Mindanao doesn’t have enough institutions to handle microfinance loans

The focus should be to provide support mechanisms — such as training and capability building — to existing microfinance institutions, said Ignacito Alvizo, director of the Mindanao Microfinance Council (MMC).

He said support should be given to cooperatives, associations, and non-government agencies that could also be conduits to microfinancing.

Alvizo, who chairs the microfinance institution Enterprise Bank, said it is not enough that micro financial institutions (MFIs) have the good intention of lending and the business interest. "They have to acquire the technology to sustain the business," he stressed.

He said there are only about 50 of more than a hundred MFIs in Mindanao who have the technology to run microfinancing. He added that around P800 million is available for microfinance in Mindanao through government financial institutions that serve as "wholesalers" for microfinance loans.

According to the MMC, Mindanao's microfinance industry has so far reached only around 400,000 clients. The MMC, composed of MFIs, rural banks, non-government organizations, cooperatives and cooperative banks, aims to reach a million clients by 2010.

Alviso said there is a need to improve the systems used by the aspiring MFIs or providers in order for them to collect loans they extend. "It is easy to extend the loan, but they usually fail in collecting it," he said.

Alvizo said there is also a need to breed MFIs who join the industry with a social conscience because there are many MFIs that do not have a "heart for the poor."

He pointed out that Enterprise Bank and other conduits of the National Livelihood Support Fund have devised a scheme to help small institutions like market vendors’ associations with trainings on capability-building. Alvizo noted that even if the associations are not yet qualified for microfinancing programs, the bank can already extend loans directly to members.

According to the People's Credit and Finance Corporation (PCFC), most of the “poorest of the poor” clients reached by MFIs in Mindanao come from highway towns and barangays.

Between July 2004 and March 2006, only around 448,531 poor households, or 31.6 percent of the total 1,419,516 poor households in Mindanao, have accessed microfinance loans. As of 2006, only 92 percent of towns have access to microfinance and around 67 percent of barangays are reached by small enterprise loans.

The council looks at saturating areas where the MFIs are already operating, at the same time expand their reach to the lower market (Walter I. Balane / MindaNews)