Microfinance borrowers raise size of loans to P8,000 average

Manila Bulletin
by Lee C. Chipongian
June 18, 2014

The country’s microfinance sector on average release about P8,000 per borrower, a gradual increase compared to P6,150 per borrower seven years ago.

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. assures that the microfinance sector remains on an upward trend, with P8.1 billion total microfinance loans released to 1,017,351 local borrowers as of end of the third quarter 2013.

“The microfinance sector continues to grow and empower more microentrepreneurs,” said Tetangco during yesterday’s 2013 Citi Microentrepreneurship Awardees event, with the Microfinance Council of the Philippines.

“In other words, bank loans to microenterprises increased by 102 percent in seven years, while the number of microentrepreneurs who accessed micro loans from banks increased by 56 percent,” he noted.  Over the same period, average micro loans increased by 30 percent as well.

Tetangco remarked that in 2013, the accumulated bank savings of microentrepreneurs totaled P8.8 billion, about 525 percent more from P1.4 billion in 2006. This means the average deposit per microentrepreneur increased from P2,000 in 2006 to P8,650 in 2013, an increase of 332 percent in seven years.

“We realize these are cold figures. However, the stories behind these figures prove the power of microfinance to transform and improve lives,” said Tetangco.

Tetangco said the BSP continues to improve the regulatory environment for banks with microfinance operations. The most significant of these policy changes are the increase in the the average daily balance of microdeposits, microinsurance now cover families of microfinance clients and improved procedures in the product approval of housing microfinance loans and micro-agri loans.

Earlier this month the BSP also approved revisions to the way banks report microfinance and microenterprises loans to improve data capture. These should improve the quality of data reported by banks which would “serve as inputs in formulating policies to further enhance the present regulatory environment in support of MSME (micro, small and medium enterprises) lending.”

There are 186 banks offering microfinance services and products. Filipinos’ access to microcredit, said Tetangco, is the first step to gaining financial independence.

The BSP still face the challenge of financial inclusion especially since only 20 percent of Philippine households have bank accounts out of a population of 100 million.

Philippines in top five of insurance coverage

Mindanao Daily Mirror
https://www.facebook.com/MinDailyMirror
Posted May 29, 2014

A microinsurance agent-company reported that the country now ranks in the top five with insured informal sector at 21.37 percent of the 91 million Filipinos since the government launched the program through the Department of Finance (DOF) in partnership with the Asian Development Bank of the Philippines.

Cebuana Lhuillier MicroInsurance (CLMI) regional manager Eduardo Flores said the company alone has already issued 1.5 million certificates last March to its clients, mostly families of migrant workers and pawnshop customers, complementing the government’s program to promote social protection and financial inclusion.

CLMI, which is acting as broker for seven accredited insurance providers, also covered public utility vehicle drivers. It is targeting seven million of its clients in Mindanao.

Last month, CLMI opened its Mindanao office in Davao City as part of its expansion to reach out to more people outside of its branches.

”We would like to bring into the people’s awareness, particularly those who are in the financially-challenged and vulnerable sector, that insurance need not make a big dent on one’s budget,” Flores said.

In 2012, DOF’s National Credit Council advocated for microinsurance coverage among fishermen, drivers, construction workers and other informal income earners, who are touted as “goldmines” for microinsurance coverage if providers have the right product and right pricing.

According to DOF, the past years showed that 66 percent of the more or less 30-million employed informal sectors are not insured but, are source of millions for microinsurance companies. DoF sees the informal sectors as a huge market considering that 99.6 percent of the total number of businesses is micro and small-medium enterprises and 96 percent of these have workers on job contracts.

The poor are considered “high risk” market in terms of vulnerability to unforeseen circumstances such as natural calamities. Microinsurance is designed to address the poor constituents, who do not normally buy insurance products because it beyond their means.

One flagship product of CLMI is the Alagang Cebuana Plus (ACP), which is selling one million certificates per month, offering affordable personal accident coverage for only P25. Those who avail ACP are assured of a P20,000 accidental death , dismemberment and disability and P5,000 fire-cash assistance, valid for four months.

Last month, 10 families who were victims of the Isla Verde fire incident were awarded their cash assistance even if they have just availed of the ACP.

AYAN C. MELLEJOR/MDM