Philippines
With a population of 85.2 million people, 26.5 million of whom are considered as poor, the demand for microfinance services in the Philippines is immense, particularly in rural areas where the majority of the population is concentrated. Rural banks and co-operatives started the concept and practise of servicing small loans as early as the 1950s. Between the 1970s and the mid 1980s the government mobilised rural banks, development banks and other government financial institutions to provide highly subsidised credit to the poor.
These directed credit programmes failed and resulted in big losses in resources. Since the end of the 1980s, non governmental organisations (NGOs) have become potent partners of the new and democratic government in the fight against poverty. These NGOs devised alternative options for non-collateralised loans and savings instruments for the poor. They provided individual as well as group lending, but used group pressure or group accountability as a collateral substitute. These microfinance NGOs were able to meet the needs of the entrepreneurial poor. In 1996 a group of microfinance NGOs in the Philippines initiated ‘Developing Standards for Microfinance Projects' to address the lack of capacity of Philippine MFIs to reach significant numbers of the poor on a sustainable basis. Growing interest in microfinance within the formal financial sector led to the establishment of the Microfinance Access to Banking Services (MABS) supported by the Rural Bankers Association of the Philippines. This programme helps rural banks to develop sustainable microfinance strategies that focus both on loans and deposit services. Government policies in the last decade brought about reforms to streamline microfinancing in the Philippines. The National Credit Council (NCC), established in 1993, crafted the National Strategy for Microfinance (NSM) in 1997 with the central vision of having a viable and sustainable private microfinance market providing low-income households and micro-enterprises access to financial services.
At present, there are three major providers of microfinance services in the Philippines: NGOs, rural banks and co-operatives. It is estimated that 500 NGOs and 4600 savings and credit co-operatives are engaged in microfinance. Many other types of registered co-operatives also provide some form of financial services or the other. As of December 2005, there were 195 banks engaged in microfinance. Four of these banks are microfinance-oriented thrift banks and another four are microfinance-oriented rural banks. The remaining 187 banks are rural and co-operative banks engaged in some level of microfinance operations ranging form 3% to 40% of their gross loan portfolio.
The MicroNed members active in the Philippines in 2009 are Cordaid (29 projects), ICCO (13 projects) and Rabobank Foundation (20 projects). ICCO is the general MicroNed country coordinator for the Philippines.
