VZCZCXRO1566
OO RUEHCHI RUEHDT RUEHHM
DE RUEHML #2078 1720821
ZNR UUUUU ZZH
O 210821Z JUN 07
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7075
INFO RHHMUNA/CDRUSPACOM HONOLULU HI IMMEDIATE
RUEHZS/ASEAN COLLECTIVE
UNCLAS MANILA 002078
SIPDIS
SIPDIS
STATE FOR EAP
E.O. 12958: N/A
TAGS: ECON EFIN RP
SUBJECT: AMBASSADOR CELEBRATES PHILIPPINE SUCCESS IN RURAL BANKING
AND MICROFINANCE
1. Summary. The Ambassador helped celebrate the one millionth loan
granted by banks participating in the USAID-funded Microenterprise
Access to Banking Services (MABS) Program. Since its launch in
1997, the Program has worked with 330 bank branches to disburse more
than $250 million to over 375,000 borrowers. Unusual among
donor-supported microfinance programs, this successful
government-private sector partnership demonstrated that microfinance
can be profitable for banks and that savings generation is possible
in impoverished communities. Central Bank Director Amando Tetangco
and Director-General Cerge Remonde joined the Ambassador in
celebrating MABS as a successful partnership between two governments
that furthers the common goal of fostering a prosperous Philippines
with a positive view of America. End Summary.
2. In addition to the Ambassador, the Governor of the Central Bank
of the Philippines, the Director-General of the Presidential
Management Staff, the Chairman of the Mindanao Economic Development
Council, the President of the Rural Bankers Association of the
Philippines, the Mission Director of USAID/Philippines, and several
hundred bankers also participated. The keynote speaker,
Presidential Management Staff Director-General Serge Remonde, and
Central Bank Governor Amando Tetangco thanked the American people
for investing in the Philippine people, calling microfinance a
flagship program of the President's administration. They both
declared that MABS has shown that commercial microcredit can be
profitable and that microfinance can be an extraordinarily useful
tool in the effort to end poverty.
3. Begun in the Mindanao region and now a national effort, MABS is
a USAID-funded project implemented in partnership with the Rural
Bankers' Association of the Philippines under the oversight of the
Mindanao Economic Development Council. This is a true grass roots
project with USAID providing no loan funds or guarantees to MABS --
All loan funds came from the banks themselves. The Program helped
rural banks mobilize deposits from the microenterprise sector.
Microdeposit accounts managed by participating rural banks increased
substantially, now totaling over one million accounts with an
overall value exceeding $14 million.
4. The Program provides training and technical support to banks to
help them develop the capability to profitably offer microfinance
services. Using these tools, the Program has disproved the common
belief that providing financial services to low income borrowers is
not a viable business proposition. Virtually all the banks
participating in the Program have found microfinance to be
profitable, and many have made microfinance a major part of their
overall portfolio.
5. The MABS Program is also significant for its contributions to
the development of new microfinance products not previously
available in the Philippines - including micro deposit accounts and
micro insurance. The Program introduced the "micro agricultural
loan" for small farming households. It has also developed new
delivery vehicles including the use of cell phones as "virtual
wallets" and the use of personal digital assistants for loan
collection activities. Through these mechanisms, the Program is
helping banks and borrowers reduce transaction costs.
6. Ninety percent of businesses in the Philippines are small or
micro enterprises. Forty percent of all households in the
Philippines depend on microenterprises as their primary source of
income. Such was the situation of Mrs. Josefina Albiza, the
first-ever borrower from the first bank participating in the MABS
Program. Mrs. Albiza, who was recognized at the event, used her
initial loan of PhP5000 (about $110) to expand and diversify her
small grocery business. She is now a local soft drink wholesaler.
With the earnings she garnered, she improved her house and sent her
daughter to college. Similarly, Mrs. Erlina Quinones, the one
millionth borrower, who was also recognized at the event, is using
her PhP15,000 (about $330) to expand her small shop. Previously, no
formal banking services were available to entrepreneurs like Mrs.
Albiza and Mrs. Quinones and their only option for expanding their
businesses was to borrow from moneylenders at interest rates that
usually precluded growing their businesses.
KENNEY