Hello Everyone!
It has been a busy few weeks here in the Philippines since my last update. I’ve spent most of my time in the field interviewing partner microfinance institutions as well as the end-borrowers. Several of the towns I have been travelling to have rotating “brown outs” where the electricity is only available to the residents for a certain number of hours per day, so internet access is occasionally hard to come by. However, working away from the office has allowed me to learn more than I otherwise would by strictly staying in the city.
Microenterprises
One of the common questions I have been asked by friends and family is what types of businesses microfinance loans go towards. Having visited a number of them, and used the services of a few as well, the short answer is that it varies greatly by community. In the more rural areas, small farmers who plant crops such as coconuts and rice are common, while in the semi-urban and urban municipalities, vendors who sell food or small items are the most frequent borrowers. There have also been quite a few random, but interesting, microenterprises I have come across including a lady who travelled throughout the village performing manicures for her customers, and a gentleman in a mountainous region who purchased a “habal-habal”, which is a mortorbike used to transport customers to areas that cars and tricycles cannot get to because of the lack of suitable roads.
Mobile Banking in Microfinance
A significant new development in the area of providing financial services to the lower income segment of the population is broadly referred to as mobile banking. This consists of two major initiatives that I have been researching: money transfers via cell phones, and bringing ATMs to the rural areas. While both technologies face considerable barriers before they will ever become mainstream; the potential payoff from them is significant. As many of you probably know, the Filipinos are one of the most active users of remittance services of any groups of people in the world due to the vast numbers of Filipinos working abroad and also the disbursement of the local population across the many islands of the Philippines. To transfer money to family members who are live in the rural areas or to students studying in the cities is quite expensive here, since businesses such as Western Union charge upwards of 5% of the transaction value. Through a partnership that Seed Finance has with the main telecommunications operator in the country, members of the Seed Finance network can now do this for as little as 2 cents via text messaging. The money can then be retrieved at a “money in-money out” center for a much more affordable rate. The ATM project has been a partnership with the only independent ATM deployer in the Philippines to bring the financial service to more remote communities. Pensioners and government employees, such as teachers, are all paid via direct deposit to their bank accounts, and often the rural residents will have to travel 45 minutes to 5 hours via bus to the nearest bank branch. When an ATM is placed in their community, they can save up to $5 (which goes a surprisingly long way here!) and a significant amount of time by using the one in their community. Innovations such as these are proving that they have the potential to be profitable, as well as allowing the companies involved to practice positive CSR techniques for the fellow countrymen and women in hard to reach areas.
A Tale of Two Resorts…
Two weeks ago I travelled to a town called Merida on the island of Leyte to witness the launching of a mobile money project in the area. The residents of the town were quite accommodating, and insisted that they cover my expenses to stay at the nearby “Merida Beach Resort” since there were no hotels nearby. Initially I thought this was more extravagant than I needed, and only at their persistence accepted the offer. Upon my arrival at the “resort”, I found out there were only 3 rooms there. This wasn’t a concern at all, since I was the first person to arrive, so I was checked into room #1 by the owner and his son, neither of whom seemed to speak English. After unpacking my bag, I turned on the light to the bathroom and noticed that there were about 2000 ants marching from a drain near the bottom, up the wall, and disappearing somewhere in the roof over my bed. While I have grown somewhat accustomed to having a few bugs around, I didn’t think I would be able to sleep that night in the middle of an ant colony, so I went to request bug spray from the owner. He shook his head and smirked that I was even thinking that was a possibility, but indicated that I could have room #2. I decided to give it a shot; regardless of what was there I was sure it couldn’t be worse than the ants. However, after opening the door and flicking on the lights, two lizards ran across the floor and under my bed. Having already been on edge from the ants, I jumped about two feet in the air, and turned around to see that the son had joined his fathering in having a hearty laugh at my expense. About at that point I decided that living with 2 lizards was safer than sleeping with 2000 ants, and that I wasn’t willing to take a chance on room #3. Needless to say, it was not the best sleep I had ever had.
