MANILA, Philippines — Local rural banks and cooperatives started the concept of practicing of servicing loans as early as the 1960’s. Agricultural workers and fisherfolk benefited from the access to small credit. The banks, however, could not sustain the programs due to low payment ratio and some structural problems in the scheme.

In the mid-1970’s until the 1980’s, the government mobilized rural development banks and other governmental financial institutions to provide highly subsidized credit to the marginalized sectors. But the Directed Credit Programs (DCPs) of the government failed because of their inability to reach the target clientele and subsidized credit went instead to big borrowers.

The lessons learned from the implementation of this government program contributed to the development of a new approach in credit methods. By the mid 1980’s, non-government organizations (NGOs) became partners with government in the fight against poverty, using microfinance as a tool to provide small loans for small business activities. Microfinance has grown dramatically since the 1990’s and although certain regulatory and prudential issues hounded local microfinance initially, the needs of the poor entrepreneurs were ably met.

At a recent National Microfinance Stakeholders Summit, the country’s microfinance industry was cited as the world’s best in terms of regulatory framework and second best in terms of the overall business environment by the Economist Intelligence Unit in its report “Global Microscope on the Microfinance Business Environment.” From a small industry a decade ago, it has grown to 210 banks who have granted over R6 billion in loans to more than 900,000 microentrepreneurs. These microentrepreneurs, in turn, generated employment in their local communities and saved billions in bank deposits.

We congratulate the Philippine Microfinance Industry for touching the lives of the marginalized sectors of society, liberating millions of Filipinos from their deprivations, changing their way of life, and transforming their lives into a life of freedom and abundance.