Microfinancing: Fund management for the poor and underprivileged

MANILA, Philippines — The existence of microfinancing institutions provides a financing system for poor communities to establish small and social enterprises or finance the basic needs of their families. Poor communities are typically not served by traditional banks or insurance companies. Thus, microfinancing serves as a tool that directly generates self-employment for poor communities to produce goods and services.

With the help of microfinancing, companies such as ASA Philippines give these communities cheaper and collateral-free micro credit, empower women, eliminate abusive money lenders, pressure the microfinance market to reduce rates and make loans affordable, and reduce the poor’s dependence on charity and grants. ASA Philippines has put a special focus on giving women livelihood opportunities to sustain their families.

ASA Philippines has funded projects such as: building sanitation systems in Apayao, Leyte, Maguindanao, Marawi; developing renewable energy sources in Bicol, Palawan, and Samar; and providing disaster response to Leyte, Zamboanga, and Marawi. From these projects, the communities have acquired financial education and exercised personal responsibility, thus ensuring the projects’ sustainability.

“While we received grants in the initial stages of our operation, it has always been the goal of the foundation to be self-sustaining and to be the best managed microfinance institution in the country. We have been able to accomplish this, expanding our outreach to poor communities in all 82 provinces in the country while relying solely on funds generated from operations and bank borrowings. We have not asked for any additional grant funding,” said ASA Philippines Foundation CEO Kamrul Tarafder. “We’ve created a system where it’s the poor who give their trust and confidence to us and we’re just helping them. We are just the fund managers of the poor.”

Presently, ASA Philippines has close to 1.8 million active clients served by 9,000 full-time staff, a significant number of whom come from clients’ families. Total client loan portfolio amounts to P18.9 billion covering business/enterprise, home, educational, water and sanitation, calamity or Qard Hassan (a short-term loan contract recognized by the Shariah or the Islamic law), and solar home system financing. The foundation has a 99 percent repayment rate from the confidence, trust and respect it has garnered from the communities it serves.