Microfinance Lending Program of Cooperatives in Cebu, Philippines: Realities, Benefits and Women’s Participation

Microfinance Lending Program of Cooperatives in Cebu, Philippines: Realities, Benefits

and Women’s Participation

1Ferdinand T. Abocejo, 1Zosima A. Pañares, 1Leonora T. Dotillos, 1Lito L. Diones and

2Sherwind A. Belciña 1Cebu Normal University 2Southwestern University

Date Submitted: June 15, 2012 Originality: 97% Date Revised: September 12, 2012 Plagiarism Detection: Passed

ABSTRACT

The study examined the contributions of microfinance programs channelled through cooperatives for the government’s poverty alleviation thrust particularly among microcredit beneficiaries. We implemented the study through personal interviews with management representatives from sample cooperatives and randomly selected cooperative members who were microfinance program beneficiaries. The study used qualitative-quantitative descriptive survey design utilizing primary and secondary data from sample cooperatives and their members. Majority of the interviewed respondents were women. Government microfinance program have led to improved assets, capital build-ups and profits of cooperatives. As noted, income levels increased among microfinance program beneficiaries. Augmentation of family and household incomes subsequently improved the living standards of member recipients. There was expanded access to microcredit and education by children of program beneficiaries. Women empowerment was evident with strong participation of wives in leading micro-entrepreneurial activities. However, with relatively large household size, exits from the poverty threshold among member households were not substantial. The study also found that many member beneficiaries keep renewing their loans becoming habitual/perennial borrowers from micro-credit lending with availed loans not used anymore for microenterprise activities. We recommend that access to microfinance program should be strengthened and sustained especially for cooperative members in the low income groups.

Keywords: poverty alleviation, microfinance program, cooperatives, credit assistance, cooperative member-borrower, women’s participation

Acknowledgement: The research team acknowledges the Commission on Higher Education – Zonal Research Center (CHED-ZRC) for the financial assistance granted in the conduct of the study as part of the CHED Grant-in-Aid (GIA) 2009 cycle and also for the logistic supports extended to the research team and field researchers by the Cebu Normal University (CNU).

25 CNU Journal of Higher Education Special Edition of Poverty Alleviation, p.25-39

INTRODUCTION

Poverty reduction is a priority thrust of the Philippines government. It is well articulated in the ten-point agenda of the Medium Term Philippine Development Plan (MTPDP) for the period 2004-2010. To attain this goal, the government is implementing multi-faceted poverty reduction strategies, one of which is the microfinance program design to help low income households gain access to micro-credits. Provision of government and private sectors’ capitalisation was channelled to cooperatives because of their strong presence at the grassroots level. Small and large scale cooperatives carry out microfinance programs inherent to their mandate with derived benefits in terms of acquiring assets, increasing capitalisation and generating profits for the organisation and for their part-owner members.

Evidently, member households seek loans from cooperatives for diverse

financial needs. These include running small enterprises, build assets, stabilise consumption and earn profits for sustenance. Microfinance scheme sets the provision of a broad range of services such as credit, savings, insurances, remittances, and transfers to low-income households (Almario, 2006). The scheme provides microfinance lending assistance to individuals or groups of borrowers for sustained micro-enterprise initiatives aimed at uplifting their standard of living. In this context, the role of cooperatives in supporting the government’s efforts of reducing poverty cannot be under-estimated. Credit cooperatives spearhead grassroots-level development initiatives through microfinance program assistance for their member beneficiaries.

In this study, the crucial role which cooperatives actively play in delivering

microfinance services to their members at the grassroots is highlighted. The research emphasised the presence of cooperatives in the local economy which essentially brings about poverty alleviation among microfinance beneficiaries. The study also highlighted the participation of women at all levels of microenterprise activities. Remarkable accomplishments about effective resource mobilisation by cooperative member-owners are likewise discussed. Notable achievements on sustainable microfinance livelihood activities catalytic to local entrepreneurial development are also highlighted.

Conceptual Framework

The study argued that cooperatives equitably share their assets to every member whereby qualified beneficiaries gain equitable access to microfinance program. Capitalisation is sourced from the national government, private sector and foreign fund providers channelled to cooperatives in the form of soft loans bearing low interests as financial assistance intended for cooperative members’ microenterprise livelihood initiatives.

