Former President Corazon Aquino was in her final speeches the most determined voice in calling for the advancement of microfinance to end poverty.
“Above all, they are vehicles for restoring the dignity and self-worth of the downtrodden. They are strengthening the fabric of our society by restoring spirituality, national pride and core family values in thousands of humble homes,” she said.
The PinoyME Foundation (PMEF)—a social investment entity, which she established to catalyze the growth of microfinance—continues her legacy by striving to achieve these by sharing financial knowledge and capacity building services from experts, creating a market for microenterprises by promoting collaboration between fledgling businesses and corporations, and by providing funds to MFIs so that they may sustain the undertakings of microentrepreneurs.
PMEF was established to act on funding for MFIs, which is most critical, especially for those operating in agricultural areas where challenges are engendered by a “cycle of poverty”. In Mindanao, Ariel “Ayi” Hernandez and the Katilingbanong Pamahandi sa Mindanao Foundation, Inc. (KPMFI) brave these challenges with PinoyME as they exhaust all efforts to transform poor families into successful microentrepreneurs.
Rural poverty and the social investment fund
Fighting poverty in agricultural areas is a task fraught with challenges. The microfinance practitioner already confronts a frustrating dearth of access to resources—from potable water to medical services. But this is even exacerbated by the glaring mismatch between farmers’ seasonal incomes with expenses that need to be met every day.
Farmers only earn income during harvest time, and yet they must spend every day for food, children’s tuition, and other school expenses. To make ends meet, they borrow from loan sharks, and hence are already mired in debt long before they harvest their crops.
KPMFI addresses this challenge by bringing about opportunities for farmers to earn for their daily expenses. Ayi Hernandez says, “KPMFI intervenes, and breaks the cycle of poverty by introducing daily, weekly or monthly income for farmers.”
PinoyME also contributes to this effort through the social investment fund (SIF), which is pooled from public donations. The SIF allows PinoyME to support microfinance initiatives in higher-risk areas like in rural communities where stormy weather threatens harvests, and may affect the settlement of loans.
The livelihood opportunities brought about by the partnership of PinoyME and KPMFI include backyard broiler businesses for farmers in Gingoog City and the Municipalities of Claveria and Magsaysay, Misamis Oriental. This allow the farmers to earn an average additional income of P3,500 a month, which they can now use for everyday expenditure. The more industrious and enterprising ones can bring in more as they receive an average of P4,000 per 1,000 chickens. KPMFI also ensures profit by linking the farmers with Sr. Pedro, one of the biggest lechon manok franchises in the country with over 250 branches nationwide.
“We fight the cycle of poverty by simply providing them opportunity,” said Hernandez. “If the farmer would have a monthly seasonal income, this will now be a surplus that one can save up or set aside for the education of the children.”
Transformation goes beyond income
Hernandez shares the belief of Tita Cory and PinoyME that transformation should be goal of microfinance. He explains, “Profit is important, but more important is how the beneficiary of the project was transformed along the way.
“It’s not just the income that you’re transforming; it’s the person. Kasi may nangyayaring ang laki ng income pero wala naman na-save. I think that’s understandable for people who live in poverty or a hand-to-mouth existence all their lives. When they get the money, they just spend it.”
KPMFI inculcates the values of discipline and an entrepreneurial attitude through “forced savings and strict monitoring of their performance.”
“Transformation is what will keep them going even after the intermediaries have left,” said Hernandez. “If we fail to transform then we have failed as intermediaries.”
“We will work until those we are helping have felt what it is to be disciplined growers, to have that vision to see that they can fight poverty.”
