National Strategy & Framework for Microinsurance Launched

On January 29, 2010, the Philippine government launched the national strategy and regulatory framework for the microinsurance industry in the Philippines. In a ceremony at the Philippine International Convention Center in Pasay City, representatives from the government -- the Department of Finance, Securities and Exchange Commission, Bangko Sentral ng Pilipinas, Insurance Commission, Cooperative Development Authority and state health insurer Philippine Health Insurance Corporation -- signed the two documents which were produced by a technical working group composed of representatives of state agencies and non-government organizations in late 2009.

Finance Secretary Margarito B. Teves said in his keynote speech during the event that promoting, supporting and advocating microinsurance or low-cost insurance that provides the poor protection and relief against distress, misfortune or contingent event "is one invaluable step towards freeing our people from those chains of poverty."

The national strategy for microinsurance states the objective, the roles of the various stakeholders and the strategies to be implemented in improving access to insurance of the poor, the self-employed and their families. It also provides ways to encourage those who are providing informal insurance and insurance-like activities to register and to comply with existing regulations set by the government.

The regulatory framework specifies that commercial life and non-life insurance firms, mutual benefit associations, cooperative insurance societies, pre-need firms and health maintenance organizations, among others, which sell microinsurance, should be registered and licensed by the state.

Finance Undersecretary Gil S. Beltran said in an interview that they will strive to eliminate "fly by night" microinsurance firms and eradicate scams by “coming up with a uniform set of rules to be followed by regulators and microinsurance firms”.

A Swing to SPM!

Social Performance Management

Two of MCPI’s member-institutions, People’s Bank of Caraga (PBC) in Agusan del Sur and the Cebu Micro-Enterprise Development Foundation (CMEDFI) in Cebu, completed their social audit as part of their social performance management (SPM) last February and March 2009 respectively. Social audit is a self-assessment tool for MFIs – NGOs, cooperatives and rural banks - to help them diagnose their operations towards improving and eventually managing their social performance. Microfinance Center (MFC) in Poland and MCPI teamed up in this project of conducting MFI social audits with the assistance of individuals and institutions in MCPI’s SPM resource pool.

Between January to July 2009, MCPI and institutional partners have organized the following activities:

• Promotional session with the regional councils in Palawan: Mar 4, 2009
• SPM - Peer Learning Community Meeting in Tagaytay City: Mar 26-27, 2009
• Training of Trainers (TOT) on the Quality Assessment Tool (QAT) for SPM in Mandaluyong City: May 4-8, 2009
• SPM Strategy Workshop for MFIs in Cebu City: June 22-26, 2009
• Quality Audit Tool (QAT) Training for MFIs in Makati City: July 29-31, 2009

Social Performance (SP) is defined as the effective translation of an institution’s mission into practice, in line with the organization’s accepted social values that relate to reaching the poorer and excluded clients, improving the lives of clients and their families and widening the range of opportunities for communities.

On the other hand, social performance management (SPM) is identified as the processes through which an organization defines and formalizes its social goals, designs the systems to put these intentions into practice, measures actual outcomes and uses these results to refine systems and improve practice.

Outgoing MCPI Executive Director, Edgardo F. Garcia urges MFI leaders to take heart in their venture towards SPM. According to him, the double bottom line is not an impossible goal for MFIs but a logical course for mission-driven institutions. He likened SP initiatives to education. “SPM has costs, the outlay is long-term but you just know that it is a sound investment,” Mr. Garcia said.

Facilitating Microfinance in the Countryside

Product Innovations Fund (PIF)

The Product Innovations Fund (PIF) continuously calls for proposals to design and pilot test innovations in microfinance. Innovations that meet the criteria set by fund donors receive grants that enable MFIs to pursue their product development plan. The PIF was established primarily to encourage microfinance institutions (MFIs) to come up with ideas on how to serve the agriculture and fisheries sector and remote hard-to-reach areas and actually try out these ideas.

The fund is a pilot initiative founded by the ICCO (a development agency based in Netherlands), the Microfinance Council of the Philippines, Inc. (MCPI), the National Confederation of Cooperatives (NATTCO) and Oikocredit Philippines.

According to the fund’s criteria, an innovation may be a new product or service appropriate to a target market. Innovations may also include changes in product features and/or changes in the process of delivering a service. The application of a new technology is also an innovation. However, the innovative concept or idea needs to show potential that it would lead to steady increase in the number of clients served in hard-to-reach areas and among poor households engaged in farm production or agriculture-related activities.

To date, the PIF has given grants to Eclof Philippines and CARD for their innovation proposals. MCPI and its partners encourage practitioners to come up with innovative financial products and services that benefit the poor and urge MFIs to submit proposals until September 30, 2009. The funding is open to both MCPI members and non-member institutions.

