FROM THE MARGINS

People often say that knowledge is power.  This is true, but I believe that real power lies in the sharing of knowledge for the benefit of many.  This is important, especially for the microfinance sector which targets vulnerable groups that usually do not have sufficient financial and credit documentation.  The lack of information to assess the creditworthiness of borrowers makes microfinance institutions (MFIs) vulnerable to adverse selection and moral hazard.  In the same way, the lack of credit history limits the access of microentrepreneurs and low-income clients to much-needed financial services.
Luckily, this constraint is already being addressed by the Philippine microfinance industry.  In 2012, the seven largest MFIs in the country established the Microfinance Information Data Sharing, Inc. (MiDAS), a credit bureau that is dedicated to microfinance borrowers.  It aims to boost growth in lending to low-income groups by collating, developing and analyzing credit information on individuals, MFIs, and all types of business concerns for risk management.  

The MiDAS is a data sharing system that allows MFIs to submit reports, send inquiries, and retrieve results on borrower information.  This information exchange platform makes lenders more comfortable at extending loans to microfinance clients.  It also gives borrowers with good credit standing easier access to loans from MFI subscribers.  It is different from traditional credit bureaus in that it does not blacklist clients. Apart from guiding lenders in credit decision-making, MiDAS helps in the rehabilitation of borrowers at risk.  It supports both the social and financial mission of microfinance, consistent with the industry’s advocacy for poverty eradication and financial inclusion.

Growth and inclusivity

Last week, I attended the MiDAS Board meeting in Bacolod and was very happy to note the credit bureau’s recent milestones. It is collecting credit information from 53 MFIs, covering 80-90 percent of the country’s microfinance market.  As of October 2023, the MiDAS database consists of more than 13.65 million clients.  Its Borrowers-at-Risk Information Sharing (BARIS) sub-system contains data from 1.49 million clients, while the MiDAS Positive Data Sharing (MPoDS) sub-system has data from 12.15 million clients.  BARIS provides a system for credit checking and reporting borrowers at risk within a community of credit grantors, while MPoDS provides positive collection results from reports submitted by partners and subscribed institutions.  

The MiDAS allows MFIs to manage loan risk more efficiently and expand their lending operations to a larger set of borrowers.   As part of the agreement with MiDAS partner- institutions, data is distributed to MFIs based on reciprocity – those that submit data can access information from the system, continuing the exchange of credit information among members and subscribers. Their credit reports and references are all handled by MiDAS, including their company profiles, financial performance and conditions, management, and debt records.

I welcomed the opportunity to hear about the next five-year development plan that was unveiled by the new chairman, Gilbert “Gomby” Maramba of the Negros Women for Tomorrow Foundation.  It outlines the strategies by which MiDAS intends to pursue its missions: first, to provide a simple and reliable data exchange platform that ensures data integrity and security towards optimum client protection; and second, to give technical assistance to MFIs for the rehabilitation of borrowers at risk and maintenance of good clients to achieve self-sufficiency.  

MiDAS President Angelo “Boy” Solarte was also thrilled to announce that exceeding expectations, the credit bureau’s membership has grown exponentially. Thousands of individuals and micro-entrepreneurs are now benefiting from its services. This growth signifies not only members’ trust, but also the dire need for credit bureau services within the microfinance sector.

Empowering lives through data

One of the most significant achievements has been MiDAS’ ability to empower individuals with the financial information they need to make informed decisions. Through the credit reporting services, MIDAS subscribers enable borrowers to build positive credit histories, opening doors to better financial opportunities.

Because of its commitment to transparency and data accuracy, MiDAS has not only earned recognition but has also played a pivotal role in promoting responsible borrowing and lending practices. Thus, it has always enjoyed the support of government agencies like the Credit Information Corporation (CIC).  

As Boy reflected on MIDAS’ journey, several milestones stood out:

Its membership has grown tenfold, reaching individuals and small businesses in even the most remote areas. MiDAS is really promoting financial inclusion. Thousands of borrowers have accessed affordable credit, expanded their businesses, and improved their livelihoods thanks to MiDAS’ credit reporting services. It has forged strategic partnerships with many institutions, including CIBI Information, Inc. a credit bureau that will help in credit scoring MiDAS’ clients. It also signed a Technical Assistance (TA) agreement with the Asian Development Bank for institutional and capacity-building support.

With these developments, I am sure that MiDAS will continue to have a lasting impact on the Philippine microfinance landscape. 
 

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 “MiDAS has become a trusted partner of microfinance institutions, lenders, and regulators alike, contributing to the overall health and stability of the financial ecosystem.” - Gilbert ‘Gomby’ Maramba

(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).)