PH to strengthen Microfinance NGOs
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THE Philippine Senate on Monday approved on third and final reading a bill which seeks to strengthen non-government organizations engaged in microfinance activities as a means to alleviate Filipinos from poverty and increase employment in the country.
Senator Paolo Benigno "Bam" Aquino IV, chairman of the Committee on Trade, Commerce and Entrepreneurship and sponsor of Senate Bill No. 2752, also known as the Microfinance NGOs Act, said the bill aimed to recognize the crucial role of the microfinance NGO sector in the growth of economy.
Senate President Franklin Drilon said the bill would help push government efforts for genuine inclusive growth across all-socio economic sectors "by empowering even underprivileged Filipinos to tap into our glowing economic situation, thus helping them improve their lives."
"The approval was a victory for all microfinance NGOs, which, for decades now, have been helping the government's poverty alleviation program without getting anything in return," Aquino said.
"The passage of this measure is recognition of their crucial role in lifting our fellow Filipinos from poverty and enabling the poor to build their own businesses and create their own sustainable livelihood," he added.
While the Philippines' economy grew at 6.9 percent in the last quarter of 2014 and contributed to the annual gross domestic product growth rate at 6.1 percent, one of the highest growth rates in the region, Aquino said, Philippine Statistic Authority statistics showed that poverty incidence in the first quarter of 2014 remained at 25.8 percent.
MSMEs compose 99.6 percent of the total establishments in the Philippines and contribute around 61.2 percent of the country's total employment. Of the figure, 91.6 percent are micro enterprises composed of sari-sari stores, handicraft markers, service shops and other modest businesses.
He said the Microfinance NGOs sector can fill in the gap and address the need of small businesses, specifically, the microentrepreneurs.
Aquino said that the proposed Microfinance NGOs Act would only cover microfinance non-government organizations
and would not cover for-profit microfinance institutions.
He said microfinance NGOs were non-stock, non-profit entities that share in the state's goal of inclusive growth and sustainable poverty alleviation. It's main purpose is to empower the marginalized sector and give them the means to attain financial stability.
Aquino said microfinance NGOs offered a variety of loans to low-income households with a minimal interest rate of two percent to two and a half percent and a loan cycle of six months.
Loans offered by microfinance NGOs can range from housing and education to medical and even energy-related financing, he explained.
In 2013, the 23 microfinance NGO members of the Microfinance Council of the Philippines, Inc. (MCPI) alone had a gross loan portfolio of over P15.26 billion catering to more than 2.7 million micro-entrepreneurs, Aquino said.
"More than just reasonable financing programs, microfinance NGOs also provide training programs and seminars to enhance the entrepreneurial skills and financial literacy of their borrowers," Aquino said.
"With this Act, we will be able to reach more Filipinos in poor communities, enabling us to fulfill our mission as an institution - lifting the poor out of poverty and bringing our nation towards development," said Dr. Aris Alip, founder and managing director of Center for Agriculture and Rural Development - Mutually Reinforcing Institutions (CARD-MRI).
CARD-MRI is the biggest MFI NGO in the country, with around 1,780 branches in different parts of the Philippines.
"The support that the bill accords to microfinance NGOs would ultimately benefit the enterprising poor in terms of greater affordability, accessibility, and variety of micro finance programs and services geared towards the expansion of their livelihoods and furthering their transformative contributions to community development," the Microfinance Council of the Philippines said in a statement.
With the House version of the measure already approved, a bicameral conference committee meeting will be held in the coming days to consolidate and finalize the provisions before it will be transmitted to Malacanang for President Aquino's approval.
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