Microfinance: Where small enterprises start success stories

Microfinance: Where small enterprises start success stories

Microfinance: Where small enterprises start success stories

There must be, by now, thousands of success stories of poor entrepreneurs whose small businesses have performed well enough to provide food, shelter, clothing and education to families. Many of these entrepreneurs have also developed other products that have created livelihood for people in their communities.

Starting with loans of from ₱3,000 to ₱5,000, the entrepreneurs have improved the living standards of their families because of microfinance loans.

There’s Mary Ann, a weaver from Quezon, who in 2010 took a ₱5,000 microfinance loan for a buri-making enterprise. Her business prospered and she became eligible for higher loans which she used for expansion. Her products now include party souvenirs which are purchased by clients here and abroad.


Another success story is Nanay Rosa in the Visayas who ran a small carinderia where she started selling lechon by the kilo, which she would prepare and roll over burning charcoal. Her interest led her to experiment on various recipes to prepare the pig before roasting, including the Cebu-style lechon flavor.

A small loan which she acquired from an NGO gave her the capital to buy pigs to cook her way. Now, she sells whole lechon to customers who prefer her recipe for the roasted pig.

There are many more of those heart-warming success stories that have given microentrepreneurs — who are incidentally mostly female — the opportunities to break the cycle of poverty.

The concept is known as microfinance (formerly microcredit). NGOs and cooperatives were the first organizations to offer small loans to borrowers who needed capital to start a business, but had no access to banks and financial institutions, and no collateral to guarantee repayment.

The important role of microfinance as an essential ingredient toward the alleviation of poverty is recognized by the government. Proclamation No. 233 signed by former president Gloria Macapagal-Arroyo in 2002 declared Aug. 17-24, 2002 as the National Microfinance Week, which continues to be observed by the sector every year.

The important role that microfinance will continue to play is highlighted by the recent report that recorded an increase in the incidence of poverty in the country.

Based on the Preliminary Results of the Family Income and Expenditure Survey (FIES) in 2021, poverty incidence among the population was “recorded at 18.1 percent. This translates to around 19.99 million Filipinos who lived below the poverty threshold of about ₱12,030 per month for a family of five.” Poverty incidence is defined as the proportion of Filipinos whose per capita income cannot sufficiently meet the individual basic food and non-food needs.

“Microfinance gives the financially excluded – the poor, the unemployed, the less educated, and the marginalized sectors — access to funds to meet their needs, support their enterprises, and prepare for emergencies,” Dr. Jaime Aristotle Alip, founder of the 2008 Ramon Magsaysay awardee for public service – Center for Agriculture and Rural Development Mutually-Reinforcing Institutions (CARD MRI). That is a group of 23 organizations that provide microfinance and social development services to some eight million individuals.

“Contrary to the hype, microfinance is not a magic formula that could wipe out poverty at one stroke. But it provides hope for the financially excluded, giving them a chance to improve their lives,” Dr. Alip said.


Poverty is a complex problem, but the success stories written by the growth of the microfinance industry in the Philippines show that work continues to be done to eradicate poverty.

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2022-08-24 00:05:00

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