Growing Business in the Philippines

A microfinance scheme in Manila in the Philippines is teaching financial skills and good business practices to some of the city's poorest people.

Mary at work

Mary suffers from Hansens disease (leprosy). She had no employment and was entirely dependent on the income of her husband who drove taxis. Her four children could not attend school because she could not afford the fees, books or uniforms.

Mary was fortunate that Sikap Development Cooperative commenced a savings and training program in her village. She pledged to save 10 Pesos every day (about 30 cents) for three months while she worked with the cooperative to improve her financial skills and develop her ideas for a business.

Mary (left) making wooden flowers

After one year and three loans for a total of $300, she has made it. She employs 12 other villagers, her four children attend school every day and her product - decorative wooden flowers - is sold to an exporter. Mary's wooden flowers are selling well from shops in Australia, the United States and Europe.

More than two thirds of Filipinos live below the poverty line, most are unemployed and all are denied access to basic financial services. Credit Union Microfinance Innovation (CUMI) is a program designed to help people in this predicament.

CUMI is a business training and savings strategy supported by AusAID. Specially trained credit union officers meet with target groups on a regular basis for a period of three months. Group members are encouraged to build up savings, the equivalent of a few cents every day, and receive instruction in numeracy and basic entrepreneurial skills.

Once members establish a savings record they can take out a small loan (up to the equivalent of about $100) to establish a small business. The group guarantees the loan and, while the loan is being repaid, members maintain their daily savings program. Once repaid a member may take out another slightly larger loan, and this can be repeated four times.

The pilot program in the National Capital Region of Manila has proved such a success that four other leagues of the Philippine Federation of Credit Cooperatives are implementing CUMI without any external funding support.

2003