FIGHTING POVERTY
I had spent the past 20 or so years of my life volunteering and working on both small-scale and large-scale development programs that help reduce poverty in the Philippines. As I reflect on what I have done, perhaps it was not enough.
At the moment, I am involved with the microfinance sector.
From its humble beginnings as a poverty reduction project, microfinance today has become a big profit-making industry. Of course, there are groups that engage in microfinance as a tool for poverty reduction, but there are now organizations that view microfinance as a profit-making activity and engage in it guised in corporate social responsibility.
But has it helped reduce poverty? That's a hard question to answer. If we take a look at the poverty incidence and its magnitude in the Philippines, we will notice that it has increased despite the proliferation of microfinance and other programs implemented by the government to help reduce poverty.
The microfinance sector boasts of 6 to 7 million Filipinos served as of the end of the year 2010 and yet it made very little impact on the poverty situation in our country. Survey after surveys made by SWS and Pulse Asia still point out to a high poverty rating for most Filipinos.
But we can also say that without all of these interventions, perhaps the poverty situation could have been worse than it is today.
Perhaps what needs to be done is a more comprehensive and better coordinated effort in addressing the various causes of poverty. Also, perhaps people who manage these programs should also rethink the way things are done. An improvement or even an overhaul of the systems will probably be needed.
Let us take microfinance and rural finance for example. Many of the rural financial institutions have overly focused on microfinance targeting women who engage in small livelihood projects or enterprise. Perhaps we may need to review microfinance as a strategy.
Aside from microfinance, rural financial institutions should begin to consider all the other parts of the system. Poverty cannot be reduced by focusing only on just one part.
What do I mean by this? Perhaps its about time that new financial products and services should be made to cater to the other needs of poor families. Microfinance is designed to augment family income. Since it is meant to augment income, the most likely target for this is the wife or the women who remain at home while the husband goes out to work.
Over the years, microfinance has tried to replace the main source of family income by encouraging the women to get bigger loans to expand their small enterprise. But without the right education and experience and entrepreneurial attitude, this attempt will only result to over indebtedness of the family.
The poverty reduction strategy is skewed and overly biased towards women (please forgive me for this statement, but this is the reality in all microfinance programs). We tend to forget that in the Filipino culture, the men still make decisions in the family and in the communities. It is the men who earn the main family income. This is true especially in the rural areas where most of the poor live.
Rural areas are generally agriculture areas and the men are mostly farmers and fishermen. By helping the men to earn more from their main source of income, we can perhaps improve the income earning capacity of the family. However, microfinance is not designed to cater to men or to farming and fishing activities.
If we want to make a considerable impact on poverty, then microfinance and the methodologies used today are not enough. There will be a need to innovate in terms of financial products provided, one that will cater to the financial needs of the farmer and fishermen. There will be a need to innovate in terms of the delivery system of services, one that will adopt existing systems used by farmers and fishermen. Finally, there will be a need to organize an entire chain of activities that will help reduce the risk for the farmers and for the financial institution providing the working capital.
What matters at the end is that we should not stop in thinking of ways of helping the poor. We may never get rid of poverty, but we can certainly think of new ways to help reduce it.
At the moment, I am involved with the microfinance sector.
From its humble beginnings as a poverty reduction project, microfinance today has become a big profit-making industry. Of course, there are groups that engage in microfinance as a tool for poverty reduction, but there are now organizations that view microfinance as a profit-making activity and engage in it guised in corporate social responsibility.
But has it helped reduce poverty? That's a hard question to answer. If we take a look at the poverty incidence and its magnitude in the Philippines, we will notice that it has increased despite the proliferation of microfinance and other programs implemented by the government to help reduce poverty.
The microfinance sector boasts of 6 to 7 million Filipinos served as of the end of the year 2010 and yet it made very little impact on the poverty situation in our country. Survey after surveys made by SWS and Pulse Asia still point out to a high poverty rating for most Filipinos.
But we can also say that without all of these interventions, perhaps the poverty situation could have been worse than it is today.
Perhaps what needs to be done is a more comprehensive and better coordinated effort in addressing the various causes of poverty. Also, perhaps people who manage these programs should also rethink the way things are done. An improvement or even an overhaul of the systems will probably be needed.
Let us take microfinance and rural finance for example. Many of the rural financial institutions have overly focused on microfinance targeting women who engage in small livelihood projects or enterprise. Perhaps we may need to review microfinance as a strategy.
Aside from microfinance, rural financial institutions should begin to consider all the other parts of the system. Poverty cannot be reduced by focusing only on just one part.
What do I mean by this? Perhaps its about time that new financial products and services should be made to cater to the other needs of poor families. Microfinance is designed to augment family income. Since it is meant to augment income, the most likely target for this is the wife or the women who remain at home while the husband goes out to work.
Over the years, microfinance has tried to replace the main source of family income by encouraging the women to get bigger loans to expand their small enterprise. But without the right education and experience and entrepreneurial attitude, this attempt will only result to over indebtedness of the family.
The poverty reduction strategy is skewed and overly biased towards women (please forgive me for this statement, but this is the reality in all microfinance programs). We tend to forget that in the Filipino culture, the men still make decisions in the family and in the communities. It is the men who earn the main family income. This is true especially in the rural areas where most of the poor live.
Rural areas are generally agriculture areas and the men are mostly farmers and fishermen. By helping the men to earn more from their main source of income, we can perhaps improve the income earning capacity of the family. However, microfinance is not designed to cater to men or to farming and fishing activities.
If we want to make a considerable impact on poverty, then microfinance and the methodologies used today are not enough. There will be a need to innovate in terms of financial products provided, one that will cater to the financial needs of the farmer and fishermen. There will be a need to innovate in terms of the delivery system of services, one that will adopt existing systems used by farmers and fishermen. Finally, there will be a need to organize an entire chain of activities that will help reduce the risk for the farmers and for the financial institution providing the working capital.
What matters at the end is that we should not stop in thinking of ways of helping the poor. We may never get rid of poverty, but we can certainly think of new ways to help reduce it.
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