Philippines Among Best Microfinance Environments
February 20, 2013, 7:21pm
The Philippines is a global leader in microfinance, having one of the best business environments for microenterprises. It ranked 4th out of 55 countries in the annual global survey “Global Microscope on the Microfinance Business Environment 2012,” released in 2012 by the London-based think-tank Economist Intelligence Unit (EIU). The Philippines posted a two-notch improvement from its 6th ranking in 2011. The report highlighted the country’s stable market and reforms initiated by public and private institutions to develop an enabling microfinance environment.
The EIU said the rankings recognized key efforts of the Bangko Sentral ng Pilipinas (BSP) such as raising the ceiling for “microfinance plus” that microenterprises and small businesses can avail of to fund their operations. Microfinance originally financed microenterprises or small livelihood activities but BSP expanded loan products to include microfinance housing, micro-agri loans, micro-insurance, and micro-deposits. There are 202 microfinance institutions operating in the Philippines.
In the 2nd quarter of 2012, the BSP, in Circular No. 748, eased its guidelines on microfinance lending to allow banks to disburse more funds in the countryside for agriculture and agrarian reform sectors. The BSP, in Circular No. 782 on January 21, 2013, raised the threshold of microfinance clients to allow low-income clients access to credit such as housing microfinance. Low-income are those with income below P17,000 a month or P206,000 per year.
Microfinance is a way of providing financial services to entrepreneurs and small businesses lacking access to conventional banking. In the Republic of the Philippines, microfinancing is an activity dominated by rural banks, non-government and people organizations, with support from international donors. Rural and cooperative banks provide financial services to over 85 percent of cities and towns, under the Micro-enterprise Access to Banking Services of the Rural Bankers Association of the Philippines, supported by the United States Agency for International Development.
We congratulate the Bangko Sentral ng Pilipinas, headed by Governor Amando M. Tetangco Jr., in its efforts to promote microfinance as one of the powerful programs of the Philippine economy.