A quasibank turns into a coastal resource manager

"It took time before our townmates listened to us, but they eventually did. Now, we have a cheaper source of credit that poor fisherfolk like us put up. Our cooperative helped us tide over our personal difficulties by funding our livelihood projects. It is now helping fishers and protecting our coastal environment."

Speaking in her native Waray, Lita Bergula, fisheries graduate and daughter of a fisher herself, spoke glowingly of the Kauswagan han Babatngon Multipurpose Cooperative (KHB-MPC), the five-year old cooperative-quasibank she helped establish as a special project of the Fisheries Resource Management Project (FRMP). The FRMP is a six-year project being implemented till end-2005 by the Bureau of Fisheries and Aquatic Resources (BFAR) with funding from the Asian Development Bank and the Japan Bank for International Cooperation.

KHB-MPC’s name literally means "progress of Babatngon", reflecting its ultimate objective. Bergula was the coop’s first president, and later became a community development worker assisting the coop.

At the moment, Babatngon’s KHB-MPC is the only source of legitimate credit for Babatngon’s residents. Engaged in quasibanking operations, it has helped fund alternative income projects for its poor fishers and farmer members by providing them with cheap and easily accessible credit. It is also engaged in social campaigns to promote fisheries and coastal resource management, having been born out of initiatives of the FRMP.

Through KHB-MPC, BFAR-FRMP provides Grameen Bank-type credit to the townís impoverished fishers. Credit gives economic relief to the poor who may want to help themselves, but are kept outside the banking orbit. Most commercial banks consider the poor, like fishers and farmers, as bad credit risks as they do not have stable and regular income-earning jobs, and lack assets like land and other property to cover their loans in case of default.

Grameen Bank-type quasibanks like KHB-MPC provide credit to small groups of poor people who agree to infuse their own capital and revolve credit among themselves, on the principle that the poorest get credit first, and successive credit for the other members shall be facilitated by repayment. In lieu of collateral, the group agrees to share in the responsibility of repayment, since if repayment fails, the credit delivery system fails, and no further credit service can be made available to the rest of the group. Grameen-type quasibanking builds on trust, confidence and peer pressure.

"There are not many choices in this town, as there are no industries to speak of. Few jobs are available, and we have to rely on ourselves and our resources to survive," explained Bergula. Fishing and farming are the primary means of livelihood in the town, and these activities stop when inclement weather visits this town normally crossed over by typhoons and strong winds.

Created under the auspices of BFAR-FRMP, through CARE Philippines, Inc., its former NGO partner, KHB-MPC’s primary targets are the fishers of the four barangays covered by FRMP. In a 2000 survey, there were 303 eligible fishers from the four FRMP-covered barangays, all potential members of the cooperative. This number counted both male and female fishers, of which 249 were full-time fishers, while 49 were part-time fishers.

Despite a shaky start and a hard time with cynics, the coop got off the ground. As of December 2003, the coop has already attracted 200 regular members, 116 of whom are fishers, and 84 non-fishers. By then, KHB-MPC has built up total capital worth P409,558.80 from capital infusions made by members. Of this amount, P402,328.33 came from the members’ share capital, and P7,530.00 from membership fees. CARE Philippines, BFAR-FRMP’s former NGO partner, had strengthened the coop’s capital base through a loan worth P1.5 million in 2001.

To generate and mobilize resources from within the community, and impress upon related sectors the value of savings and resource mobilization, the cooperative campaigned for members. Aside from regular members recruited from the fisherfolk, KHB-MPC accepts associate members who help infuse capital in three savings programs: kiddie, junior, and as voluntary savers. Most associate members are children of the regular members.

The cooperative also accepts associate members from the non-FRMP areas, such as the nearby barangays of Naga-asan and Malibago. "We want to increase our capital base, and spread to other areas the value of cooperatives as ventures for collective socioeconomic empowerment", said Ramon Delis, coop manager.

KHB-MPC, the cooperative-quasibank that Delis and Bergula helped set up, now serves as a cheap source of credit for both its fisher and non-fisher members. Regular loans from P5,000 to P10,000 are granted to regular members, payable in three to six months, at 3% interest. Express loans of P1,000-P2,000 are open to both regular and non-regular members, at 5% interest. Repayment may be done on daily or weekly basis. Around four out of five members have already availed of the coop’s lending services.

Coop members make use of their loans for alternative livelihood projects, such as operating a sari-sari store, buy-and-sell operations, tuba vending, and selling barbecue. Others use their loans in fish vending. The rest are engaged in such disparate pursuits as livestock raising, video tape rental operations, pedicab drivers or operators, peddling viands, or dealing in vegetables, among others.

With money borrowed from the cooperative, some members were able to expand their trading operations by increasing the volume of their items for sale, offering a richer assortment of materials, or by opening new sales outlets. Even fishers stepped up their fish trading operations with the money they borrowed from the cooperative.

Quasibanks like KHB-MPC strengthen themselves by building discipline and upgrading the leadership and management skills of officers and managers. Credit repayment has to be closely supervised, stressing on credit discipline and collective borrower responsibility and peer pressure, since it is only through repayment that the quasibank can ensure continuity of capital for lending.

"We had a repayment problem in the past, when some seven members refused to pay their loans. We asked the barangay leaders to intercede. When CARE Philippines decided not to apply for its third year of operations, some members refused to pay their loans. We threatened legal action, and now, some of them are paying back their loans," said Bergula.

Special investment is given to training to develop a highly motivated staff, so that the decision making and operational authority is gradually decentralized, and administrative functions are delegated to the members who are then trained to assume leadership tasks in managing the coop.

KHB-MPC officers went to the Lamac Multi-Purpose Cooperative, which is based in a remote mountain barangay in Toledo City, Cebu. From a fledgling coop established in 1992, this cooperative has since accumulated assets worth at least P38.3 million, with two branch offices in the Toledo City proper, and in another adjoining city. It has received five awards as a Samahang Nayon, and 17 awards as a cooperative from prestigious institutions like the Land Bank of the Philippines, Rizal Commercial Banking Corporation, Department of Trade and Industry. Livelihood Corporation, Consumers Union of the Philippines, and CARE Philippines.

Special safeguards are collectively adopted in quasibanking to minimize the risks that the poor confront. Unlike traditional banks, there is transparency in all quasibank transactions, and in really problematic cases, resolutions are made collectively. Members are expected to choose and manage carefully the livelihood activity for which loans were secured.

For instance, noting that many members went into livestock raising, the cooperative campaigned for the members not to allow animal droppings into the sea, but to collect them carefully into an appropriate pit, said Bergula. The members have been advised not to congest one livelihood activity, but to look for fresher, untapped areas so as not to compete with the other members.