Giving charity to the poor is easy but teaching them a livelihood takes real commitment. Case in point: Mang Pandoy -- father of eight, former street vendor and, until recently, the poster boy of the Filipino poor.
During the presidential debates for the 1992 elections, Mang Pandoy (real name Felipe Natanio) became a buzzword for Filipino politicians who wanted to trumpet their plans to improve the lot of the marginalized segments of society. Having finished only Grade 3, Mang Pandoy made a living selling vegetables until he grew too sick to even do that. In one television show hosted by sociologist Randy David, he joked that he would agree to be shot in exchange for P100,000.
As poster boy of the Ramos administration, he earned at least P2,000 per episode as co-host of a weekly TV show and was later hired as consultant by then Speaker Jose de Venecia. He also received doleouts from both the Quezon City government and de Venecia but failed to make the money grow even as national leaders all but forgot him.
Last Sunday, the 63-year-old former street vendor caught the nation's attention for the last time when he died of tuberculosis.
Jaime Aristotle Alip, co-founder of the Center for Agriculture and Rural Development Mutually Reinforcing Institutions (CARD MRI), said the story of Mang Pandoy gives new meaning to his group's mission to give a helping hand to poor and landless farmers who are striving to rise out of penury.
"It takes three to five years to bring a family out of poverty. It takes another five to eight years to stabilize them because a calamity could come and then everything they've worked for could be destroyed. And then you need another five years to move them from microentrepreneurs to full-fledged SMEs. It takes a real commitment for change, for sustainable development," he said during a forum at the Ramon Magsaysay Foundation.
Alip has been fighting the good fight against poverty for more than 20 years since he and several like-minded individuals founded the CARD NGO to provide microfinancing to landless, rural workers in the country. With little more than P20 in his pocket and a typewriter to write grant proposals, Alip said he founded the center with a vision - to establish a bank owned by the landless poor.
"Everyone I talked to said I was very idealistic and a little crazy. The farmers may not have the land or the property but they will own the bank," he said.
CARD MRI's business model was simple: give a group P3,000 to P5,000 in working capital to establish a sari-sari store, piggery or any other microenterprise at 1 to 2 percent monthly interest and watch how the small capital leads to changed lives.
Today, CARD MRI has 629 branches throughout the country. The institution services a total of 680,632 clients and hopes to reach one million clients by the end of 2009.
CARD MRI's total outstanding loans as of June 2008 is at P2.3 billion, which accounts for 40 percent of the total microfinance portfolio in the country. Alip notes with pride that repayment rate for CARD MRI microfinance loans is an astonishing 99.46 percent as of July.
Because of their efforts, CARD MRI has been named this year's Ramon Magsaysay awardee for public service for "successful adaptation of microfinance to the Philippines, providing self-sustaining and comprehensive financial services for half a million poor women and their families."
Alip still laughs at what he calls the center's "growing pains" when they first started out several months after the 1986 EDSA People Power Revolution. To get funding, he borrowed money for a plane ticket to Japan in order to submit a proposal for a $10,000 grant to the Asian Community Trust office in Tokyo.
Since he had no money for a hotel, Alip slept on a waiting bench at the Narita airport for three days and took the free shuttle to Tokyo every morning to meet Takayoshi Amenomori, then secretary-general of Asian Community Trust. He said Amenomori later discovered where he was staying and asked him to stay at a hotel inside the airport complex.
"I was very proud and I still am. He followed me to the airport and found out where I was staying. He later told me that he would submit my proposal to the executive committee and would even look for another funder," he recalls.
For his efforts, Alip walked away with a $20,000 grant to establish a training focused economic assistance program for landless rural workers in San Pablo City and Bay, Laguna province.
Yet even with the money, CARD MRI still had to learn the ropes in finding a good business model for the group while striving for their original goal of giving capital to the poor.
"We did not have a clear definition of who were the poor we wanted to serve. We let the members of our organized groups decide when to pay back their loans. We did not institute rigid supervision. We did not consider savings to be important. We never paid thought to cost recovery. Consequently, only two of seven groups provided with loans were able to repay on time. Internally, generated savings was almost nil and our resources were slowly dwindling," he said.