Welcoming the Newest Partners of MCPI

Paglaum MPC, Rural Bank of Roxas and FicoBank

The Microfinance Council of the Philippines warmly welcomes its newest regular members: the Paglaum Multi-Purpose Cooperative, the Rural Bank of Pres. M.A. Roxas (ZN), Inc. and the First Isabela Coop Bank, Inc. The three institutions were formally accepted and declared as MCPI members in the 2009 Annual General Meeting.

Paglaum MPC is the second cooperative to be part of the network. It was established in 1992 as a livelihood arm of the Paglaum Community Development Foundation, Inc. (PCDFI), a child-centered, community-oriented organization. Paglaum MPC began as a micro-enterprise to assist the mothers of the poor children in the community of Plaridel, Misamis Oriental. From palay trading, the cooperative has ventured into a host of economic endeavors, encouraging the poorest in the locality to participate in different gainful activities. Presently, Paglaum MPC has an outreach of 18, 000, employee roster of 184 and Php 170 million in assets. Mr. Gadwin Handumon is its General Manager.

The Rural Bank of Roxas (RB Roxas) in Dipolog City was established in 2000 as a local response to the call for poverty alleviation in the country. As a microfinance program, it was organized to help the poor access credit and to promote savings awareness among people with meager resources. RB Roxas is the 2005 recipient of the Unwavering Commitment to the Microfinance Cause Award from the People’s Credit and Finance Corporation (PCFC). The bank was hailed for its effort to reach clients in the remote areas in the provinces of Zamboanga del Norte, Zamboanga del Sur, Zamboanga Sibugay and Misamis Occidental. Its present outreach covers 31 municipalities and it has almost 6,000 active clients. RB Roxas has 52 personnel spread in its six (6) branches. Its General Manager is Ms. Rosa Ruales Lim.

First Isabela Cooperative Bank, Inc., a pioneer in the field of cooperative banking, was established in the province of Isabela in 1976. To date, its operation spans four (4) provinces and nine (9) branches in the northernmost region of the Philippines. FICOBank’s microfinance program started since 1998 and has since grown to reach more than 1,000 active micro-borrowers with a loan portfolio of over Php30 million. FICOBank is a recipient of numerous awards: EAGLE Achiever in Microfinance Performance (USAID-MABS and RBAP); Outstanding Cooperative Bank in the Philippines, 1995 to 2007 (Landbank Gawad Pitak Annual Award) and Number One in Financial Performance Award (Bangkoop). FICOBank takes pride in having produced the Citi-Microentrepreneur of the Year Awardees in 2002 and 2007. Mr. Herminio Ocampo is the president and CEO of FICOBank.

Understanding the Crisis, Gearing up for Recovery

MCPI Annual Conference Tackled the Economic Crisis

"Overconsumption in the American economy brought about the present global economic crisis", said Dr. Cayetano Paderanga of IDEA, keynote speaker at the MCPI Annual Conference held at the Century Park Sheraton Manila last May 12-13, 2009 with the theme, Understanding the Crisis, Gearing up for Recovery. Dr. Paderanga, an Economics expert and Central Bank Monetary Board member for nine (9) years, depicted the economic progress of the US in the last two decades as bubble growth the explosion of which had world-wide repercussions.

MFI clients, Ms. Dolores Banaag (CARD) and Ms. Cloudy Rain Buendia (TSPI), reactors to Dr. Paderanga’s presentation, confirmed that the crisis has found its way to the Philippine microfinance sector. Their micro-businesses have experienced a fall in demand due to the high prices of goods and the lower consumption of their regular buyers.

Ms. Teresa Ganzon (Bangko Kabayan), Ms. Mean Ignacio (Kasagana-Ka Development Center) and Mr. Gadwin Handumon (Paglaum Cooperative), MFI presenters, said that there was a slight decrease in the number and sizes of microfinance loans for the period 2008-2009. However, it was also during the same period that these MFIs ventured to increase their outreach and to diversify their products.

Mr. Christopher Tan of Grameen Foundation (GF); Mr. Josaias Dela Cruz of Bank of the Philippine Islands (BPI); Mr. Edgar Generoso of People’s Credit and Finance Corporation (PCFC) and; Ms. Gondelina Amata of National Livelihood Development Corporation (NLDC) explained the possibility that funding may be delayed due to the crisis. On the other hand, they stressed that more credit windows and support facilities will be available to MFIs during these hard times.

The conference participants agreed that generally, there may be more opportunities than threats during the crisis. Challenges can be overcome given the players’ proper understanding of the economic situation and their prudent actions. Recovery may just be around the corner, chorused Dr. Paderanga and PinoyMe Foundation's Danilo Songco.

The Conference also took up continuing concerns in the Practitioners Learning Workshops (PLWs). These were Agriculture Microfinance; Leadership Succession; Over-indebtedness of Clients; Progress in Micro Insurance; Delinquency Management; Organizing Micro-MBA and; The Changing World of Governing MFIs. Now on their 6^th year, the PLWs are workshop sessions organized to facilitate exchanges on topics of interest among MFIs.