KCCDMFI: A maverick in Southern Mindanao
Published May 7, 2023 04:05 pm
FROM THE MARGINS
When the going gets tough, the tough get going. There is one microfinance institution (MFI) that always comes to mind whenever I hear this phrase. I have the utmost respect for the Kasanyangan Center for Community Development and Microfinance Foundation, Inc. (KCCDMFI), because it was one of the first MFIs to offer financial services to Muslim communities in Basilan, Sulu and Tawi-Tawi. These island provinces, collectively referred to as BASULTA, are among the poorest in the country, with high poverty incidence among families. KCCDMFI founders went where no one dared to go. Because of their daring, a number of MFIs followed. Generous sharing of their experiences encouraged other MFIs to extend their operations in Muslim communities.
Pioneering moves
KCCDMFI was a spin-off from the microfinance program of Kasanyangan Foundation, Inc. (KFI), an NGO established in 1998 as a service project for Agrarian Reform Beneficiaries (ARBs) who were former union members of the National Federation of Labor (NFL). KFI started its own Grameen Bank replication program in Zamboanga City in 2001 with an initial capitalization of only ₱500,000. After a successful pilot project, KFI was given a credit line of ₱5.5 million by the then People’s Credit and Finance Corporation (PCFC) in 2002. This was subsequently increased to ₱11.5 million. In 2004, KFI decided to spin-off its microfinance program into a separate entity. The Kasanyangan Center for Community Development Foundation Inc. (KCCDFI) was registered with the Securities and Exchange Commission in 2005, with ₱53.37 million assets. Rodolfo Quinday (RQ), KFI’s microfinance program’s manager, became the first president of KCCDFI. In 2008, KCCDFI shifted from the modified Grameen Bank Approach (group liability for loans) to the ASA Lending Methodology (individual liability), leading to the expansion of its microfinance operations to cover the entire City of Zamboanga and communities all the way to Basilan, Sulu, Tawi-Tawi, Zamboanga Sibugay, Zamboanga del Sur, Zamboanga del Norte, Iligan, Cagayan de Oro and Cebu.Learning from hardships
The journey was not all roses. KCCDFI suffered many setbacks, like operational constraints due to the deteriorating peace and order situation, lack of financial resources to sustain expansion and regulatory requirement challenges. The 2013 Zamboanga siege posed major challenges. Due to the worsening peace and order situation, rebels took over Zamboanga City, burning houses and closing down businesses. The siege displaced over 23,000 families and severely affected the region’s economy, causing many of its borrowers to become delinquent on their loans. KCCDFI was forced to scale down its operations and close 14 branches in 2015, due to increasing past due loans and security threats that hampered operations in BASULTA. Its liquidity was severely affected; its credit facilities were suspended to give way to rehabilitation. But in every crisis, KCCDFI found opportunities for transformation. It plodded on and eventually recovered. They were able to surpass difficulties, with Atty Ibarra (Bong) Malonzo taking the lead when RQ retired in 2016. Republic Act No. 10693 (the NGO Microfinance Act of 2016), led to the renaming of KCCDFI into the Kasanyangan Center for Community Development and Microfinance Foundation, Inc. (KCCDMFI). Bong retired in 2021, handing the reins to Ms. Mercedes (Mercy) Faustino, the first woman president and CEO of KCCDMFI.Enabling the enterprising poor
According to Mercy, KCCDMFI aims to be a “trusted partner of low-income households empowered to build sustainable livelihoods and communities in the Philippines.” It offers Kabuhayan Loans to support clients’ income-generating activities and MSMEs, as well as Agri-Kabuhayan Loan for agricultural and fisheries production. It also offers Eskwela Loan for the educational expenses of clients’ children, Ayos-Bahay Loan to assist in fixing their houses, and Covid Rehabilitation Loan to help clients recover their losses from the pandemic. It synergies the different KMFI institutions to deliver capacity-building and enterprise development services to clients. It provides microinsurance services via the KCCDFI-MBA, which offers basic life insurance, credit life insurance, Hospitalization Assistance Pamilya Insurance (HAPI) plan, St Peter Memorial Package and burial assistance to clients. It also provides non-financial services and community development programs on health, education, sanitation, environment, and livelihood.Moving forward
As of December 2022, KCCDMFI has 21 branches in Zamboanga Peninsula and a branch in Tawi-Tawi. They have 22,000 active clients with a loan portfolio of more than ₱183 million. Their collection rate is now more than 90 percent and rising. Mercy is leading KCCDMFI’s transformation through digitalization. Plans are in the offing for the opening of more branches and the development of more products and services. By 2027, It aspires to be the leading MFI in the Zamboanga Peninsula with an outreach of 40,000 active borrowers, a loan portfolio of ₱400 million and a net surplus ₱40 million. I am sure they will meet this goal. It has already proven its mettle, doing what the great Confucius once said: “Our greatest glory is not in never falling, but in rising every time we fall.” *(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.)*