31 August 2010
My name is Eric Miller and I had the pleasure of working with MABS this summer as I continue my business and public policy graduate studies at the University of Maryland, right outside of Washington, DC. You may have heard from me over the past few months – I wrote a number of blog articles under the title “Guest Blogger”. I wanted to share a few thoughts and reflections from this extraordinary experience.
I never heard of microfinance before starting business school last year. However, after attending numerous panel sessions and discussions on the topic, including a Muhammad Yunus speech, I began to believe in the power of credit in fighting poverty. But I wanted to see it for myself.
The first week of my internship, I attended the RBAP annual convention and the MABS national roundtable. What an introduction to microfinance in the Philippines! One of the first important lessons that I learned during that week is that microfinance is not just about providing micro-loans to underserved entrepreneurs. It is about including them in all aspects of financing – deposit services, insurance, housing loans, micro-agri loans and financial education. Another fascinating part of the MABS program is the innovative technology it has introduced with the help of its partner companies. For instance, GCash provides micro-entrepreneurs¬ with the ability to conduct their banking through mobile phones via SMS messages. This service is truly expanding the bank’s microfinance services. It is easier, cheaper and safer to make transactions using mobile technology. Finally, I immediately was impressed by the supportive regulatory environment that the Bangko Sentral ng Pilipinas provides the microfinance industry, encouraging innovation and private sector involvement.
One of the true highlights of the summer was visiting Cantilan Bank for its 30th anniversary celebration. I had the opportunity to go out in the field and meet clients who benefited from Cantilan’s microfinance services. I met owners of pharmacies, sari-sari stores and pawnshops who provide cash-in/cash-out services, making remittance transactions cheaper and more secure. I met housing microfinance clients who use micro-loans to build new homes or improve their existing homes, providing them with the confidence they need to develop as a small business owner. I met a farmer who uses micro-agri loans to help her family expand its farming business. This was truly an eye-opening experience, witnessing firsthand how so many are benefiting from the great work the bank is doing day-in and day-out. Thank you Cantilan Bank for being such gracious hosts!
I also visited Bangko Kabayan, a rural bank in the province of Batangas. We went to study how the bank has been so successful in their group lending program. I visited two center meetings on Thursday and we discovered three keys to the success of Bangko Kabayan’s group lending program: 1) providing a demand-driven product, 2) developing a wide range of products in its portfolio, such as educational and medical emergency loans, and 3) the center fund, a pooled account that each member deposits into weekly, used for parties, field trips, business development training and other events that keep members interested, educated and active. It was great to observe how microfinance is not only providing capital, but how it is empowering women and building communities.
I joined a team of MABS specialists down in Cebu for a group lending transition workshop. Market research has consistently shown that the group lending product must be adjusted to the current needs of microfinance clients. During the workshop, I had the opportunity to travel to two group lending meetings where the rural bankers had the opportunity to test out the market research skills they learned in the classroom. Based on the interviews, we learned that the borrowers did not like the tapal system (or being liable for the loans of others). Additionally, they thought the meetings were too long and they suggested that the bank offer them other financial products, such as insurance, education loans and the ability to access emergency loans. My dear co-workers even allowed me to run a few sessions during the workshop. It was a great experience all around.
Besides absorbing all of this rich knowledge of microfinance, my big project for the summer was compiling three years of training materials, presentations and other resources into an updated DVD toolkit. And boy there has been a lot of activity since 2007. I hope you find this toolkit useful.
I have had the opportunity to travel to many places across this remarkably beautiful country: weekends at the beaches of Bohol and Boracay, a mountain adventure in the rice terraces and caves of Banaue and Sagada, and other trips to Clark, Subic, Cebu and Surigao. I promise I will be one of the most vocal advocates of the Philippines and hope to convince my American friends to explore your country.
Muhammad Yunus once said that poverty is not a function of the person, but a function of the system. I am not sure I could have truly appreciated the meaning of this quote if I hadn’t worked in the Philippines this summer and visited the hard-working micro-entrepreneurs throughout the countryside that were able to build their businesses because of inexpensive access to financial services. We let poverty occur because we have this preconceived notion that poor people are not credit-worthy, that they are not responsible enough to bring them into the economy. Poverty will never be eradicated if we continue to think this way.
What shocked me most when I first arrived at my apartment in Ermita was the amount of poverty on the streets. Many Filipinos leave the provinces hoping to make a better life for their family in Manila, but just end up sleeping on the streets at night while overpopulating the city. This is why it is so important to build up opportunities for micro-entrepreneurs in the countryside – to encourage Filipinos to stay in the provinces and make them believe that there is opportunity for a better life right where they live. I applaud the success of the MABS program, the supportive regulatory environment of the Bangko Sentral ng Pilipinas and the 70 participating rural banks that have made the Philippines into a compelling case study of how microfinance can transform the lives of individuals from the small cities of the provinces to the most remote, underserved communities in the country.
John, Mely and the entire MABS Staff – thank you for this unforgettable experience and the opportunity to be a part of such an inspiring program.
Mabuhay ang Pilipinas!
