’s critical and what’s even more critical is computerizing that system. We’ve heard a lot of horror stories of MFIs hiring consultants to design software only to find out that it does not compliment their operations.

“The course helps them understand, ‘If you want to automate this is how to do it’. If we are able to help MFIs systematize their MIS, then we can really make the industry more efficient and we can make it grow faster and reach more poor people. The big MFIs can already afford to buy software and hire consultants. But there are only a few of those. The program targets the medium-sized MFIs who would not have the resources for automation. This is a strategic partnership with Accenture. We convinced Accenture that they can really make a difference in the microfinance industry if they partner with us in this program.” Read more »

Can Online People Power Fight Poverty?

DPC Yellow Pages presents a model of how corporations, MFIs, and consolidators work together in the People-Powered Markets Exhibit.

The unexpected visitor was former president Tita Cory Aquino. The women, upon noticing the PinoyME chairperson, scrambled to give her a decent seat. However, Tita Cory only gently asked them to ignore her and to continue their meeting. She was there to hear out what they had to say.

A woman asked shyly asked where she could get a loan of P2000 for a banana-cue kiosk. Another said she needed P5,000 to maintain her sari-sari store. As Tita Cory quietly listened to their plans, she became convinced that microfinance was the most potent tool to provide the women means to build more prosperous lives. With sufficient training and support, poor Filipinos can bring an end to poverty.

These were the lessons and the words she heard in Tatalon–words she gave voice to, and shared with businessmen, NGO workers, and others when she called out for support for her last advocacy–a new people power that would translate to better lives for more Filipinos, the People Power of Microenterprise Development.

“Over the past year, I have been inspired by the noble work of microfinance institutions which have reached out to the entrepreneurial poor, giving them the means to uplift their lives through honest and hard work,” she said in one of her last speeches. “The small but steady income from their microenterprises makes it possible for them to eat decent meals, to send their children to school and to nurture dreams of a better life.” Read more »