Alip said the group then looked to Bangladesh, which was then considered a mecca of sustainable microfinance. Drawing inspiration from the Grameen Bank and its founder, Prof. Muhammad Yunus, CARD MRI adopted its own microfinance model by targeting the poorest of the poor, particularly women; the formation of small groups; small loan amounts and small repayments in weekly meetings, and compulsory weekly savings, among others.
Alip says the shift from a poverty alleviation approach to a financial systems approach worked as default loans went down and repayments went up. Inspired by their successful business model, the group established the Landless People's Fund, which they envisioned would later become a bank owned and managed by landless, poor women.
Alip admits that their microfinancing arm tends to favor women "because there is an immediate effect on poverty alleviation on the family."
"By experience, when you give the women a loan and that money starts generating an income, it immediately goes to food, clothing for the children, to the needs of the household. If you give it to the men and the money earns an income, the priorities are different. They build gardens, beer gardens. Some pay off the loans but not all," he said.
Growing the organization
Alip says the high repayment rate of their clients emboldened CARD MRI to pursue its original vision of founding a bank owned by the poor. On September 1, 1997, the Bangko Sentral ng Pilipinas (BSP) granted CARD Bank a license to operate as the very first microfinance-oriented rural bank in the Philippines.
It was, Alip says, "the best manifestation of what empowerment is all about."
During its first week in operation, a BSP representative came to a CARD Bank branch and was surprised that the institution had no collateral and the loans too small. "They told us that we broke the first rule of financing, which is that 70 percent of loans must be fully collateralized. We said that our clients are landless poor, they have no houses and lots," he said.
He said BSP was finally convinced of the financial viability of the institution when it saw that CARD Bank's loan repayment rate was nearly 100 percent. "It showed BSP that microfinance is viable and that the poor can pay," he said.
The success of CARD Bank would later lead to establishment of other institutions including the CARD Mutual Benefit Association (CARD MBA), the CARD MRI Development Institute and the CARD Business Development Services (CARD BDS)
Alip says he established CARD MBA because many of their microfinance clients did not have life insurance or even plan for the deaths of their loved ones. "I used to tell the nanays, 'Don't die. It's expensive to die!'" He said the institution now services 2.5 million individuals with death and funeral benefits, medical subsidies and pensions.
On the other hand, the CARD MRI Development Institute caters to the learning needs of CARD MRI staff while offering non-degree courses on microfinancing. He said the learnings of CARD MRI can be learned by applying to the courses including a Master of Arts in Organization Development and the Master of Science in International Economic Community Development both majoring in Microfinance Management.
Finally, CARD Business Development Services serves as the business arm of the group, which provides services such as business consulting, forward and backward integration and larger capital. Alip said one initiative of CARD BDS is the establishment of "HAPINOY" stores, which are similar to the 7-11 chain of 24-hour convenience stores.
Fighting the doleout mentality
It's hard to argue with the success of CARD MRI when their numbers are this good.
Alip said one satisfaction of going into microfinance is debunking traditional banking wisdom that the poor cannot pay back their loans. He said microfinancing has already made a difference in poor communities in Mindoro, Masbate and Samar Island "where there are no banking facilities."
One strategy that has made CARD MRI a leader in the microfinancing industry is its focus on communities where microlending institutions are not present.
Alip says CARD MRI has opened microfinance branches in places as far as Jolo, Tawi-Tawi and Sulu where they discovered a whole new batch of clients seeking capital to start their own businesses.
In one instance, he said one CARD MRI branch failed to make their collections after firefights broke out. He said the branch manager later told him that their clients came straight to the CARD MRI branch and paid their dues as soon as the fighting stopped.
Alip admits that while doleouts are necessary to help the poorest of the poor, a doleout mentality can be counterproductive in the long term.
He also points out that microfinance is part of a larger set of factors that can alleviate poverty. After all, he says that while giving working capital to landless and poor farmers is a necessary first step in helping them out of penury, there should be sufficient infrastructure to ensure that the gains made are not erased by circumstance.
"I was very sad to hear about the case of Mang Pandoy. In CARD, since we operate mostly in the countryside, once we assist the landless and the poor, we go with them through a lifetime. As long as they need us, we will be here to give them all the help that they need. It's a long term arrangement and this necessitates that you aim for sustainability. Teach the poor financial responsibility, as microfinance is not charity; it should bring dignity, not perpetuate self-pity," he said.