It
is said that sharks abound in the Philippines, even on land.
They evolve into two-legged creatures, largely unnoticed
until somebody in the neighborhood gets financially desperate
and falls into their trap called “five-six”.
Notorious
for being home to Asia’s poor savers, the Philippines
is naturally loan shark-infested. Crippling poverty that
leads to lack of access to formal financial channels is
at the heart of the problem.
In
the city of Pasay, more than half of the population live
in slum areas, are uneducated and have a mendicant mentality.
No bank wanted to lend for livelihood programs. When capital
does not flow, the economic stream stagnates. To survive,
the poor turn to loan sharks that welcome them with open
arms.
The urgency of cutting this vicious cycle led to the Bayanihan
Banking Program in Pasay City. Launched during the term
of the former Mayor Jovito Claudio in 1999, the program
aims to empower the poor by enabling them to save and gain
access to credit.
The
formula is not new. It is based on the microfinance model
popularized in Bangladesh by Dr. Mohammad Yunus who organized
women belonging to the poorest of the poor. The success
of the “Grameen Bank” model, as it is called,
inspired many nations to set up their own versions of micro
credit.
Despite being a political rival of his predecessor and winning
through a recall election, Mayor Peewee Trinidad continued
with the program. “It’s incumbent upon any mayor
to continue a good program, irrespective of who’s
in charge,” he says.
With
a P1.5-million assistance, the Bayanihan Banking Program
was revived and given a new lease on life. It involves helping
beneficiaries manage their own livelihood programs through
weekly meetings.
Adopting the Grameen Bank approach, more women than men
are chosen beneficiaries as they are proven to be more responsible
in honoring their financial obligations. Women are also
more responsive to values education, which is greatly emphasized
in the weekly meetings.
Under
Bayanihan Banking, little groups made up of 26 to 30 beneficiaries
set up their “Financial Center”. Each has its
own system and policy on savings and loans. Financial Centers
create their own emergency fund out of savings pledged during
the weekly meetings. Aside from credit lines, members also
have access to accident insurance. They cannot borrow if
they do not save as their savings record serves as their
credit record. And they have passbooks to show for it.
Individual
members save from P3,000 to P18,000. Around 21 Financial
Centers have so far raised at least P20,000, with one generating
as much as P400,000 in savings. Since members own the program,
they are made more accountable and responsible for their
actions. So far, there are already 35 barangays in the city
which play host to 73 Financial Centers, benefiting 1,800
members.
Barely
two years in operation, the 73 Financial Centers have already
grown their resources to P2 million, of which P1.2 million
are deposited in their choice of bank or cooperative. Loans
amount to P700,000. The Pasay City government has high hopes
for the program. By 2005, it expects to have already reached
13,500 households in 201 barangays. To attain this goal,
Bayanihan Banking replicators need to establish 450 new
Financial Centers in five years, or at the rate of 90 centers
a year. The program is targeting P10.5 million worth of
savings by the end of the period.
