Countryside lending

Among farmers, fisherfolk, and rural women, it is called the self-reliant team or SRT model. SRT is the Philippine adaptation to the Bangladesh-initiated Grameen microfinancing model implemented by the Quedan and Rural Credit Guarantee Corp. in the countryside since last year.

"Beyond being able to introduce positive lending models from other countries in the Asia-Pacific region, what is important is to adapt these to different cultures," said Quedancor president Nelson Buenaflor, who began designing the SRT in 2000 when he was still executive vice-president. Buenaflor holds the SRT copyright issued by the National Commission for Culture and the Arts.

At the heart of SRT is the grouping of borrowers into self-reliant teams, each team made up of at least 15 members. A group leader is chosen. It is the group leader who pays in lump sum the individual loans of the members through post-dated checks payable to Quedancor. In turn, the group leader collects from the team members upon harvest or when the team members make money from their livelihood ventures.

To date, SRT’s repayment rate is 98% for hybrid rice farmers and 85% for hybrid corn farmers in spite of the El Nino phenomenon. The average repayment rate has increased from 70% to 80% in previous accounts to 85% to 98% among the 350,000 enrollees in SRT.

In the last year, Quedancor has increased its volume of loans from P200 million to P1.5 billion through its 45 district or provincial offices and 14 regional offices.

Commercial loans

"We have seen a dramatic increase in the level of confidence in countryside financing among commercial banks, which have transformed their views and perceptions of small borrowers from high risk and dole out takers to conscientious borrowers," said Buenaflor. Allied Bank Corp. has committed P1 billion for agricultural lending. Philippine Veterans Bank is chipping in P150 million and Land Bank of the Philippines has set aside P800 million. In the final stages of negotiation is a P200 million rural lending package by United Overseas Bank Phils .

As of early June, Quedancor has already lent out P1 billion of its low-end target of P3.3 billion. A high-end loan target of P5.7 billion includes the rediscounting funds of commercial banks for small accounts.

If the 2002 lending profile is followed, 40% of this year’s loans will go to the hybrid rice and hybrid corn programs of the Department of Agriculture and 10% to the high-margins seaweed program. The balance will be lent to livelihood programs, including an income augmentation loan program for government employees, as well as livestock programs.