, April 8, 2004
By Carla Paras-Sison - Carpenter Mang Abner and wife, Nora, get orders from Manila shops and then make unique furniture out of driftwood. They started their business by displaying furniture samples in front of their home in Luisiana, Laguna.

"We got the capital for making the sample furniture through a P7,000 loan from ABS-CBN Bayan Foundation," said Mang Abner, a member of the country’s entrepreneurial poor.

The Bangko Sentral identifies the entrepreneurial poor as those in businesses with a capitalization not exceeding P150,000. The classification easily includes ambulant vendors, tricycle drivers, home-based dressmakers, and sari-sari store owners.

In addition, the annual per capita poverty threshold of P11,605 means a family of five must earn P4,835 per month to meet its food and non-food basic needs.

Based on the latest report (issued in October 2003) of the National Statistical Coordination Board, P4.3 million families or 26.5 million Filipinos– 34% of the country’s population– live below this threshold.


"Our foundation and similar micro-lenders have become true allies of the poor," said ABS-CBN Bayan director Reno Rayel. "Poor entrepreneurs are perennially in need of capital. With practically no assets to enhance their credit standing, they comprise the most lucrative market for small loans and are often exploited by loan sharks or usurers."

The foundation provides loans of between P2,000 and P19,000 to micro-entrepreneurs, payable in two to five months. It also provides loans to more advanced businesses in the range of P20,000 to P150,000. The loans are priced at 3% per month, quite competitive for a market that will not normally qualify for credit cards.

As complementary services, the foundation teaches member-borrowers to develop the habit of saving or building cash assets for growing their businesses and gives training in leadership, value formation, and business management.

"We see microfinancing as an activity for expressing corporate social responsibility. Instead of giving dole-outs as typical civic projects do, why not help people help themselves? It only costs P8 million to set up a microfinance branch. The amount will immediately benefit 1,500 families and even more as the funds are rolled over and the project made sustainable with increased membership and loan payments," Rayel said.


Since 1997, the foundation has disbursed cumulative loans of P1.57 billion to 22,627 member-borrowers, 91% of them women, in 113 municipalities through 19 branches. With a repayment rate of 96.8%, it has been able to sustain operations, rolling over P58 million in cumulative funds given by the Lopez group of companies.

An impact assessment conducted by Philippine Business for Social Progress on the ABS-CBN Bayan program in Bauang, La Union showed that 89% of households increased their household income, 79% increased their buying power, and 74% increased household savings. Children improved school attendance and perceived themselves as healthier compared to three years earlier or before the implementation of the program. School absences had been attributed to the lack of money.

The PBSP study also showed that the foundation has gained 89% of the existing credit market in Bauang from 1998-2001 and has influenced interest rates charged by competitors such as loan sharks, reducing annual rates by as much as 10%. Host communities also reported improved economic activities such as more capital for livelihood among women and increased business opportunities as well as more money available for family and emergency needs.

"The study affirmed that microfinance does save the day for poor entrepreneurs and their kin," said Rayel.

Reported by: Sol Jose Vanzi

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