Micro-finance credit not enough to uplift poor–loan manager

DAVAO CITY, Philippines — The loans being offered by microfinance institutions are simply not enough to uplift the lives of the poorest of the poor, according to a ranking official of the Microfinance Council of the Philippines (MCPI).

MCPI is a network of 44 institutions working towards the rapid development of the micro-finance industry in the Philippines.

The group counts 36 practitioners and nine service providers as members and also partners with government agencies.

Ruben De Lara, MCPI president, admitted to reporters here Monday that the standard micro-enterprise loan alone, which their members offer, would not eradicate poverty.

“The poor always remains poor,” De Lara said.

De Lara defined microfinancing as loans extended to the poor, ranging from as low as P3, 000 or 4, 000 and as high as P8, 000.

“These are amounts that formal financial institutions will not entertain, but which the poor needed most,” De Lara said.

But De Lara said it was not simply enough to uplift the lives of the poor.

He said they would try to address these issues during a three-leg conference that started in Cebu.

It was during the Cebu conference when MCPI reached a consensus the need for MFIs to go beyond micro-credit to fully eradicate poverty, he said.

De Lara said the reality was that microfinance institutions (MFIs) needed to adopt a wider approach if poverty has to be eradicated.

“MFIs with financial services targeting the poor should provide more than just loans. This includes a multitude of other pro-poor products and services, both financial and non-financial,” he said.

Other interventions, De Lara said, include social services and infrastructure such as assistance in housing, education, health care, water and sanitation, alternative energy, physical community infrastructure, financial literacy and legal services.

Mindanao Microfinance Council (MMC) executive director Jeffrey Ordonez also admitted that poor people have had less access to microfinance credit.

This, he said, could be attributed to the unwillingness of some micro-finance institutions to touch base in conflict-ridden areas of Mindanao.

Ordonez said that in the Autonomous Region in Muslim Mindanao (ARMM) for example, problems on peace and order have made the region a very high risk area for microfinance lending.

“Since we started, we have always strived to provide micro financing in Mindanao, especially in areas less covered,” he said. “But we’ve been having problems in penetrating the ARMM, especially in such towns as Lanao and Maguindanao. We’re not that ready.”

“In the past, we have experiences of MFIs na di maganda (that are not good),” Ordonez said. “We also had a case of one MFI which collapsed in Marawi and another of an MFI official who was kidnapped in Basilan.” –Judy Quiros, Germelina Lacorte, Philippine Daily Inquirer