Starting April 2017, the national government implemented the Pondo sa Pagbabago at Pag-asenso (P3) for micro entrepreneurs across the country with an initial funding of P850.0 million. The program makes available lower cost loans to our people who are engaged in small business and are vulnerable to usurious lenders in the absence of an alternative source. Through the P3, our poor sectors can find relief from overly expensive borrowings as they pursue their livelihood activities.
In 2018, the national government (NG) will add another P1.0 billion to the P3 fund in order to support more micro enterprises in growing their small business.
The P3 Program is implemented by NG through DTI’s attached agency, the Small Business Corporation which is a non-bank government financial institution mandated under R.A. 9501 to support solely micro, small and medium enterprises (MSME).
The P3 Program is now in full swing. To date, with the support of DTI regional and provincial offices, SBCorp has accredited a total of 94 micro finance institutions (MFI) plus another 45 MFIs in the pipeline. Except for a handful of provinces yet to be served, the P3 Program is now rolled out throughout the entire country from north to south.
Rose Marie Obeña of Tacloban City began her process of moving on and re-building her life after Typhoon Yolanda took all 17 members of her family and left her alone by re-opening her store the moment the Tacloban Market was ready to operate again.
“Mag-isa na lang ako, wala umaasa at wala din maasahan. Ito (her store) na lang araw-araw na kasama ko sa buhay.” said Obeña.
From the day she started construction of the store and whenever she needed extra cash to buy merchandise to sell, Rose Marie would borrow from a “five-six” lender.
“For a small-time market vendor who has to start from the bottom again after my first store was destroyed by the typhoon it is the easiest way to obtain capital. I have no personal documents, no collateral, no bank will loan to someone like me,” Obeña lamented.
Obena, along with thousands of others rely on and has been at the mercy of enterprising lenders and loan sharks in the country’s public markets for many years. They charge an oppressive interest of up to 20% monthly to borrowers, who end up buried in so much debt because they do not have any other choice.
Obena was among the first batch of market vendors who were able to access a P3 loan. She used the P50,000 loan to expand her store and to buy a refrigerator to sell softdrinks. After three months she was able to pay up and renew her loan.
“Nakaka-ipon na ako ngayon. Paunti-unti nakakapagtabi ma ako para sa sarili ko. Hindo katulad noon na ang kita araw-araw pambayad din ng utang araw-araw.” Obeña said.
Majority of the partner MFIs are cooperatives. They are self-help people’s organizations that have a good grasp of what their members need in order to grow their businesses. A number of large MFIs including CARD have also given their support to the P3 Program for its timely scale up even in remote areas of the country.
Under the P3 Program, a micro enterprise can borrow between P5,000 up to P100,000 depending on its business need and repayment capacity. Interest rate and service fees, all in, do not exceed 2.5% monthly which is a huge relief from the 20% monthly rate under the 5/6 system. Documentation is simplified and processing time is reasonable, which makes P3 a worthy competitor to 5/6 lenders.
Hercolano Villasin, never though that at his age of 78 he will be able to loan and continue his dried fish business which he has been doing since he was in his teens,
“Nasanay na kami na ang kinikita namin sa pag-dadaing pinapa-ikot lang.Kung may kita, may pambili ng susunod na paninda, kung wala eh si wala talaga,” Villasin related.
Villasin and his wife has been relying on their income from selling dried fish to nearby markets as their main source of income.
“Our children have their own lives now and we don’t want to obligate them to support us. So as long as we are capable of earning on our own we will keep on doing so,”
Mr.Villasin accessed the P3 Program through the Fatima Multi-Purpose Cooperative (FATIMA MPC). A credit cooperative which was started in March of 1996 by a few farmers who saw that a source of credit is a felt need among the poor folks in Calubian, Leyte. To date, Fatima MPC has 8,138 active members in 27 municipalities of Leyte and managed a total asset of P191, 619,877.36.
“Hindi sya mahirap tulad ng inaasahan ko. Unang lapit meron agad. Pati pagbabayad madali din. Nilapitan ako ng account officer ng Fatima MPC at tuloy –tuloy na mula doon,”Mr.Villasin shared.
“Over and above all the economic gains is the dream of FATIMA MPC to contribute in the development of its members and community,” FATIMA MPC – Carigara Manager, Valentin Tambis related.
Fatima MPC requires their P3 borrowers to become cooperative members so they can share in the benefits and privileges enjoyed by their regular members. Although the requirements are much relaxed and the processing faster FATIMA MPC do not want to compromise the quality of their portfolio.
“We advocate the true concept of self-reliance and thrift, wise use of money and that group cooperation is still important in this age of materialism,” Mr. Tambis concluded.
The DTI-SBCorp will be launching in early December 2017 a P3 facility for the constituents of Lanao del Sur, specifically for Marawi micro entrepreneurs displaced by the war. For the period December 2017 up to April 2018, interest-free P3 loans will be lent out to the area targeting several public markets and beneficiaries of the starter livelihood kits being distributed by the DTI. In succeeding months, some form of interest rate shall be charged but still much lower than the 2.5% monthly rate, until the situation normalizes in the years to come.
For MFIs that want to start lending to the Lanao del Sur area in solidarity with the people of Marawi and of the entire province, the P3 Program will provide credit risk support to the MFI in exchange for their timely and quick response. A DTI-SBCorp team will be housed at DTI-Marawi, which will also be supported by the staff housed in DTI-Cagayan de Oro. All MFIs that would like to participate are invited to contact DTI and or SBCorp.
The SBCorp is called upon to search for, to accredit and to support (by way of capacity building trainings) at least five local MFIs per province in the coming years in order to ensure that all micro enterprises will have easy and reliable access to reasonably-priced credit within their own locality (total of 400 grassroots conduits targeted). It is hoped that the P3 program of national government will encourage communities to organize themselves into cooperatives or other self-help units engaged in entrepreneurship.
The rural banking sector is also invited to support the P3 Program given its more than 2,000 branches nationwide, mostly rural based, which makes these small banks a potent force for scaling up P3 and for improving the fund channelling system and for making sure that the P3 fund reaches the micro enterprises in a timely and judicious manner.