The next week was a long weekend, as the country was celebrating their Independence Day. I took advantage of the extra day off of work, and travelled a couple hours South of Manila to another resort, but had learned my lesson and actually did some research on it before I went. It was a great weekend, and my first experience swimming and snorkeling near a coral reef. I spent a total of 9 hours in the water that weekend, and saw many interesting fish, including a jelly fish, sea urchin, and a few of Nemo’s clown fish relatives, and was also pretty amazed by the soft coral. Perhaps most surprisingly, the rates were less expensive than it would be to stay at a Howard Johnson hotel for a hockey tournament or cattle show back home in Canada.
Corporate Perks???
The last story will be a short one. While looking through the financial statements of Seed Finance’s partner MFIs , I came across an item that I had not seen before in any of the annual reports that I’ve read on companies and non-profits in Canada and the US. Listed under the note titled “Staff Compensation” was a description of the allowances and benefits they were allotted. After reading the usual “retirement benefits, sick pay leave, housing allowance etc.” came one that I had not, and likely will not, ever see again: Rice Allowance. I had to ask the rest of the Seed Finance team if that was a joke or not, but apparently it’s quite common here in the Philippines. So for all of you who are, are soon to enter, the corporate working world, don’t forget to ask if you can get your Filipino Rice Allowance before signing the next contract…
Take care , I’ll send another update soon.
-Danny
Wednesday, June 23, 2010
Wednesday, June 2, 2010
Update #1 - May 26, 2010
Seed Finance
I left the Calgary Airport on a clear and cool, -2° C morning, and stepped out of the plane into the 38°C heat of a Manila afternoon some 40 hours. After arriving at the office, I was briefed on Seed Finance (SF), the organization that I am interning with, and given a full schedule of my itinerary for the following three weeks. To my surprise, they had already organized a busy three weeks of activities for me, including meetings with some of Seed Finance’s loan providers, business partners, and clients. I will be in 6 different cities in 6 different provinces on 5 different islands by the end of the month, which is great because it allows me to meet a lot of people in the sector and see some different areas of the country. As a wholesale financial institution, SF provides loans worth a total of $9 million and training services to 70 retail microfinance institutions who then provide financial products to over 1.2 million people throughout the Philippines.
Living in the Philippines
At least for the first month, I will be staying at a hostel in a residential (read: non-touristy) area of Metro Manila. The place is only a few steps down the chain from first-year residences at Queen’s, but is working well for me so far. The most important thing is that it has an air conditioner, as I would probably not be able to sleep without one (night time temperatures only dip down to 25°C). I’ve only seen two cockroaches in the building and a handful of other bugs since checking in, which is actually not too bad. Eating regular meals here has been an ongoing adjustment for me, and I try to eat a mix of Filipino food and “normal” fast food from good ol’ McDonalds and Pizza Hut. It’s customary to eat rice at least two times a day here (and often for breakfast), as it’s the replacement for bread products that we would normally have back home. People here eat a lot of fish, which has also been a pretty big change for me having grown up on a cattle ranch. Last week I had one stretch of 6 meals in a row with only fish as my meat product, and I don’t think I would have had more than 6 meals in my entire life that had fish in them up until that point. Most people speak a basic level of English hear, but their native tongue is Tagalog. I’m trying to pick up a few key phrases while I’m here, but it’s proving to be quite difficult.
Jeepneys and “Balut”
The two most memorable completely new experiences that I’ve had so far have been riding jeepneys and eating the local delicacy in Southeast Asia, balut. Jeepneys are the main form of public transportation for local Filipinos, and are essentially an off-road looking, low-cost version of a van crossed with a jeep. So far I’ve been the only North American that I’ve seen ride one, and judging by the looks I get from fellow passengers, I very well could be the first white person ever do so. During rush hours, it’s common to squeeze 14 or 16 people into the vehicle that should normally hold about 8 comfortably. No seatbelts, no padded seats, and I pretty much go on a hope and a prayer that it’s travelling in the right direction. However, I’ve found that people here are always willing to point you in the right direction when you’re completely lost and in a different part of the city than you’ve ever seen before (which has happened to me on numerous occasions). I’ve attached a couple pictures of the beast for you all to see what a jeepney is like.
