ELIZABETH CORGIO is a farmer in Sulop, Davao del Sur, who engaged in a side business of selling bread to her neighbors. Using her small personal savings, she started her own bakeshop. She was granted a P4,000 loan which helped her business to eventually take off. She now earns triple the salary of a bank manager and provides jobs to 20 employees.
Nida Jatulan and her husband, of Antipolo, Rizal, used their small savings to start making miswa, the thin Chinese noodle, which they sold in public markets. They obtained a P4,000 loan that enabled their business to expand. They now earn more than the income of a Mang Inasal franchisee and provide livelihood to 16 employees.
Eldy Tutor and her husband borrowed two sacks of ginger to plant in their one-hectare farm in Maasim, Sarangani. After harvesting a profit, they encouraged their neighbors to shift from corn to ginger. Eldy obtained a P7,000 loan to finance her ginger trading business. She now trades 60 tons of ginger per week, earns more than the salary of a senior lawyer in a Makati law firm, and provides livelihood to 220 farmers.
They are inspiring stories of people with so little, but who clawed themselves out of poverty because their tinder determination to succeed was ignited by collateral-free microfinance loans of as little as P4,000.
The life struggles and success stories of outstanding microfinance beneficiaries should make wonderful resource stories for parents to read to their children, excellent case-study materials and internship opportunities for college students, and exceptional learning examples for the government.
There are more than 200 nongovernmental organizations, cooperatives, and microfinance-oriented banks that provide P20.6 billion in small loans to almost four million Filipino small entrepreneurs. (Habaradas/Umali/dlsu.edu.ph/2013).
Most of these microfinanciers are adaptations of the successful Grameen Bank model that provides collateral-free loans to the poor in Bangladesh, adopting the philosophy that if the poor are given access to financial resources under reasonable terms, “these millions of small people with their millions of small pursuits can add up to create the biggest development wonder.”
The current thrust to spur economic growth in the Philippines is to provide incentives and opportunities to businesses. This approach as implemented, however, only benefits capital-endowed individuals because business incentives and opportunities are completely meaningless to those who lack capital. The expectation is that when businesses prosper, the benefits of prosperity will trickle down to the masses in the form of jobs.
The current approach is resulting in astounding success for capital-endowed business owners. But the trickling down of jobs to the masses has failed to materialize in commensurate significance. What do we expect if the employment generators relied upon have the core philosophy of maximizing profit by minimizing labor cost? Say hello to contractualization, inventory importation, and use of labor-saving systems.
The government must not limit the ability of the masses to achieve decent lives through mere employment. It must enable them to become business owners and employers like Elizabeth Corgio, Nida Jatulan and Eldy Tutor.
What prevents the masses from becoming microentrepreneurs—sari-sari store owners, roadside eatery owners, fish vendors, fruit- or vegetable-stand owners—is a woeful lack of even a tiny capital. What strip our farmers of honorable living conditions are scandalously usurious loans.
NGOs like the Center for Community Transformation and Kabalikat Para Sa Maunlad Na Buhay Inc., which are extending more than P1 billion each in collateral-free loans to an expanding number of underprivileged clients, and which are experiencing repayment rates of more than 97 percent, show that microfinance can be an effective tool of poverty alleviation, if properly implemented.
After redefining its programs by making wholesale funds available to reliable microfinance entities, the government must next pass the bill giving tax incentives to microfinance organizations. It is an outrage that business giants who ship their profits abroad are given tax holidays while entities who toil to help the poor are saddled with burdensome taxes. The government must devise more creative initiatives to make microfinance a tool that will transform the country into a spawning ground for employers instead of allowing its stagnation into a concentration camp of the unemployed.
Unless the government enables the masses to have access to capital in order to have a shot at becoming business owners and employers, all our laws that give incentives and opportunities to businesses are nothing but instruments that perpetuate inequality.
Anatole France once noted that “[t]he law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.”
An economic scheme that leaves business opportunities accessible only to the moneyed few breathes truth to those words. The law in all its majestic equality allows all Filipinos, rich and poor alike, to buy a Ferrari.
Now, where will tens of millions of Filipinos get bus fare to reach the Ferrari showroom and sign the deed of sale for a gleaming sports car?
Joel Ruiz Butuyan lends his legal services to various NGOs that work with the poor.