Developing Standards for Micro-finance

Microfinance or the means of providing a range of financial services to the poor based on market-driven and commercial approaches, is now increasingly recognized in the Philippines and abroad as an effective tool for poverty alleviation. Although many NGOs and POs provide microfinance services to the poor, most lack the capacity and tools to operate effectively on a large-scale and sustainable basis. Thus, their impact on the poverty situation, is not maximized.

In recognizing this problem, Tulay Sa Pag-unlad (TSPI), a developmental NGO involved in microfinance led the formation of a coalition consisting of 54 members of several to work for the development of Philippine standards for the sustained and expanded operations of microfinance. These standards are being designed to define the industry and create common direction for NGOs by concentrating on the issues of institutional viability and broad outreach to achieve long-term impact in poverty lending.

The coalition started with the first large scale conference entitled, "The New World of Microfinance," which aimed at promoting microfinance. Key players from local and international institutions had the opportunity to share their ideas and accomplishments with stakeholders in the Philippines. Their participation helped in erasing some of the myths and negative images about the poor, and opened up the minds of many skeptical stakeholders. Not only was the conference set up to promote microfinance, but it also showed stakeholders on how to get involved.

The coalition has drawn much attention locally and from abroad because of the depth of its membership and organization technique. Many international institutions want to take part in the development of the standards, but the coalition is already a step ahead of the rest in terms of completing its final stages. A national microfinance survey conducted by the coalition identified, located, and gathered relevant information on existing NGOs delivering financial services to the poor. The survey has yielded data on basic performance indicators that has served as major input in the development of standards. The establishment alone of a statistical database on 600 microfinance institutions in the Philippines has been a major breakthrough.


Hari Srinivas - hsrinivas@gdrc.org
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