26 CNU Journal of Higher Education, Special Edition of Poverty Alleviation (2012)

Provided capitalisation which is used by cooperatives as revolving funds for microcredit lending afford their member-borrowers to expand assets and generate profits for sustenance and other vital household expenditure needs. Subsequently, member-borrowers are recognised as part-owners of the cooperatives which provide microfinance assistance for target beneficiaries when the latter seek to borrow capital investments for micro-enterprise ventures. Cooperative members are aware of the value of raising and investing their net earnings in productive microenterprise initiatives. Their full awareness of being part-owner members of the cooperatives led them to engage in productive microfinance activities that afford them to augment income, improve financial resources thereby raise their quality of life. Better living conditions eventually foster good health of family/household members and enable them to send their children to learning institutions offering quality education and subsequently exit from the vicious cycle of poverty.

Research Objectives and Significance of the Study

This study determined the contributions of government’s microfinance program on cooperatives and their members. On cooperatives, we looked into how microfinance program contributed to their assets, capitalisation and profits. On cooperative member borrowers, we examined the contributions of microfinance program on their disposable income, expenditures, living standards and women’s participation.

Findings of the study would serve as bases for formulation of microfinance

guidelines and policy directions essential for improved cooperative microcredit services delivery. To this end, the study hoped to give evidence and render visible the vital contributions of cooperatives in realising the government’s goal of bringing microfinance program recipients out of the poverty chain.

LITERATURE REVIEW

The United Nations Development Program’s Millennium Development Goals (MDGs) on Eradications of Extreme Poverty and Hunger [UNDP-MDGs] (2000) strengthens the view that microfinance lending is an alternative avenue which plays a larger role in the development of an economy. Through micro-financing scheme, it is hoped that whenever possible, resources can take the form of productive assets that could empower people, especially the women, to improve their standard of living. This in turn requires that economic institutions provide policies and avenues conducive to meeting the urgent challenges of development and poverty eradication. The micro-financing scheme seeks to reduce poverty by increasing the access of poor people to savings and credits so that they can invest on physical capital supportive to increased productivity particularly among low income groups. Furthermore, it seeks to provide working capital for the purchase of inputs for productive livelihood initiatives (UNDP, 2000).

27 Abocejo, Pañares, Dotillos, Diones and Belciña: Microfinance Lending Program

The Regulatory Framework for Microfinance (RFM) in the Philippines formulated by the Department of Finance [DOF] (2000) strongly supports the current government’s fight to alleviate poverty. There are urgent needs of the people who do not have the basic transaction facilities particularly the non-salaried workforce. In so doing, the RFM advocates tightening of the regulation for the commercial micro-lending sector so the people could do away from over-indebtedness. The regulations include the strategies that redress the power of the lenders over the borrowers. On the other hand, the benchmarking Philippine MFIs (2005) stressed that the Philippines has a well-defined policy and regulatory architecture for microfinance which enabled microfinance institutions to improve the living conditions of hundreds of thousands of low-income Filipinos.

Past government initiatives for poverty alleviation from the 1960’s to the

1980’s were focused on direct credit and guaranteed programs which provided massive credit subsidies to bring down the cost of borrowing for target sectors. These programs resulted in very limited effectiveness in outreach and brought about a great cost to the Philippine government’s budget (DOF, 2000). The problems pertaining to massive repayments were not met; funds were captured by large scale-borrowers; mobilisation of deposits was neglected and a huge fiscal cost for the government was experienced (DOF, 2000).

Kondo, Orbeta, Dingcong and Infantado, (2008) argued that the impact of

availing of microfinance program loans on per capita income and per capita expenditures is mildly statistically significant (significance level 10 percent). They found that obtaining microfinance loan translated to higher income among borrowers by about Php5,222.00 annually (US$116.00) compared to those who have not availed loans among rural Philippine households. Their research findings indicated that per capita expenditure is positively affected by access to microfinance program loans. Previous study conducted by Zeller, et al. (2001) in Bangladesh illustrate similar higher estimate of annual average impact by about 37 percent (per capita income as the dependent variable). Moreover, Kondo, et al. (2008) found that per capita expenditure on food is also positively affected with access to microfinance loans. They estimate that borrowing households earned about Pph1,333 (US$30.00) higher per year compared to those who did not avail of microfinance program loan.

