FROM THE MARGINS
There is much optimism after news of the economy’s robust growth in the last quarter of 2022 came out. The challenge now is sustaining this and ensuring that growth trickles down to the poor. After all, just a few weeks ago, the SWS reported that 51 percent of Filipino families or about 12.9 million households self-rated themselves “mahirap” or poor. We can combat poverty by promoting financial inclusion.
For years, the government has been working toward greater financial inclusion, a key component of which is microfinance. Microfinance is the provision of a wide-range of financial and non-financial services to poor and low-income households. It plays a critical role in poverty alleviation, as microfinance supports microenterprises, enabling poor people to increase their income and improve their living standards.
There are many microfinance institutions (MFIs) operating in the country. One of the biggest is ASA Philippines, which was founded by Kamrul Hasan Tarafder, an expert in the microfinance approach designed by the legendary founder of the Association for Social Advancement (ASA)-Bangladesh, Shafiqual Haque Choudhury. Kamrul, as we fondly call him, was the Team Leader of the technical service provider of MSP-Philippines, the UNDP’s MicroStart Program in the 90s. He taught the ASA methodology to many MFIs in the country from 1998 to 2004.
Kamrul believes that microfinance, especially the ASA-Bangladesh model, has a great potential for helping the poor. He started ASA Philippines in 2004 with initial funding from several foundations, but the MFI has attained self-sufficiency since 2007. As of December 2022, its outreach covers more than 2.1 million active women borrowers. Its loan portfolio stands at ₱37.3 billion with a portfolio-at-risk (PAR) of only 1.5 percent. It has 1,683 branches all over the country and has grown into one of the best performing MFIs in the Philippines.
This outstanding performance proves Kamrul’s point. In his words: “I simply wanted to prove that the (microfinance) model has the capacity to reach millions of people when rightly managed. At that time, poverty was increasing…We wanted to be sustainable, the most client-responsive and least costly microfinance.”
ASA Philippines serves entrepreneurial poor women, whom Kamrul fondly calls “Nanays” (mothers).
“These women are the heroes of our society,” says Kamrul. ASA Philippines aims not just to provide financial support to poor communities, but to promote women’s participation in income-generating activities to facilitate their involvement in decision-making processes. ASA Philippines provides credit access in the form of microbusiness loans, agri-microfinance loans, and Islamic microfinance. It also offers subsidiary loans for home financing, water and sanitation, education and solar energy.
According to Kamrul, their women-clients are their bosses. “As we are capitalizing the trust and confidence of these mothers, we want to be the best and least-costly source of their capital,” explains Kamrul. “It is not only ASA Philippines that is making an impact on our clients’ lives,” he continues. “The Nanays impact us in a big way. Our fund balance (now worth billions) comprises their contributions over the last 18 years.”
Kamrul is very proud that nearly one-third of their workforce comes from their clients’ families. According to him, 92 percent of their clients have increased their incomes. About 85 percent have increased their assets and savings, and six percent have created employment, providing over 450,000 jobs in their communities.
Hoping to do more
The Covid-19 pandemic was the biggest challenge that ASA Philippines has faced. “Our clients faced both the health hazard and business losses,” Kamrul lamented. About 308 clients died due to Covid. ASA Philippines condoned their loan balance and provided financial grants to their families. Because almost 50 percent of their clients’ business folded due to the lockdowns and community quarantines, they provided interest-free loans called MalASAkit finance in late 2020.
“We stood by our clients during the crisis,” says Kamrul. ASA Philippines provided assistance to clients through relief and grants, psycho-social support, payment moratorium, and continuous loan disbursements. Kamrul candidly shares: “Our CSR expenses went up to ₱859 million in 2020. To take care of our staff, we created internal Medical Teams with two doctors and 45 nurses, and established 90 isolation centers in different parts of the country.”
Apart from MalASAkit, ASA Philippines is proud of its Sariah financing for Muslims, which was started in 2016. The program is operating in BARMM, and Kamrul reports that as of December 2022, they have 37,774 active borrowers in 34 branches with a total portfolio of ₱911 million.
Asked about future plans, Kamrul responds by saying that while their short-term plan is to grow their outreach and portfolio, the long-term plan is to include microinsurance in their menu of services. Kamrul also hopes to bring down their lending rate, but in the meantime, they will continue to provide financial assistance to clients through MalASAKIT and other programs.
I wish Kamrul and ASA Philippines success. They are living testaments to what Jacqueline Novogratz once said: “A sustainable world means working together to create prosperity for all.”
(Dr. Jaime Aristotle B. Alip is a poverty eradication advocate. He is the founder of the Center for Agriculture and Rural Development Mutually-Reinforcing Institutions (CARD MRI), a group of 23 organizations that provide social development services to eight million economically-disadvantaged Filipinos and insure more than 27 million nationwide.)