Last week, I travelled to Ormoc City to meet with some partner financial institutions. After our meetings one night, we went out to find some local “street food”, and in particular “balut”. Apparently it’s quite common entertainment for Filipinos to try and get Europeans and North Americans to try to eat balut, but few manage to convince them to do so. I did not have the luxury of being told exactly what it was prior to opening up the egg, and it took me a while to find out. After drinking the juice (which I had to put a ton of salt on to be able to choke down), I then decided to eat the yolk because it looked like the next safest thing in comparison to the dark mass at the bottom of the shell. Upon closer inspection, I then realized that there were feathers said dark mass. It was at that point that I was informed that balut is actually a fertilized duck egg that is 17 days old. They can hatch as young as 25 days, so you can imagine how developed they were at that point (feathers, beak and feet all intact). Thankfully I didn’t eat that part of the egg, but I was the only one in the group who took a pass on it.
-Danny
I left the Calgary Airport on a clear and cool, -2° C morning, and stepped out of the plane into the 38°C heat of a Manila afternoon some 40 hours. After arriving at the office, I was briefed on Seed Finance (SF), the organization that I am interning with, and given a full schedule of my itinerary for the following three weeks. To my surprise, they had already organized a busy three weeks of activities for me, including meetings with some of Seed Finance’s loan providers, business partners, and clients. I will be in 6 different cities in 6 different provinces on 5 different islands by the end of the month, which is great because it allows me to meet a lot of people in the sector and see some different areas of the country. As a wholesale financial institution, SF provides loans worth a total of $9 million and training services to 70 retail microfinance institutions who then provide financial products to over 1.2 million people throughout the Philippines.
Living in the Philippines
At least for the first month, I will be staying at a hostel in a residential (read: non-touristy) area of Metro Manila. The place is only a few steps down the chain from first-year residences at Queen’s, but is working well for me so far. The most important thing is that it has an air conditioner, as I would probably not be able to sleep without one (night time temperatures only dip down to 25°C). I’ve only seen two cockroaches in the building and a handful of other bugs since checking in, which is actually not too bad. Eating regular meals here has been an ongoing adjustment for me, and I try to eat a mix of Filipino food and “normal” fast food from good ol’ McDonalds and Pizza Hut. It’s customary to eat rice at least two times a day here (and often for breakfast), as it’s the replacement for bread products that we would normally have back home. People here eat a lot of fish, which has also been a pretty big change for me having grown up on a cattle ranch. Last week I had one stretch of 6 meals in a row with only fish as my meat product, and I don’t think I would have had more than 6 meals in my entire life that had fish in them up until that point. Most people speak a basic level of English hear, but their native tongue is Tagalog. I’m trying to pick up a few key phrases while I’m here, but it’s proving to be quite difficult.
Jeepneys and “Balut”
The two most memorable completely new experiences that I’ve had so far have been riding jeepneys and eating the local delicacy in Southeast Asia, balut. Jeepneys are the main form of public transportation for local Filipinos, and are essentially an off-road looking, low-cost version of a van crossed with a jeep. So far I’ve been the only North American that I’ve seen ride one, and judging by the looks I get from fellow passengers, I very well could be the first white person ever do so. During rush hours, it’s common to squeeze 14 or 16 people into the vehicle that should normally hold about 8 comfortably. No seatbelts, no padded seats, and I pretty much go on a hope and a prayer that it’s travelling in the right direction. However, I’ve found that people here are always willing to point you in the right direction when you’re completely lost and in a different part of the city than you’ve ever seen before (which has happened to me on numerous occasions). I’ve attached a couple pictures of the beast for you all to see what a jeepney is like.
Last week, I travelled to Ormoc City to meet with some partner financial institutions. After our meetings one night, we went out to find some local “street food”, and in particular “balut”. Apparently it’s quite common entertainment for Filipinos to try and get Europeans and North Americans to try to eat balut, but few manage to convince them to do so. I did not have the luxury of being told exactly what it was prior to opening up the egg, and it took me a while to find out. After drinking the juice (which I had to put a ton of salt on to be able to choke down), I then decided to eat the yolk because it looked like the next safest thing in comparison to the dark mass at the bottom of the shell. Upon closer inspection, I then realized that there were feathers said dark mass. It was at that point that I was informed that balut is actually a fertilized duck egg that is 17 days old. They can hatch as young as 25 days, so you can imagine how developed they were at that point (feathers, beak and feet all intact). Thankfully I didn’t eat that part of the egg, but I was the only one in the group who took a pass on it.