Along this line, government policies have emphasised reforms to develop a

credit facility environment, promoted and supported private institutions to broaden and deepen their services. Subsequent policy issuances and laws that were passed, the microfinance markets have been driven by private sectors with the government only providing an enabling policy and regulatory environment (Almario, Jimenez and Roman, 2006). Over the years, the Philippine government has been actively extending credits and technical assistance to MFIs which implement microfinance lending programs to the low-income groups. These credits and technical assistance include direct lending, channelling funds and providing credit guarantees to MFIs for their member beneficiaries, encouraging linkages between banks and MFIs with incentives package for those which engaged in microfinance (Kondo, et al., 2008).


METHODOLOGY

In this study, we adopted a quantitative-qualitative descriptive survey research method with focus on secondary and primary data collections for cooperative and microfinance beneficiaries. Existing records of cooperatives pertaining to their microfinance program operations, capitalisation and member-clientele related activities were examined. Primary data were gathered through the use of a validated survey questionnaire. The research put emphases on microfinance-related initiatives of the cooperatives and their client-member beneficiaries.

Research Locale and Sample Cooperatives, and Respondents

We implemented the study in various localities Cebu province, conducted interviews with eight (8) management officials from each cooperative and 400 randomly selected cooperative microfinance program beneficiaries. The study respondents involved the low-income workforce with particular focus on the women who are cooperative members. Respondents’ selection was based on the following criteria; (1) they must have applied for a credit/loan with the cooperative financed through the microfinance program; and (2) they have been legitimate members of the cooperative for at least three years. Wives, who were mostly present in their houses/stores during the interviews constituted the large majority of the respondents.

Research Instrument

We developed a researcher-made interview guide based on the Living Standard Measurement Survey of World Bank. The instrument was pilot-tested to more than 50 respondents, then a reliability test (Cronbach’s alpha = 0.71) was instituted. Actual interviews were then conducted to randomly selected microfinance beneficiaries according to the inclusion criteria.

Data Gatherings and Analyses

The study identified four (4) each from small and large scale sample cooperatives in various locations of Cebu province, Philippines where secondary data were gathered from each Cooperative Management Office (CMO). Upon obtaining approval from respective cooperative management, we asked for the list of members who qualified as target respondents (one per household) based on the inclusion criteria. Research respondents were randomly drawn from the sampling frame. Then our trained field researchers conducted household-level interviews. The study was conducted in a period of eight months.


RESULTS AND DISCUSSION

Microfinance program implemented by sample cooperatives were examined to determine their contributions on the government’s poverty alleviation thrust through the provision of financial access to cooperative members and target beneficiaries. Respondents’ profile, acquired assets through productive microenterprise activities, capital accumulation, profit realisation and related benefits are presented and analysed in the succeeding discussions.

Contributions of government microfinance on cooperatives

The sample cooperatives obtained their capitalisation for microfinance programs from the Land Bank of the Philippines (LBP), National Confederation of Cooperatives (NATCO), Philippine Cooperative Central Fund Federation (PCCFF) and People’s Credit Finance Corporation (PCFC). For some sample cooperatives, foreign donors also provide funds for livelihood loan assistance for their legitimate members. LBP, PCFC and NATCO have been substantial financers for almost all sample cooperatives.

Table 1. Selected indicators of samples cooperatives

Minimum Maximum Average

Number of Members 200 39,000 13,660

Membership Fees 100 500 130.00

Capitalisation

Initial Capital 500 5,000 1,740.00 Year Started 1970 2007 Present Asset (2009) Php5.6 million Php2.8 billion Php8.72 million

Microfinance Component

Total Amount of Financing

This year (2009) Php2.0 million Pph1.8 billion Php566.72 million

Last Year (2008) Php1.5 million Php1.4 billion Php463.84 million

Total number of beneficiaries

At the start 9 278 14 At present 150 3,621 878

Beneficiaries with standing loans 90 3,422 815 Percentage share profit from Microfinance (%) 3 6 3.67 Note: Based on a currency exchange rate of US$1.00 = Php45.00

