2012 MCPI Annual Conference Focusing on Responsible and Client-Centered Microfinance - PowerPoint PPT Presentation

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2012 MCPI Annual Conference Focusing on Responsible and Client-Centered Microfinance

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2012 MCPI Annual Conference Focusing on Responsible and Client-Centered Microfinance Hyatt Hotel, Manila, 26-27 July 2012 – PowerPoint PPT presentation

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Title: 2012 MCPI Annual Conference Focusing on Responsible and Client-Centered Microfinance


1
2012 MCPI Annual ConferenceFocusing on
Responsible and Client-Centered Microfinance
  • Hyatt Hotel, Manila, 26-27 July 2012

2
4 Plenary sessions
  • Poverty situation in the Philippines / Poverty
    outreach of microfinance institutions
  • Understanding multiple borrowing in microfinance
  • Creating an enabling environment for
    client-centered microfinance
  • National microfinance client mapping initiative

3
2 Breakout sessions with 3 topics each
  • Day 1
  • Beyond Credit Products and Services for
    Microfinance Clients
  • Value chain finance
  • Savings products for microfinance
  • Financial education
  • Day 2
  • Addressing the Risks and Vulnerabilities of
    Clients
  • Disaster risk reduction and management
  • Avoiding over-indebtedness
  • Truth and transparency in lending

4
Poverty situation in the Philippines / Poverty
outreach of microfinance institutions
  • Poverty situation (2009)
  • Poverty incidence of 26.5 percent (1/4 of
    population) or 23.14 million Filipinos are poor
  • Region VII (10.8), V (10) and VI (9) with
    biggest share of total poor families
  • Poorest among basic sectors are the fishers
    (41.4), farmers (36.7) and children (35)

5
Poverty situation in the Philippines / Poverty
outreach of microfinance institutions
  • Poverty outreach (covering 10 MFIs)
  • Basic question Are MFIs reaching the poor
    people?
  • Generally low levels of penetration
  • Widening gap between poverty concentration and
    rural poverty incidence
  • MFIs serving the most number of poor households
    have relatively lower poverty concentrations
  • How to reach the poor?
  • Modify product and look at the clients potential
    business and capacity to pay
  • Get the list of poor HH from DSWD
  • Use the PPI for targeting as well as tracking
    performance

6
National microfinance client mapping initiative
  • 112 MFIs mapped out 1.3 million clients
  • About 54 of served barangays in urban areas and
    66 in rural areas are saturated and
    over-saturated, respectively.
  • About 40 of urban barangays and 53 of rural
    barangays have no outreach.
  • No evidence of policy amongst MFIs to serve the
    poorer municipalities
  • There are municipalities served by 10 or more
    MFIs while there are municipalities with none.
  • High concentration of MFIs resulting in large
    outreach could likely lead to multiple borrowings

7
Understanding multiple borrowing in microfinance
  • Basic question Is there cause for concern about
    multiple borrowing?
  • Branch client data (Commonwealth)
  • Average of 14 of clients of MFI branches
  • 77-78 if including borrowing from other sources
  • No strong evidence of multiple borrowing to
    specific characteristics and to delinquency
  • FGD results
  • Vibrant lending and borrowing sectors emerging
  • Prospects and risks with clients
  • Interest rates are increasing despite competition

8
Creating an enabling environment for
client-centered microfinance
  • Government has put in place adequate policies
    from financial inclusion to consumer protection
    in the area of microfinance in past decades
  • There are also private fund providers with a
    conscience
  • Financial education is key
  • Challenge now is for MFIs and other service
    providers to comply with the policies

9
Value chain finance
  • Various modes
  • GDMPCs as enabler for fisher-clients
  • LBPs food supply chain program as financier in
    various stages of the value chain
  • Insol as BDS provider for potential entrepreneurs
  • Cover value chain development when one talks of
    value chain finance
  • Creating value for the low income producers

10
Savings products for microfinance
  • BPI Globe BanKO
  • Technology driven but cost-efficient way of
    mobilizing savings/deposits
  • Cantilan Bank Microsavings
  • Savings for IPs
  • Money for health, education etc.
  • With financial education, e.g. how to save and
    budget

11
Financial educationAppropriateness of method to
conduct financial education
  • NWTF Customer Service Department
  • Separate department that conducts training for
    borrowers
  • No fixed venue but where convenient
  • Borrowers are invited to attend the training
  • CARD-MRI Development Institute
  • Trains team of trainers, including loan officers
  • Conduct of training during center meetings
  • Required attendance to training

12
Disaster risk reduction and management
  • With high probability of risk in disaster, the
    objective is to lower the risk by increasing the
    capacity of the community responses may be short
    term or long term
  • MFIs are encouraged to establish protocols and
    policies to follow during disasters and
    emergencies. Framework must include mitigation,
    preparedness, response, rehabilitation/recovery
  • Also recommended is to develop a comprehensive
    Disaster Risk Management Framework, focused on
    pre-event and post-event protocols and policies.

13
Avoiding over-indebtedness
  • Kasagana Ka
  • Example of intervention design of multiple
    products, product innovations, client protection
    strategies, culture of service for the staff
  • Networking as core strategy (one-stop shop)
  • ASKI
  • Practices build long-term relationships with
    clients, understand financial need of clients,
    offering other support aside from microcredit
    (e.g, micro-insurance, health, sanitation,
    marketing of clients products)

14
Truth and transparency in lending
  • Requires the participation of all credit-granting
    institutions, including the clients, for a
    level-playing field
  • Win-win situation both for the clients and
    institutions because it will foster responsible
    finance, transparency and better treatment of
    clients
  • Importance with clear understanding of true
    costs of borrowing, informed clients will be able
    to make informed decisions

15
  • RB branching for MF operations
  • Microfinance-oriented banks
  • Rediscounting line for MFIs
  • EO 138

Enabling Environment
MFI
  • Credit with savings
  • Micro-insurance
  • OFW Remittances

MFI clients
Poverty Situation
16
  • RB branching for MF operations
  • Microfinance-oriented banks
  • Rediscounting line for MFIs
  • EO 138
  • BSP circular 680
  • Financial learning centers
  • BSP circular 730, 754, 755

Enabling Environment
MFI
MFI
MFI clients
  • Credit with savings
  • Micro-insurance
  • OFW Remittances
  • Savings products
  • Value chain finance
  • BDS e.g., financial education
  • Approach to disaster mitigation
  • Avoidance of client over-indebtedness

MFI
Poverty Situation
17
Continuing challenges
  • Still many underserved areas challenge to MFIs
    is to target clients and come up with the right
    business model
  • What can the role of other stakeholders be to
    support the MFIs
  • There is hence a call for responsible
    microfinance especially in saturated and
    oversaturated areas

18
What is Responsible Finance?
  • EU
  • Transparent and equitable delivery of financial
    services which benefit society at large
  • Fully disclosed, priced fairly, adapted to
    clients
  • ICCO
  • Avoids harmful or unfair treatment of clients
  • Balance clients interests with providers
    (MFIs/Investors)
  • Balance people, planet, profit
  • Meeting triple bottomline
  • BSP
  • Shared responsibilty (multi-stakeholder)
  • A responsible financial institution is strong,
    stable, transparent, inclusive and
    consumer-friendly

19
Responsible Microfinance
  • Transparent pricing
  • Avoiding over indebtedness
  • Product adapted to clients needs
  • Responsible investments

20
Client-Centered Microfinance
It's about the poor clients who need to have
access to financial and non-financial services
to alleviate their poverty and improve their
lives
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