Micro-finance player sparks hope for small merchants

Amid the mounting complaints from micro-industry players on the unavailability of financial access, the government run People's Credit & Finance Corporation (PCFC) sparked hope for the sector saying there is hope for the "hopeless poor" as financial accessibility is being readied for the industry.

PCFC, one of the largest players in the micro-finance industry in the Philippines, is partnering with 16 micro-finance institutions in Cebu province, four of which are Non-Government Organizations (NGOs), five rural banks, and the rest are cooperatives which can help their members avail of the funding tool to start small business and start a decent livelihood.

In Cebu province, the entire micro-finance industry has released an estimated P700 million from January this year up to the present. About 83,000 active borrowers have been helped by the micro-finance industry in Cebu province, giving smaller interest rate charges ranging from two percent to three percent a month.

According to PCFC assistant vice president, AMG-Visayas Jose Rico C. Coligado there are a lot of opportunities for the poor to start a small business such as ambulant or mobile vending, and the likes, provided that a borrower can show interest to his proposed business or livelihood project.

Based on the Bangko Sentral Ng Pilipinas (BSP), a loan that would cost below P150,000 is considered as a micro-finance facility already. However, in Cebu, Coligado said borrowers are averaging a loan amount of P5,000 for a 90-day payment scheme.

"We provide hope to the 'hopeless poor', those people na wala na talagang mapupuntahan. Because our loans through our partner institutions do not require collateral, we are requiring interested borrowers to go through a one-month seminar (once or twice every week session), to understand that whole essence of micro-finance and their responsibilities for the loan, and other vital information," Coligado said.

Majority of the micro-industry players are resorting to 5/6 lending or high percentage interest rates lending offered by the "Bombay lenders" for an instant financial access.

Some however, do not mind if they are paying very high interest rates per month, or per day, as long as they get their financial fuel at the soonest possible time.

In legitimate micro-finance industry, Coligado said which deals with NGOs, Cooperatives, and Rural Banks, will not only involve a provision of financial resource, but it also aims to teach the poor how to handle a small livelihood operation wisely, including counseling for troubled borrowers.

In the Philippines, including Cebu, there are identified major sectors availing of their capitalization needs from micro-finance loan channels, these are petty and ambulant vending, service shop business, eload or prepaid business, bag repair, beauty shops or parlor, barber shops, sari-sari stores, and the likes.

Although these loans need non-collateral requirement, only a person-guarantor, the entire micro-finance industry in the Philippines enjoyed lesser overdue problems.

In fact, three of the PCFC partners in Cebu are posting 97 percent to 100 percent on-time repayment rate.

He stressed that as long as there is determination, walang mahirap na walang opportunity," he added.

The Cebu Peoples Development Cooperative (Cepedeco) hosted a Micro-finance event in celebration of the International Year for Micro-finance.

PCFC is operating under the umbrella of the Land Bank of the Philippines (LBP).

In Cebu, there are 22 micro-finance institutions operating, 16 of which are working under the PCFC.