Cooperatives gained wide memberships among households in the study area (Table 1). The largest cooperative registered about 39 thousand members covering all its branches in the Visayas and Mindadnao areas of the country. On asset acquisition, microfinance program ranged from 5.6 million pesos (US$124 thousand) to Php2.8 billion (US$62 million) benefitting more than five thousand (5,000) member beneficiaries who availed microfinance loans. Loans not exceeding Php150 thousand (US$3.3 thousand) are considered under microfinance program,


as set by the Central Bank of the Philippines (Bangko Sentral ng Pilipinas -BSP). Available microfinance capitalisation of cooperatives increased from a high

Php1.4 billion (US$31.11 million) in 2008 to Php1.8 billion (US$40 million) in 2009. This reflects substantial financial resource base for the microfinance lending program in the study area. Accordingly, more than three (3) thousand beneficiaries have availed microfinance assistance as of 2009. Profits generated from microfinance lending by cooperatives ranged between 3-6% of their total capital investment. Evidently, interests earn by the cooperatives are very minimal as microfinance program operates more as financial assistance rather than profit generation. In fact the LBP cooperative credit program is guided by the principle of providing financial access to poor families and households instead of realising lending profits. Table 2. Characteristics of member parent respondents

Variables Husband Wife Total Count (n) 328 389 Mean (age in years) 46.51 45.89 Mode (age in years) 50 (n=21) 50 (n=19) Education (count) 328 389 Post-Graduate 0 1 College Graduate 44 39 College Level 56 63 HS Graduate 92 99 HS Level 38 57 Elem. Graduate 71 92 Elem. Level 25 37 Below Elementary 2 1

Profile of parent-respondent member beneficiaries

Either the husband or the wife, in their mid-40s, composed the parent-respondents of the study although wives constituted the majority of respondents. They either completed secondary or tertiary education. Obtaining at least elementary level education was evident among cooperative member respondents. Moreover, all parent respondents affirmed they send their school-age children to school and provide needed allowances out of their income from microfinance activities. Data also suggest that many children who graduated from HS and college levels completed their studies from government basic schools and tertiary learning institutions. Notably, tuition and other fees are met through earnings derived from cooperative microfinance loans.

The finding also revealed that the youngest microfinance beneficiary was 20

years old while the oldest was 76 years of age. This reflects that sample cooperatives extend microfinance lending not only to young borrowers but also to senior citizens who still manage to run microenterprise livelihood activities. Common household occupations included farming, fishing, labour contracting for the husbands while


their housewives were into vending and housekeeping. The vending activities, where most wives were engaged, obtained their capitalisation through cooperative microfinance program. For some households, capitalisation for their farming and fishing livelihood was financed from cooperative micro-credit.

On the average, there were about 6 children per surveyed household. Sixty

percent (60%) of surveyed couples have 1 to 4 children while 30% have 5-8 children. As noted, family size tends to be larger than a typical Filipino family in the rural areas. The situation is exacerbated with the presence of relatives from either husband or wife (or both) who stay with the family under one roof. In some cases, even married children of parent respondents still live with them constituting a large household up to a maximum of 10 members. Extent of contribution of microfinance on cooperative members

Cooperative microfinance program was proven to benefit the majority of the low-income households in the study area. The microfinance assistance helped mobilised available resources of member-owners at the grassroots level to augment family/household incomes. Almost all of respondents confirmed increased income after venturing microenterprise activities financed from approved microfinance loan. This also affirmed the findings of Kondo, et al. (2008) stating that per capita income has been higher in those obtain microfinance loans than those who did not among low income household groups. Table 3. Estimated monthly family income and expenditures

Minimum Maximum Average A. Monthly Income Husband Php12 Php70,000 Php8,584.91 Wife Php50 Php40,000 Php8,683.90 Children (combined) Php22 Php500,000 P22,926.60 B. Monthly Expenditures

Electric Bills Php18 Php5,000 P715.02 Telephone Bills Php15 Php5,000 P725.11 Rentals Php25 Php35,000 P2,001.59 Food Php50 Php30,000 P4,427.44 Wages for Labour P100 Php20,000 P3,287.75

Comparatively, average monthly income of wives was slightly higher than

their husbands (Table 3) as wives primarily take the responsibility of managing their microenterprises. In many cases, husbands of wife-respondents were away for labour contracting employment mostly in urban areas of Cebu province and wives are left in their locality to run the microenterprise.


