Micro finance: Financial Services with a Human Face

As Ms. Never Balkido came up to receive her prize as best entrepreneur of the month she tearfully told her story to the assembled group leaders of Baba’s Foundation Incorporated (BFI) Micro-finance scheme. She started borrowing from BFI in 2004 with her initial loan of $US 83. She used the money to buy vegetables from her neighbors and sell them in the nearby market. Five years and 11 more rounds of borrowing and repayment later, Never was able to buy a small van to transport her ever expanding quantity of vegetables which she collects from many more neighbors in her neighborhood as well as from two others.

BFI, one of AMURT’s oldest local partners is based in the Mindanao Island of the Philippines. It was founded in 1988. It shifted from its grant-sponsored social service activities (7 pre-schools, 16 consumer cooperatives, demo plots on sustainable agriculture) to Micro-Finance in 2004 when donor grants became increasingly scarce in the competitive NGO field in southern Mindanao. “We realized that we had to find a way to make our organization more sustainable as grant money eventually terminated and we were constantly forced to look for new grants. When the government amended laws to allow micro-finance services to be undertaken by NGO’s we decided to do our organizational makeover”, said Cristita Racosalem Epal, 48, BFI’s Executive Director who joined the institution 18 years ago.

Today BFI is a leader in the micro-finance field known for its innovative techniques that appeal to the real needs of the poor. Social services such as children’s advocacy, gender awareness, waste management and marketing linkages workshops still occupy 30% of BFI’s programs. Forty percent of the income from BFI’s micro finance activities go to support its social services which are largely self funded nowadays.

The majority of BFI’s 27 full time staff members daily tread the compound pathways and market places to encourage small scale entrepreneurs to join their program which offers attractive insurance schemes unavailable in the more traditional micro-finance institutions. Its 3000 card carrying members by virtue of their 250 PHP ($5.20) enrollment fee are entitled to additional benefits in case of death, wedding, sickness, fire, child delivery (almost all of BFI’s clients are women), even birthdays! “One woman who lost her leg through diabetes could claim money from BFI’s insurance scheme. Even though she belongs to two other micro-finance groups they do not offer insurance like we do. That’s why our MWS (Member’s Welfare System) is the talk of the town. Our popularity grows by word of mouth”, explains Ed Epal, 46, BFI’s Micro Finance Program Manager.

BFI offers loans to 7 different categories of income earners, but the most popular one is an informal cluster of 30 people, called a center. Each center will have 10 triads of 3 people each. The loanee must be guaranteed by her other two co-makers. BFI’s field officers collect money from their clients in the morning and visit defaulters in the afternoon. “We have a zero tolerance policy for loan repayment. Our officer will sit in a client’s house even past midnight if necessary until she or her co-makers pay up. With groups our repayment rate is 98%”, says Epal.

In five years the BFI has been able to establish 193 centers serviced by 5 branches in Davao City, Panabo, Butuan, Compostela Valley and Agusan Sur Province. Short term plans include opening three more branches this year, while long term objectives are to open a micro finance bank and start a Wellness Center. With the creativity, enthusiasm and managerial skills honed over 20 years of community work one gets the feeling that the only direction BFI can go is up!