My name is Eric Miller and I had the pleasure of working with the USAID-supported RBAP-MABS Program this summer as I continue my business and public policy graduate studies at the University of Maryland, right outside of Washington, DC. You may have heard from me over the past few months – I wrote a number of blog articles under the title “Guest Blogger”. I wanted to share a few thoughts and reflections from this extraordinary experience.
I never heard of microfinance before starting business school last year. However, after attending numerous panel sessions and discussions on the topic, including a Muhammad Yunus speech, I began to believe in the power of credit in fighting poverty. But I wanted to see it for myself.
The first week of my internship, I attended the RBAP annual convention and the MABS national roundtable. What an introduction to microfinance in the Philippines! One of the first important lessons that I learned during that week is that microfinance is not just about providing micro-loans to underserved entrepreneurs. It is about including them in all aspects of financing – deposit services, insurance, housing loans, micro-agri loans and financial education. Another fascinating part of USAID’s RBAP-MABS program is the innovative technology it has introduced with the help of its partner companies. For instance, GCash provides micro-entrepreneurs¬ with the ability to conduct their banking through mobile phones via SMS messages. This service is truly expanding the bank’s microfinance services. It is easier, cheaper and safer to make transactions using mobile technology. Finally, I immediately was impressed by the supportive regulatory environment that the Bangko Sentral ng Pilipinas provides the microfinance industry, encouraging innovation and private sector involvement.
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27 August 2010
Bangko mabuhay together with G-Xchange Inc. (GXI), a wholly-owned mobile commerce subsidiary of Globe Telecom, brings the benefits of mobile money and convenient remittance pay-out options in Cavite.
Using the GCASH platform, its branches serve as cash-in and cash-out facilities for customers who would like to take advantage of the convenience that mobile money transfer offers. Bangko Mabuhay is also an active pay-out outlet for GCASH REMIT, cash pick-up remittance service under GXI.
Bangko Mabuhay, registered as Rural Bank of Tanza (Cavite), Inc., has over P900M in assets serving thousands of clients in the province.
Bangko Mabuhay together with G-Xchange Inc. (GXI), a wholly-owned mobile commerce subsidiary of Globe Telecom, brings the benefits of mobile money and convenient remittance pay-out options in Cavite.
Using the GCASH platform, its branches serve as cash-in and cash-out facilities for customers who would like to take advantage of the convenience that mobile money transfer offers. Bangko Mabuhay is also an active pay-out outlet for GCASH REMIT, cash pick-up remittance service under GXI.
Bangko Mabuhay, registered as Rural Bank of Tanza (Cavite), Inc., has over P900M in assets serving thousands of clients in the province.
See full section printed on Philippine Star on August 27, 2010.
26 July 2010
A 12-member study group from the Bangko Sentral ng Pilipinas(BSP) led by Monetary Board Member Juanita Amatong and Dep. Gov. Nestor Espenilla, Jr. visited Cantilan Bank and Green Bank in Butuan City from July 23-24. During the visit, the BSP engaged the officials and staff of the banks in an open dialogue concerning the challenges in their microfinance operations and the regulatory areas that could help promote sound expansion of microfinance services among rural banks. Cantilan Bank and Green Bank are both participant banks of the RBAP-MABS program, which is supported by USAID/Philippines.
At the Cantilan Bank branch in Butuan City, Ret. Gen. Charles Hotchkiss, chair of Cantilan Bank’s executive committee, briefed the group on the bank’s microfinance operations and its agriculture microfinance loan product performance. Cantilan Bank is one of the pioneers in implementing the RBAP-MABS Approach to agriculture microfinancing, which began in 2005.
The study group visited Cantilan Bank’s micro agri clients engaged in the piggery business and processing of snack food items using available farm raw materials (rice, corn, banana, and cassava). This visit highlighted the need for loan amounts¬¬ and terms beyond the present regulatory limits of PhP150,000 and 12 months, respectively.
The visit by the BSP group to Green Bank focused on the bank’s mobile phone banking services and kiosk operations. Green Bank started offering mobile phone banking services using the GCASH platform in 2005. With over 40 branches and 90 kiosks nationwide, Green Bank is one of the top rural banks in offering mobile phone banking services to their clients. The field visit to two merchants that provide cash in/cash out services showed the study group the role that cash-in and cash-out merchants play in facilitating remote loan payments through e-money, hence, saving the borrowers the time and expense for transportation each time.
Meanwhile, the visit to two Green Bank kiosks (Other Banking Offices) located around the Butuan City area provided insights on the banking services demanded by rural bank clients, as well as the potential functions these kiosks can play in expanding full microfinance services including loans as well as micro-saving deposit servic
A 12-member study group from the Bangko Sentral ng Pilipinas(BSP) led by Monetary Board Member Juanita Amatong and Dep. Gov. Nestor Espenilla, Jr. visited Cantilan Bank and Green Bank in Butuan City from July 23-24. During the visit, the BSP engaged the officials and staff of the banks in an open dialogue concerning the challenges in their microfinance operations and the regulatory areas that could help promote sound expansion of microfinance services among rural banks. Cantilan Bank and Green Bank are both participant banks of the RBAP-MABS program, which is supported by USAID/Philippines.