Table 4. Acquisition cost of property and expenses on children’s education

n Minimum Maximum Average A. Acquisition of property

Real estate 97 Php10,000 Php2,000,000 Php240,698.92 Vehicles 78 Php65,000 Php980,000 Php127,358.97 Appliances 137 Php300 Php20,000 Php21,649.26 Jewelry 25 Php3,000 Php60,000 Php13,919.20

B. Expenditures on children's education

Daily school allowance 191 Php5 Php200 P75.45 Tuition fee per student 155 Php15 P51,000 P7,586.08

The combined estimated average income of children almost three-fold

higher than those of their parents. But this was not imputed into the household level income since household member children don’t officially contribute to payments of monthly expenditures. This is one unique characteristic among Filipino households when parents don’t compel their children to help settle essential household expenditures like monthly bills, rental or food consumption budgets as they are paid through profits derived from their micro-financed business enterprises. This affirms the strong family ties among Filipinos where parents typically continue shouldering household expenditures even if their children who, still live with them, already earn income.

We also noted that majority of household respondents do not save any

portion of their net disposable income realised after settling their obligations and payables. In practice, they never save for future use or for any economically profitable activities. Any extra amount, after payment of cooperative loan amortisation and payables, are usually spent on non-productive consumptions like buying non-basic food items, groceries and other “wanted” goods. Evidently, there is no formal and appropriate accounting on business earnings and expenditures. For the majority of the survey households, it was enough to bring ahead the business to the next day and pay loan amortisations to the cooperative on due dates.

Acquisition of real estate was evident among parent respondents with

average microenterprise capitalisation of Php100 thousand or US$45 thousand. About 97 households have acquired real estate property amounting to a maximum of Php2 million (Table 4). Purchase of vehicles tops the list for property acquisition for households in the study area mainly for facilitations of business operations. Acquired vehicles are available for transports of goods bought-and-sold and for other business mobility purposes. Investments on appliances were common among cooperative members in support of their business operations. Acquired appliances included refrigerators, coolers, electric fans, televisions, and components. Others bought motorcycle and non-motorised tricycle for use in their microenterprise activities.


Table 5. Microfinance investment and loan amortization

Minimum Maximum Average A. Fixed Assets Building P1,000 P3,000,000 P168,407.03 Goods in Stock 1,000 P1,000,000 P35,834.62 Appliances P1,000 P1,000,000 P20,993.52 B. Loan amortisation

Daily P10 P6,600 P261.80 Weekly P20 P15,000 P1,023.93 Monthly P70 P50,000 P4,395.53 C. Derived Income Daily P25 P9,000 P635.78 Weekly P100 P14,000 P4,834.09 Monthly P400 P80,000 P21,534.86 D. Gross Profit Daily P10 P9,000 P373.98 Weekly P249 P15,240 P3,810.16 Monthly P400 P80,000 P17,139.33 E. Other business bakery, sari-sari store, chicken andswine raising

Daily allowances for children’s schooling and tuition fees are sourced by

parents from earnings of their microenterprises with an average daily budget of 75.45 (Table 4). Meanwhile, about Php7.6 thousand (US$169) annually were spent on students’ tuition fees mostly for elementary and high school children enrolled in government schools. The study found that these daily expenses are not officially recorded as part of the daily earnings derived from microfinance gainful activities by the end of the day. In practice, children just take money from the cash register for their fare going to (and from) school and daily allowance.

As can be gleaned from Table 5, some cooperative members were able to

acquire buildings for trading activities and storage of goods in stock for their businesses. Assets accumulation on buildings reached a high value of about Php3 million (US$66.7 thousand) with an average of about Php160 thousand (US$3.5 thousand) investments in 2009. Many beneficiaries have their stores on the ground floor while the second floor served as storage areas. Highest capitalisation was noted amounting to Php1 million pesos (US$22.22 thousand) of good in stock with an average of about 35 thousand pesos (US$777.78). Visibly, many microfinance borrowers were able to generate daily, weekly and monthly profits out of their microfinance enterprises. This confirms the findings of Kondo, et al. (2008) which revealed that obtaining microfinance loan afforded higher annual income for member borrowers.

