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The Philippines’ poverty situation is continuing to deteriorate in both absolute number and percentage. In 2003 poverty increased by at least 2 percentage points (Ref: NEDA). With this 2% increase, the number of poor households in the country believed to be increased from 5.1 million to 5.6 million by the end of 2003. The population under the poverty line is mostly unproductive or in some cases under-productive and certainly it is a big burden for a nation to have such a large number of unproductive population. Poverty is the root cause of many social crimes and injustices. To face the terribly expanding situation of poverty today, microfinance is recognized as an effective tool helping the poor in their livelihood and micro-businesses to increase their family incomes, so that people would have access to social equity and other benefits. Since the beginning of the nineteen-nineties many other NGOs, Coops and Rural Banks have been implementing microfinance. Today there are believed to be 300 NGOs including Foundations, 1000 Credit Cooperatives and 790 Rural Banks which are extending these services to the end beneficiaries. However, there is still a very big gap between demand and supply. This miss-match is mainly due to a lack of leadership, institutional capacity and commitment, lack of appropriate systems and finally unjustifiable interest charges of MFI to the end clients. |
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In view of this, Ambassador Howard Dee and Mr. Kamrul H. Tarafder met each other sometime in August 2003. There were several subsequent meetings and discussions in order to define the institutional as well as personal vision and mission to assist the poor through microfinance services. Since there is an enormous market need and a strong personal commitment, both of them eventually decided to incorporate a foundation with the financial assistance of Assisi Development Foundation (ADF) and Benigno S. Aquino Foundation (BSAF) in order to assist the enterprising poor through microfinance. Since it has been found out that ASA method is more effective compared to other methods and has proved its effectiveness even in the Philippines and since the expertise is in hand, the all incorporators, advisors and patrons decided to use the same ASA system that was conceived and redesigned by Mr. Kamrul Tarafder for the Philippines context. The incorporators also decided to retain the brand name of ASA since institutional and personal commitment was also given by the founder of ASA Bangladesh and the president of ASA Philippines Foundation was one of the most senior managers of ASA for a long period of time. |
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The first official meeting of the incorporators of ASA Philippines Foundation was held on May 25th 2004. The five trustees come from different sectors. The Chairman, Mr. Adward S. Go is experienced with formal finance and a very renowned life time Banker in the Philippines, the president has a microfinance implementation background, there is an institutional representative each from Assisi Development Foundation and Benigno S. Aquino Foundation and one from an international institution background. ASA Philippines Foundation is registered under Securities and Exchange Commission (SEC) in the Philippines as a non-stock, non-profit corporation on July 9, 2004 and the registration # is CN200409459. Since the beginning of inception in early 2004 the foundation made its commitment to contribute to the poverty reduction of the Philippines through microfinance services. The board of trustees of the foundation is as follows: |
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| BOARD OF TRUSTEES: |
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| Mr. Edward S. Go Chairman |
| Ms. Victoria A. Dee Member/Treasurer |
| Mr. Rafael C. Lopa Member |
| Ms. Imelda M. Nicolas Member |
| Mr. Kamrul H. Tarafder Member/President |
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| VISION |
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We are devoted to the poor for them to fight against growing poverty with the most cost-effective sustainable microfinance services and with the highest portfolio quality and management efficiency in order to eventually grow as the best-managed and lowest-charging microfinance service provider in the Philippines market. |
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| MISSIONS |
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ASA Philippines Foundation has made its commitment to three sectors. The first is a commitment to the marginalized poor sector for which the foundation exists. The second commitment is to the staffs who are dedicated to the foundation’s mission objectives. The third commitment is to the incorporators and patrons to make the program the best and most self sustainable micro-finance institution in the country. |
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| THE TARGET
BENEFICIARIES |
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The enterprising poor families have income not more than P2400 (less than $2 a day) per member in the family per month is the target clientele. One female member from one family is a target client. The beneficiaries are chosen very keenly by observing their entrepreneurial passion on the business, behavior and attitude towards savings in order to make the service more effective. |
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| THE SERVICES OFFERED AND DELIVERY
MECHANISM |
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There are three major service products being offered to the enterprising poor for their economic improvement. The following services are being offered: |
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LOANS:
The loan is uncollateralized and duration of six months for one cycle. The loans are always in the form of multiple of thousands, such as P1000, P2000, P3000, P4000, P5000, P6000 etc. No releases of a fraction of thousand are done. No upfront deductions are practiced, if the approved loan is P5000, the release goes to the borrower’s hand exactly P5000. The initial loan is between P1000 to P6000 depending upon the absorbing capacity of the proposed borrower’s enterprise. The service charge including interest of the loan for six month is 15% and therefore, in a year, the add-on service charge goes up to 30%. The payments are weekly P50 per thousand borrowed amount and paid in equal 23 repayments in six months period. For one thousand loans the payment is P50, for 2K loan the payment is P100, for 3K loan the payment is P150 etc. This simple calculation process helps the accounting system to be simple and transparent to the illiterate poor clients. |
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CAPITAL BUILD-UP (CBU):
CBU is an alternative micro savings product for the beneficiaries to save a small amount that helps building future capital and also to mitigate family emergencies: This CBU is withdraw-able at the beneficiary’s convenience and need. A beneficiary has a choice of saving P50 or above during the weekly collection meeting at their door steps. This savings product with very negligible amount is not appreciated by the commercial bank. The CBU account earns interest at 7% per annum, at least 3-4 times higher than the bank. The mandatory and voluntary CBU product makes a beneficiary more discipline to shape-up their economic life. |
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LOCKED IN CAPITAL BUILD-UP (LCBU):
The LCBU is an alternative CBU of the beneficiaries as their insurance
and is locked for the time being. It is an alternative savings because the premiums are refundable upon resignation or every after five year. A beneficiary gives P10 a week as alternative CBU and enjoys a benefit in case of death. The benefit varies P3000 to P12000 depending upon the length of stay in the program. Since all premiums are refundable and considered as alternative savings, therefore, the benefit is a cost of the loan program and covered from the income of loans. |
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DELIVERY MECHANISM: |
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All services are offered at the doorstep through a decentralization mechanism being implemented in a particular community called branch; therefore, a client spends very minimal time to obtain these services. The branch is composed of 1 Branch Manager (BM) and 4 Loan Officers (LOs). Each LO has to take care of at least 300 clients. Therefore, a branch has a target of catering 1200 clients on a sustainable basis. Each LO has to work for 5 days in a week and each day has to take care of 3 groups (cluster) in an average of 20 clients in each group (cluster). The BM is the coordinator and supervisor of 4 LOs in the branch. To achieve sustainability a typical branch in Metro Manila requires P2.5 million fund infusion and in the provincial area P2 million. |
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