Microfinance loans up by 21% in 2019

MANILA, Philippines – Microfinance loans increased by nearly 21 percent to P27.3 billion last year from P22.6 billion in 2018 as more banks and microfinance-oriented institutions served the sector, according to the Bangko Sentral ng Pilipinas (BSP).

BSP Governor Benjamin Diokno said a total of 154 banks with microfinance operations served more than 2.4 million microentrepreneurs nationwide, 21.3 percent higher than the two million customers served in 2018.

“The BSP continues to play a supportive role in the promotion of inclusive economic and social development objectives of the government through its advocacy programs aimed at promoting financial inclusion,” Diokno said.

Based on the report on regional economic developments in 2019, the BSP said microfinance service providers increased by 19 percent to 2,405 last year from 2,022 nationwide in 2018, while the number of borrowers inched up to 1.98 million from 1.95 million.

In terms of the share to total microfinance loans, Calabarzon region or Cavite, Laguna, Batangas, Rizal and Quezon cornered 69.1 percent or P18.9 billion of the total loans and 80.5 percent or 1.9 million of the total borrowers.

Microfinance clients grew in some regions, particularly Central Visayas by 72.9 percent and National Capital Region (NCR) by 65.5 percent, but declined in Eastern Visayas by 49.6 percent and Central Luzon by 22 percent.

Microfinance refers to a broad range of financial services such as deposits, loans, payment services, money transfers and insurance to the poor and low income households, generally for their microenterprises and small businesses, to enable them to raise their income levels and improve their living standards.

The typical clients of microfinance are the economically-active, entrepreneurial poor. These include household-based entrepreneurs, farmers, rural artisans and individuals in the informal sector.

These people will be able to sustain and enhance their livelihood if they are provided with effective access to a wide range of financial products and services.

Since 2000, the BSP has established an enabling policy and regulatory environment for sustainable microfinance to flourish in the banking system.