In general, microfinance borrowers generated gross profits after deductions

of agreed amortisation frequency scheme. Effectively, interest rate for daily payment scheme was higher than weekly and monthly bases. Yet, many borrowers prefer


microfinance loans payable daily because of smaller amount they need to pay than those under weekly and monthly amortisation schemes. Except for few cases, majority of respondents affirmed they were able to pay their daily, weekly and/or monthly amortisations to the cooperative. Those amortising daily and weekly pay through cooperative collecting agents who come to the borrower’s store/home as scheduled. Meanwhile, monthly payments are usually brought by borrowers to the cooperative office where they pay direct to the cooperative cashier.

Microenterprises under daily payment scheme are usually fruits, vegetable

selling, peddling and other small livelihood vending activities. We also noted that for small scale vending livelihoods, no proper accounting and record keeping is practice at all. What matters for vendor-borrowers is to sustain their daily consumptions out of daily sales and be able to pay the needed amortisation for the day.

Meanwhile, for weekly and monthly bases, the borrowed sum can be higher

which may require collaterals and take longer days to get approved and released, usually from three days up to two weeks. The findings also indicate that borrowers get higher margin of income from loans amortised on monthly basis. This is because borrowers are able to roll over their invested capital for some days of productive activities allowing them to generate additional income unlike those borrowers paying their dues daily. Consequently, profit margins are high for those amortising monthly and low for those opting weekly and daily payment schemes.

Loan Characteristics of Microfinance Program Beneficiaries

One salient finding of the study revealed that micro-finance borrowings from cooperatives become a habitual practice among member beneficiaries. Many borrowers keep on getting loans from the microfinance program even before they are able to fully pay their borrowed capital. Once they qualify for loan renewal, they right away apply for it. As shown in Table 1, about 94% of microfinance program beneficiaries have existing loans as of 2009. That is, of 3,621 microfinance borrowers, some 3,422 beneficiaries have loans from their respective cooperatives. They affirmed that renewing loans enable them to buy vital household needs like furniture, appliances and even real property.

Easy access to microfinance loans have encouraged microfinance

beneficiaries to habitually borrow even if they don’t actually need the loan for microenterprise activity. As long as microenterprise operations (financed from previous loans) generate profits enough to pay their amortisation obligations to the cooperative, member borrowers avail loans. In effect, very few micro-credit beneficiaries have graduated from microfinance borrowings. We found that cooperatives do not have clear guidelines and policy monitoring schemes whether the applied loan renewals are literally directed towards microfinance investment by member borrowers.


On the one hand, some member borrowers who failed to pay their amortisation on due dates because allocated payments have been diverted for emergency needs like occurrence of sudden illness and eventual hospitalisation of household members. Without choice, the money intended for amortisation payment of microfinance loan was not remitted to the cooperative instead was used to purchase medicines. In the end, succeeding loan repayments were delayed. As a consequence, the borrower was not allowed to renew loans from the cooperative. Already living with marginal income, the member client was faced with the dilemma of bringing ahead the family/household sustenance and financial needs.

Women’s Participation in the Cooperative

Figure 1. Womens’ participation in microenterprise initiatives

Involvement of women in cooperative activities not only empowered them to

be more self-reliant but also led them to become more pro-active in livelihood household initiatives. Women empowerment was evident among surveyed households. Majority of microfinance member beneficiaries were wives or unmarried business-oriented women. Aside from being principal member-borrowers, they were actively involved in various cooperative initiatives.

The study found that over two-thirds (65%) of business ventures are decided

by women who also acted as principal players in running the family/household microenterprise (Fig. 1). It was noted that 78% of wives in the study area took the role as principal borrowers and provide the linked between their household and the cooperative. In managing their microenterprise, about 85% of the women do credit collections, money keeping (83%) and payments of microenterprise-related bills (81%). Many husbands affirmed that their wives take the responsibility in sustaining microenterprise activities. They noted that their wives are thrifty and very determined towards realising profits. Moreover, wives find time to attend meetings and cooperative meetings and activities.

