Tricycle Operators Get Green Light
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A new loan program called KAYOD designed for motorized tricycle operators has gotten rave reviews by its clients. Bembiano Estrada Jr. and Elvis Jose Huerte, drivers for five months and two years respectively, are enthusiastic about the program.
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"I am a fisherman but I needed a way to supplement my income when I am not fishing," explains Mr. Estrada Jr. "With KAYOD I am able to purchase a brand new bike for not much more than it would cost me to rent it. But after three years I will own it. I am very happy with the arrangement."
So far, the arrangement works well. "I farm for most of the day," says Mr. Huerte. "Operating a tricycle gives me the flexibility to work in my free time. I'm hoping to earn enough so that I can save beyond what is required of me."
Most tricycle drivers in the Philippines do not own the tricycle that they drive, and must pay daily rent. Although daily rent payments on a bike cost the same or only slightly more than loan repayments on the purchase of a bike, rarely does a tricycle operator have enough money on-hand to purchase a bike up front and eventually end the rent payment cycle.
The Rural Bank of Cantilan, Inc. (RBCI) in Surigao del Sur offers the KAYOD loan to tricycle drivers and operators as part of its microfinance operations under the MABS program. KAYOD pays for the purchase of a brand new tricycle (between P40,000 and P60,000), tools, and one-year's insurance for interested drivers. In return, drivers must adhere to a strict repayment plan, a mandatory savings plan and a voluntary savings component. The structured arrangement allows drivers to invest in their own bike and encourages them to save for future needs that may arise with bike maintenance.
Before the arrival of the RBCI loan, tricycle operators found it difficult to acquire the start-up capital needed to purchase a bike. With KAYOD, after three years of repayment, the client owns his tricycle.
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