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20 July 2010
CGAP - Mobile banking services are beginning to revolutionize the way people in developing countries manage their money, creating opportunities for microfinance institutions to substantially improve their services. Although widespread m-banking services are currently only present in a few countries, a new CGAP Focus Note, Microfinance and Mobile Banking: The Story So Far shows how microfinance institutions (MFIs) can link into existing m-banking services to make it more convenient and cost-effective for customers to borrow and repay loans. Still, for those MFIs located in countries without an existing m-banking service, most will find it too expensive, time-consuming, and complex to develop a service on their own.
The study, which examines the intersection of mobile banking and microfinance in countries both with and without existing m-banking services (Bolivia, Cambodia, Kenya, Malawi, Mongolia, Pakistan, Tanzania, and the Philippines), found that giving customers the flexibility to make loan payments and deposits using their mobile phones typically shortens group meetings and decreases cases of theft and fraud.
“Using mobile phones to automate payments can offer significant operational cost savings for an MFI if there is a large gap between technology costs and labor costs in their market, enabling them to lower interest rates for their customers,” says Kabir Kumar, co-author of the study.
Working as an agent in an m-banking system can also enable an MFI to learn more about how m-banking works without high investment costs, while helping them differentiate themselves from others in the market, and bringing greater liquidity to their branch locations.
Kenya offers some of the best examples of how MFIs are building on an existing m-banking service. In December 2009, MFI Faulu Kenya launched a service to link Safaricom’s successful M-PESA mobile money transfer service with Faulu savings accounts. Four months after the launch, about $60,000 was transferred between the two institutions each week and 30,000 customers were using the service.
Smaller MFIs can also work together to leverage an m-banking service. One such program is the Rural Bankers Association of the Philippines–Microenterprise Access to Banking Services (MABS) program. This USAID-assisted program organized a group of 60 rural banks, using their ties with more than a thousand small business customers to serve as resellers for GCash, a mobile payments solution developed by GXI, a subsidiary of Globe Telecom.
The study, which examines the intersection of mobile banking and microfinance in countries both with and without existing m-banking services (Bolivia, Cambodia, Kenya, Malawi, Mongolia, Pakistan, Tanzania, and the Philippines), found that giving customers the flexibility to make loan payments and deposits using their mobile phones typically shortens group meetings and decreases cases of theft and fraud.
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17 July 2010
Cotabato City, the seat of the ARMM Government in Mindanao, has a big market for microfinance as evidenced by the robust business activities within and outside its business district. The favourable business climate it experiences nowadays is the result of continuing effort exerted by the national and local government, the military, and more importantly, the unwavering resolve of the local populace to bring lasting peace and prosperity.
To date, there are 3 privately owned and 2 government-owned commercial banks active in the city’s commercial lending sphere. However, despite the city’s enormous potential for microfinance, only one bank offers microfinance products in the area – the Rural Bank of Cotabato, Inc. (RBCI) established almost 50 years ago. The only rural bank in Cotabato City, RBCI was established in 1961 for the primary purpose of providing the city’s public school teachers with access to salary loans and deposit services. It now offers loans for agricultural and commercial purposes, among others. RBCI joined the USAID-supported MABS Program in 2004 and in 2005, it began applying the MABS Approach to microfinance lending.
In order to gear up RBCI’s financial services for the large micro and SME (small and medium enterprise) sectors in Cotabato City and its environs, MABS reviewed RBCI’s microfinance operations on July 14-16 to evaluate its areas for improvement and training needs. Assisted by MABS, the bank drafted an action plan to guide the bank in moving towards further strengthening its banking and microfinance operations.
With assistance from MABS, RBCI hopes to provide better financial services to Cotabato City and its neighbors’ microfinance clients, taking its own share of bringing peace and prosperity in the once feared metropolis.
Cotabato City, the seat of the ARMM Government in Mindanao, has a big market for microfinance as evidenced by the robust business activities within and outside its business district. The favourable business climate it experiences nowadays is the result of continuing effort exerted by the national and local government, the military, and more importantly, the unwavering resolve of the local populace to bring lasting peace and prosperity.
To date, there are 3 privately owned and 2 government-owned commercial banks active in the city’s commercial lending sphere. However, despite the city’s enormous potential for microfinance, only one bank offers microfinance products in the area – the Rural Bank of Cotabato, Inc. (RBCI) established almost 50 years ago. The only rural bank in Cotabato City, RBCI was established in 1961 for the primary purpose of providing the city’s public school teachers with access to salary loans and deposit services. It now offers loans for agricultural and commercial purposes, among others. RBCI joined the USAID-supported RBAP-MABS Program in 2004 and in 2005, it began applying the MABS Approach to microfinance lending.
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Bangko Mabuhay together with G-Xchange Inc. (GXI), a wholly-owned mobile commerce subsidiary of Globe Telecom, brings the benefits of mobile money and convenient remittance pay-out options in Cavite.
