P4-B microfinance started with P20, typewriter

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RAMON MAGSAYSAY AWARDS
RAMON MAGSAYSAY AWARDS : P4-B microfinance started with P20, typewriter By TJ Burgonio
Philippine Daily Inquirer
Posted date: September 05, 2008
MANILA, Philippines—A venture that was started with P20 and an old Remington typewriter is now a one-stop shop offering loans, banking services and life insurance. And, because of it, hundreds of thousands of poor clients have become richer.
For the past 20 years, the Center for Agriculture and Rural Development Mutually Reinforcing Institutions (CARD MRI) has been extending all forms of credit to landless peasants to help them rise out of poverty.

From its base in San Pablo City, Laguna, it has quietly reached out to the women of landless families, even in conflict areas in Mindanao, to help them set up small livelihood projects, save extra income, and get insured in case of death.

Small wonder then that CARD MRI—an organization comprising an NGO, a rural bank, a micro-insurance company and a training institute—has been named one of two Ramon Magsaysay awardees for public service this year.

The Ramon Magsaysay Award Foundation cited CARD MRI for its “successful adaptation of microfinance in the Philippines, providing self-sustaining and comprehensive services for half a million poor women and their families.”

Named after President Ramon Magsaysay who died in a plane crash in 1957, the awards are given out every year to individuals and organizations in Asia that have shown the late leader’s sense of selfless service.

The foundation conferred the award on the new laureates in a ceremony at the Cultural Center of the Philippines on Aug. 31. The winners each received a certificate, a medallion bearing the likeness of Magsaysay and a $50,000 cash prize.

Came as a shock

“It came as a shock that we’re being awarded the Ramon Magsaysay. We thought this was reserved only for high-profile companies,” said Dr. Jaime Aristotle Alip, founding chair and managing director of CARD MRI.

Alip and 14 rural developers established CARD Inc. as an NGO for the landless rural folk in Laguna in 1986 in the aftermath of Edsa I people power revolution that toppled Ferdinand Marcos.

The following year, they quit the Philippine Business for Social Progress (PBSP) to focus on CARD and ended up revolutionizing the microfinance industry.

“PBSP had a project here concentrating on rice farmers, but I felt these landless rural workers needed more help,” Alip, 51, said in an interview at the CARD MRI’s main office in San Pablo.

These are the seasonal farmers who don’t own land, get hired by tenant farmers to plant and harvest crops, and work odd jobs in between, he said.

Starting from scratch

CARD started out literally from scratch, with a measly capital of P20—according to Alip—or just enough to buy bond paper on which to write applications for foreign grants.

It initially occupied a classroom in the Alip family-owned vocational school that had spartan provisions—an old Remington typewriter, a desk and three chairs.

Thanks to a $20,000 grant from two Japanese micro-funding agencies, including the Asian Community Trust (ACT), it launched its economic assistance program for landless peasants in San Pablo and Bay, Laguna, in 1988.

“I think my friend (from ACT) pitied me, that’s why he gave us the grant,” said Alip, who flew to Japan to meet the funders carrying one suit, spent his nights at the airport and typed his proposals on the Remington.

Shift to women

With the grant, CARD trained some 200 “landless rural workers” on project management and organizational development, organized them into groups, and provided them with loans ranging from P500 to P5,000.

The initial batch was a mix of men and women but the NGO eventually shifted to women—the mothers—because they were better at managing finances.

“They would meet each week. There was a collection of savings, payments of loans. After that, there was an exchange of experiences, and then training on education,” Alip said.

A graduate of Agricultural Economics at the University of the Philippines in Los Baños, Laguna (UPLB), Alip holds a master’s degree in Agricultural Marketing and a doctorate in Organizational Development.

Poor beginnings

The loans, payable in one year, were used to set up a variety store, handicraft store, poultry and piggery, among other “backyard projects.”

After a poor start that was marked by poor repayment, CARD picked up steam and expanded its membership from its base in Laguna to the provinces of Quezon, Marinduque, Mindoro and Masbate, and elsewhere.

In 1996, CARD applied for a license to operate a microfinance-oriented rural bank, the main goal of Alip and his colleagues for conceiving the NGO. And in September 1997, it opened the CARD Rural Bank in San Pablo.

Many of the CARD members eventually became part owners of the bank.

Secret of success

“That’s my thesis: Give them the ownership. Because for me the issue in microfinance is no longer access to credit. The issue is control of resource, and the best control of resources is by owning the equity of the bank,” Alip said.

He added: “The moment they have ownership, they’re able to get control and access in the capital. Then they can convert this into income. With income they can buy education, house for their family, food and the land that they need.”

With the bank, the members got bigger loans and, more important, opened savings and checking accounts, among others.

Alip said: “Now there are countless mothers who have their own land, own their own house, have their own business, and to me that is really bringing them out of poverty.”

In 1999, CARD formed another institution, the Mutual Benefit Association (MBA), to serve as a micro-insurance facility that would help members cope with deaths in the family and other unexpected events.

A mother’s idea

It was borne out of a mother’s proposal that CARD collect P1 each as a standby fund in case a mother or her next of kin dies. The pot reached a whopping P4.2 million, necessitating the establishment of a mutual insurance facility.

Again, the mothers were enrolled as part owners. As of June this year, MBA has insured some 2.9 million individuals around the country, more than those of many commercial insurance players.

MBA now operates in at least 47 provinces in the country, as well as in Cambodia and Vietnam.

The facility offered mortuary benefits, and loan redemption in case of the death of a mother, or any of her family members, under a “1-3-5” scheme.

This means that if a member dies, a life insurance ranging from P50,000 to P100,000 would be released to a beneficiary in one, three or five days at the most if there are any hitches, such as a delay in the release of the death certificate.

“At first, they played a prank on us. One claimed death in the family, but after three days the dead rose again. We found out about the false claim and made them repay,” Alip said, chuckling.

P4-B assets

Through this facility, CARD also offered pension to members, hospitalization and accident loans, as well as emergency loans during inclement weather.

CARD also relaunched its training center in 2004 and named it CARD MRI Development Institute, offering degree and non-degree courses for its staff. A year later, it established the Business Development Service (BDS) to help the mothers expand their micro-enterprises.

So, from the original NGO, four other institutions have been born—the bank, the micro-insurance company, the learning institute and the BDS, hence the name Mutually Reinforcing Institutions.

In 47 provinces

From a fledgling NGO 20 years ago, CARD MRI is now serving over 700,000 poor women clients in 47 provinces, including Basilan, Sulu and Tawi-Tawi, with P2.3 billion outstanding loans. It boasts of P4 billion in assets.

“Microfinance is not a panacea or the answer to all poverty,” Alip admitted. “But certainly it’s a powerful tool in helping the poor rise out of poverty.”





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