When micro means big
TEMPO – News in a flash, Jan 6th, 2014
During the holiday season, some of us might have used the phrase “big things come in small packages” to describe the gifts we gave to or received from friends and loved ones. Indeed, there are times when things that seem little and invaluable can create an impact greater than what their appearance would tell.
Such is the case of microfinance, deemed by the national government as one of the key strategies in solving poverty in the Philippines.
Microfinance offers financial services that are within the means of the low-income sector. Requiring simpler documentation, microfinance encourages and enables people to start businesses or to save for the future.
Although it would not bring instant wealth or security to poor families, it provides the necessary push and support for them to develop discipline and confidence towards attaining financial independence. It’s definitely a big help for those starting at the bottom and with almost nothing.
Ester Lumbo from Negros Occidental, one of the winners at the 2010 Citi Microentrepreneur of the Year Awards, would surely agree. With the help of P3,000 she borrowed from a microfinance institution, she was able to grow her bag and handicrafts business. Her products are being sold now in as far as Cebu and even Hawaii.
Based on the report on the state of financial inclusion in the Philippines by the Inclusive Finance Advocacy Staff (IFAS) of the Bangko Sentral ng Pilipinas (BSP), more and more Filipinos are going to microfinance to better their lives.
In fact, there was a 191 percent growth among microfinance borrowers from 2002 to 2012. In 2012, 1.37 million Filipinos were given a chance to start or grow their small-to-medium enterprises using about P8.4 billion worth of microfinance loans. They also began to save more as the 64 percent increase in microfinance savings from 2011 to 2012 would show.
The Bangko Sentral ng Pilipinas (BSP) has been tracking the growth of microfinance in the recent years, at least in so far as the banking system is concerned.
It is important to note, however, that there are also private and non-government institutions offering microfinance, so there may actually be more Filipinos in rural and far-flung areas that are able to access and benefit from microfinance products and services.
What we are certain about is that the industry continues to grow, and its products have gone beyond just credit and savings. Some microfinance groups also offer housing and house repair microfinance loans, health-related microfinance loans, and microinsurance.
This January, we are actually celebrating the National Microinsurance Month, an official event that has been observed since 2007. Following the same logic behind microsavings and microcredit, it offers affordable insurance – with smaller premium than the usual insurance products out there – to low-income individuals, so that their losses are covered in times of death or emergency.
It was first introduced around 2005, the National Strategy and Regulatory Framework for Microinsurance were finally signed and issued in 2010.
Although it is the Insurance Commission and not the BSP, that is the main government agency overseeing microinsurance activity, the BSP is still active in creating policy and regulation on microinsurance, at least for institutions under its jurisdiction, such as rural, cooperative, and thrift banks.
In his speech at the 2013 Citi Microentrepreneurship Awards (CMA) Awarding Ceremonies last December, BSP Governor Amando M. Tetangco, Jr. emphasized to the various microfinance stakeholders in audience the importance of having insurance protection.
He said that microinsurance can protect the hard-earned gains of microentrepreneurs, especially amid destructive natural calamities that occur in the country, like the recent super typhoon.
Indeed, in trying times, for people with less or none at all, microfinance and all related micro-products and services can do wonders. That’s when we can say that micro is big.