Microfinance opens gates for the entrepreneurial Pinoy

A P5,000 loan and a lot of hard work were all it took for Enrico Fojas to stop searching for overseas work and transform a small animal feeds business into million peso enterprise.

In 2008, Enrico’s brother suggested that he embark on a small business so he wouldn’t have to leave his family to work as a caregiver abroad.

Enrico heeded the advice and decided to start a business, Cookie Mill Feeds in Hagonoy, Bulacan.

He went around the neighborhood and asked bakeries for their stale bread, which he processed into animal feeds that he then sold to the community’s farmers and fisherfolk.

To grow the new business, Enrico took an initial loan of P5,000 from microfinance firm Urban Program for Livelihood Finance and Training (UPLIFT) Philippines Inc.

Because it uses natural products, Cookie Mill offers animal feeds at a cost 60 percent cheaper than branded products, providing affordable feeds.

With prices that were hard to match, Cookie Mill soon turned into a million peso business, raking in some P2.7 million net profits annually, of which half is reinvested to grow the enterprise further.

Apart from the financial rewards, Enrico Fojas’ business employs nearly two dozen workers.

“’Yung loan nakatulong po sakin na pandagdag sa puhunan para mapalaki yung negosyo,” Enrico, winner of the 11th Citi Microentrepreneurship Awards, said in an interview during the awarding ceremony Tuesday.

Enrico is one of the over a million clients of Philippine-based microfinance institutions, which extend loans to individuals wanting to start small businesses, like mom and pop shops, but who cannot access credit from big banks because they do not have enough collateral.

The Philippine microfinance industry, estimated to have over a million clients with consolidated outstanding loans of over P8 billion as of last June.

Microfinance as “viable” funding source

“Microfinance is a viable option for the entrepreneurial Pinoy,” Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said.

Tetangco said the Bangko Sentral remains bullish on the microfinance industry, as it continues to put in place regulations growing and strengthening the sector.

The central bank has increased the microfinance loan ceiling to P300,000 from P150,000 under the regulator’s “microfinance plus” initiatives, he noted.

Pia Bernadette Roman-Tayag, central bank head for financial inclusion, said initiatives including mobile issuance as strengthening microinsurance and microsavings arms of microfinance institutions are in the pipeline to support the industry’s growth.

Microfinance Council of the Philippines Inc. (MCPI) chairman Mila Mercado-Bunker has said that the microfinance industry remains healthy. The industry’s re-payment rate is over 95 percent, proving that the poor can be good borrowers despite hurdles they face.

On its 11th year, the Citi Foundation, Bangko Sentral and MCPI’s Citi Microentrepreneurship Awards recognize exemplary men and women who run small businesses.

The microenterprises awarded this year span from a mom and pop shop and a buchi (glutinous rice cake) stall at one end of the spectrum to a sugarcane farm and a small mountaineering gear manufacturing facility at the other.

The selection board – co-chaired by Tetangco and Citi Philippines CEO Batara Sianturi – include top executives in leading Philippine companies, like GMA Network Inc. chairman and CEO Atty. Felipe L. Gozon.

“Microfinance is really important because a lot of us have to start small, not everyone is blessed with capital or connections. It levels the playing field and gives everybody a fighting chance,” said GMA Assistant Vice President Corporate Affairs Ma. Teresa Lopez Pacis, who represented Atty. Gozon at the event.  — ELR, GMA News