Tag Archives: Microfinance

Life on the Farm: Micro-Crop Loans

This post appeared on the Kiva Fellows blog. Read the original here.

Last week I went to a town called La Castellana about an hour south of Bacolod to visit the NWTF branch there. I was there to meet a handful of Kiva borrowers and interview them about the progress of their loan. Over the course of two days, I met six women that currently have a loan with Kiva, and another four that I am going to post to the site this week. La Castellana is a town in the mountains that is largely supported by agriculture. It is also one of the major areas impacted by agrarian reform and home to some of NWTF’s poorest clients.

The Philippines is a country of ~90 million people, half of whom live in rural areas. Eighty percent (80%) of Filipinos living below the poverty line are in rural communities, supported primarily by agriculture. Over the past three decades, agricultural land ownership in the Philippines underwent a transformation via a series of legislation known as Comprehensive Agrarian Reform Program (CARP) passed in 1988. Designed to provide landless farm workers a piece of land, the program has redistributed farmland in 1.1-hectare units. It is a controversial topic, and its effectiveness at combating poverty is debatable. Regardless of whether or not CARP has worked, the ARBs (Agrarian Reform Beneficiaries) – the recipients of the farmland – are the poorest of the poor. In Negros alone, there are 112,000 ARBs working 170,00 hectares. There are no economies of scale on a one-hectare farm. Fertilizer, farming equipment and labor are expensive, and they don’t have the capital. The average land tract size for ARBs in Negros is 1.25 hectares, with input costs of 35,000 pesos (~$800 USD) per hectare. The government gave them land but failed to provide adequate funding, agricultural training, or meaningful support. In many ways, the cards are stacked against them. So, unable to make ends meet, many just rent or sell their land back to the owner. It is a vicious cycle, but microfinance can offer a solution. Continue reading →

Hapinoy

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Here in the Philippines, the most common use for a microloan is a sari-sari store – otherwise known as a general or convenience store. There are an estimated 700,000 of them here, and you can find one on just about every block in the country. In 2007, an organization called Microventures Incorporated introduced its Hapinoy program, which is a coop of sari sari stores across the country. By joining together, these stores can get leverage economies of scale to get volume discounts, competitive pricing, and more favorable terms for microloans. The organization purchases products in bulk from Procter & Gamble and other large manufacturers, and distributes them to each Hapinoy store via a community store. It is a hub-and-spoke model with a wholesale store serving different regions. Here is a program that operates within the existing framework of the country, improving what exists, rather than trying to change it altogether. Continue reading →

In The Field

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The road to a borrowers home

I spent the last three days in “the field,” a term used to describe the front lines of microfinance where the money is distributed to the clients of the banks. Beginning early Tuesday morning, I set out for the town of Valladolid, a rural municipality about 50 km from Bacolod City. The road snakes along the coast through increasingly less urban communities, until reaching Pontevedra, where the NWTF (Negros Women for Tomorrow Foundation) Valladolid branch is located. Linda, the branch manager and former loan officer, took me to see the first of 15 borrowers we would try to track down over the course of the three-day trip (with a 67% success rate). Riding in the metal grates on the back of a tricycle, where I’d spend most of my trip, we rode to small village called a barangay to interview several women about their business and loan. The community here is small, and stopping for directions usually produced a guide that brought us directly to the home of the borrower. Home constructions vary from 2-3 room bamboo nipa huts, to shanties with roofs of corrugated aluminum and floors of dirt, to cement frames with electricity, running water, and decorations on the walls. Over the course of the week, I’d see all types represented. Housing loans are popular among borrowers, and many homes have been built with loans from NWTF.

Continue reading →