-Danny
Background Information
Q: Why on earth are you working in the Philippines this summer? Wouldn’t it be much easier to stay at home in Canada?
A: As part of my Loran scholarship I am required to do three summer experiences: public policy, international personal and community development, and enterprise. Last summer was my public policy summer where I worked for the Canadian Embassy in Washington, this will be my international personal and community development summer, and next year will be my enterprise internship. After looking into a few different possibilities, I decided to pursue a position in the microfinance field this summer as it’s an area of international development work that I strongly support and felt my skills would be able to help out with. Additionally, I wanted to spend some time in Southeast Asia and had heard positive feedback about the Philippines. I had the good fortune to receive an offer from Seed Finance a couple months ago, and haven’t looked back since.
Q: What is microfinance?
A: Microfinance is the provision of basic financial services (lending, savings, insurance, money transfer) to the lower-income segments of society that the traditional, formal finance sector does not serve. Microfinance is being used as a tool to combat poverty in the developing world, and in my opinion, has the potential to make a greater, longer term impact than other types of development funding. Microcredit, the loans aspect of microfinance, has largely been a private sector initiative that has been proven that it can be self-sustaining and does not necessarily rely on continual external sources of grants or subsidies.
Q: How is microfinance used to help those who are less fortunate?
A: By providing the financial services that we tend to take for granted, microfinance allows for individuals and families to increase their financial security, income and wealth levels. Loans are provided for entrepreneurs to start or grow their own small businesses to provide for their families, savings products allow for families to put aside funds for sudden demands for cash that everyone face (sickness, weddings, education expenses etc.), and microinsurance helps reduce the vulnerability to external shocks that would otherwise threaten the family’s financial security.
That’s all for now, but I’ll be sending an update shortly!
- Danny
A: As part of my Loran scholarship I am required to do three summer experiences: public policy, international personal and community development, and enterprise. Last summer was my public policy summer where I worked for the Canadian Embassy in Washington, this will be my international personal and community development summer, and next year will be my enterprise internship. After looking into a few different possibilities, I decided to pursue a position in the microfinance field this summer as it’s an area of international development work that I strongly support and felt my skills would be able to help out with. Additionally, I wanted to spend some time in Southeast Asia and had heard positive feedback about the Philippines. I had the good fortune to receive an offer from Seed Finance a couple months ago, and haven’t looked back since.
Q: What is microfinance?
A: Microfinance is the provision of basic financial services (lending, savings, insurance, money transfer) to the lower-income segments of society that the traditional, formal finance sector does not serve. Microfinance is being used as a tool to combat poverty in the developing world, and in my opinion, has the potential to make a greater, longer term impact than other types of development funding. Microcredit, the loans aspect of microfinance, has largely been a private sector initiative that has been proven that it can be self-sustaining and does not necessarily rely on continual external sources of grants or subsidies.
Q: How is microfinance used to help those who are less fortunate?
A: By providing the financial services that we tend to take for granted, microfinance allows for individuals and families to increase their financial security, income and wealth levels. Loans are provided for entrepreneurs to start or grow their own small businesses to provide for their families, savings products allow for families to put aside funds for sudden demands for cash that everyone face (sickness, weddings, education expenses etc.), and microinsurance helps reduce the vulnerability to external shocks that would otherwise threaten the family’s financial security.
That’s all for now, but I’ll be sending an update shortly!
- Danny
Welcome!
Hello Everyone,
After hearing from a few friends and family members that followed my blog last year (www.dannyinwashington.blogspot.com), I've decided to start one for this summer as well.
I will try and update it relatively frequently with interesting content about my experience working in microfinance in the Philippines. If you have any questions or would like to comment, either do so at the bottom of the posting or send me an email at dhertz_14@hotmail.com.
Thanks for reading, and I hope you enjoy!
Danny
After hearing from a few friends and family members that followed my blog last year (www.dannyinwashington.blogspot.com), I've decided to start one for this summer as well.
I will try and update it relatively frequently with interesting content about my experience working in microfinance in the Philippines. If you have any questions or would like to comment, either do so at the bottom of the posting or send me an email at dhertz_14@hotmail.com.
Thanks for reading, and I hope you enjoy!
Danny
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