70

72

74

76

78

80

82

84

borrowers keep business

money and disburse

decides on business matters

do payment of loans and

bills

do budgeting

and allocation

source out business

capital

78%

83%

75%

81%

75% 75%


Attributes of microfinance program on the living standard of cooperative members

In general, microfinance program generated employment and income for member beneficiaries. It substantially helped member-borrowers in meeting their daily sustenance and basic food requirements. Member recipients were able to acquire basic food needs, develop entrepreneurial skills and send their children to schools. Ultimately, this contributed to the alleviation from economic hardship as evidence by improved living standard among microfinance beneficiaries. Eventually, microenterprises supported by microfinance lending program not only benefited the poor households but also boasted the morale and confidence of target beneficiaries in the study area. The women in particular confirmed having found themselves engaged in productive activities vital in augmenting family income, on acquiring assets, real properties, equipment and appliances, among others.

However, the finding also reveals that many microfinance program

recipients still fall within the poverty threshold. This was evident among large size families/households in the low income groups. Even if income increased was attained through their microenterprise activities, it did not afford them to exit from the poverty threshold. Operationally, the vital contribution of the microfinance program towards low income household groups was meeting their food consumption needs which were sustained from earnings out of microenterprise productive activities. Some respondents confided that before availing the microfinance program, they could hardly able to eat three times a day. Now with microfinance loan put into microenterprise, at least they are able to sustain the entire family/household food needs, and even send their children to school.

As noted, no actual record keeping and formal accounting were practiced by

almost all small scale microfinance program recipients. As long as they are able to bring ahead and sustained the family to the next day, then they don’t mind doing detailed account of earnings and profits when amortising obligations to the cooperative are met. What counts for them was to bring food at the table out of profits generated from their microenterprise activities.

CONCLUSION AND RECOMMENDATIONS

In the light of the findings, it is concluded that government microfinance program had benefitted both cooperatives and their member-borrowers. The provision of microfinance capitalisation enabled the cooperatives to acquire assets, increased capitalisation for microfinance investments and expanded cooperative profits. As to member beneficiaries, microfinance lending program has substantially benefitted the low income groups by way of capacitating them to generate revenues for family and household sustenance. Access to the program empowered member beneficiaries, especially the women, to earn profits and engage in productive micro-enterprise initiatives permitting the entire household to meet food consumption,


shelter needs and educational support for children. Cooperative members became viably productive in their local community through microenterprise initiatives. Women empowerment was strong among microfinance beneficiaries with wives mostly taking the lead in micro-entrepreneurial activities. Meanwhile, access to microcredit assistance encouraged target beneficiaries to become habitual borrowers thereby incurring perennial loans with their cooperative in spite of improved living standard.

Considering the foregoing, for microfinance to be an effective poverty-

alleviation tool over the long term, there is a need to strengthen and sustain access by member beneficiaries especially for families/households in the low income groups. Provision of micro-credits should result not only at increasing family/household incomes but more so in allowing beneficiaries exit from the poverty threshold. There is also a pressing need for authentic assessment of the economic status of microcredit clients to avoid drifting away from the focus on the poor and low income families/households. Cooperatives should enforce effective monitoring schemes for microfinance borrowers to gauge their actual needs for microcredit funds upon application of loan renewals. Finally, cooperatives should assess microfinance borrowers who could not remit or amortise their loans on due dates because of unexpected/emergency cases like sudden ailments where intended payment fund is diverted in favour of more pressing needs. In such cases, microfinance borrowers should be well assessed if authentic poverty alleviation is to be attained.

Further researches may be conducted to document microenterprise

successful and sustainable practices and how they can be replicated and adopted by other microfinance program recipients in other parts of the country. In like manner, assessment of member borrowers who failed to pay their microfinance loans should be conducted to evaluate root causes of non-payments as inputs to microfinance program’s policy evaluation.

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http://www.neda.gov.ph/ads/mtpdp/MTPDP2004-2010/PDF/MTPDP2004-2010.html

http://www.msnbc.msn/

http://www.undp.org/mdg/goal1.html

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