Update #2

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