Bunye: Microfinance and the BSP

IN LAST week's column, we mentioned how the Bangko Sentral ng Pilipinas (BSP) helps in attaining a better life for all Filipinos through its advocacy of financial inclusion.

BSP carries out this advocacy through financial literacy and education as well as by making possible, through enabling regulations, the delivery of microfinance products and services to the underprivileged and unbanked in our society.

Microfinance products include micro-deposits (which require minimal maintaining balance), micro-insurance, micro-enterprise loan plus, housing microfinance loans, and micro-agri loans.

These products are well within the means of low-income households. They are also relatively easier to access because of simpler documentation.

In a report entitled Financial Inclusion in the Philippines, the BSP reported the dramatic growth of micro-finance in the country in terms of the number of participating institutions, number of clients, loans outstanding and savings generated.

"As of end-year 2012, there are 187 banks with microfinance operations reaching more than 1 million clients with loans outstanding amounting to P8.4 billion and savings of P6.4 billion," the BSP said.

Alongside these statistics are inspiring stories of countless micro-entrepreneurs who have graduated from a hand-to-mouth existence to earning not only a steady income for their families but also generating employment for the rest of the community.

According to the same report, enterprises funded through microfinance already make up 91.6% of industries in the nation, while 30% of the workforce is employed in microenterprises.

The BSP's microfinance advocacy actually began 13 years ago, when the General Banking Law of 2000 tasked the country's central monetary authority to set regulations for microfinance in the banking sector.

To date, the BSP has already released 26 Circulars on microfinance that include guidelines and regulations on loans, products, and governance.

The result of all these years of building a sound regulatory framework for microfinance has caught international attention. For the 5th year in a row, the Philippines has been adjudged by the respected Economist Intelligence Unit as the best in the world in microfinance policy-making and implementation.

For this a lot of credit goes to a small group within the BSP called the Inclusive Finance Advocacy Staff (IFAS), headed by Pia Roman Tayag.

Formerly called the Microfinance Unit, the group was established in 2002 to become the main driver of the BSP's microfinance initiatives.

The team follows a multi-layered approach in promoting microfinance. The team works with other departments in the BSP in crafting policies that will benefit the "unbanked." The team also frequently goes to the field to touch base with stakeholders, to promote capacity-building and advocacy activities in order to ensure the sustainability and effectiveness of microfinance products and services being offered.

Tayag, (and the other members of her team Rochelle Tomas, Mynard Bryan Mojica and Mary Rose Roque) attribute their success to high level support.

"The supportive and visionary leadership of Deputy Governor Nestor G. Espenilla and Governor Amado M. Tetango Jr. empower us to find ways to do our work better," she shared.

Tomas is further encouraged seeing firsthand the impact of their work on ordinary people's lives.

For their remarkable work, the four members of IFAS will be recognized by the Civil Service Commission on October 24 as winners in this year's Search for Outstanding Public Officials and Employees.

They will receive the Presidential Lingkod Bayan Award, which is given to an individual or group for exceptional or extraordinary contributions that have nationwide impact.

Note: My book "Central Banking for Every Juan and Maria" is now available in major branches of Fully Booked, Power Books, National Bookstore and UP University Press.

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