Welcome Remarks delivered during the MABS National Roundtable (26 April 2005)

MABS National Roundtable Conference
“Managing Growth of Microfinance Operations: New Developments and
April 26-27, 2005

Deputy Governor Amando M. Tetangco Jr., other guests, fellow rural bankers, good morning!

I am honored to welcome you all at this special occasion of the RBAP-MABS
Third National Roundtable Conference and pleased to associate myself with
the noble objective of microfinance.

Drawing out from the history of microfinance, we have seen its impressive ability to empower an individual and its extensive impact to the country’s economic growth. At a broader perspective, support from the government, financial intermediaries and good business environment contributed a lot to the success of the microfinance industry.

The theme of the conference “Managing Growth of Microfinance Operations: New Developments and Innovations” is a recognition on the need of flexibility and innovativeness of the microfinance industry towards the ever changing business environment. The challenge for us is to provide a balance between the need of the institution and the need to meet client demands. This is crucial to consider not only as we expand our outreach to more
clients but especially as we look at ways to improve our service and seek to retain clients in an increasingly competitive market place.

RBAP-MABS was intitutionalized in the context of strengthening the local economies through a strong and responsive rural banking system. It provides rural banks with a systematic approach to developing and enhancing the financial services they provide to the microenterprise sector. The MABS Approach combines consciousness on profitability and outreach to the enterprising poor in order to secure the success of rural banks and ensure their continued investment in the growing microenterprise sector.

Riding on the same goals, the efforts of RBAP-MABS program and the participating rural banks accomplished significant results over the last year. As of 2004, the total number of participating rural banks was above target. From a target of 180 rural banking units, our January 2005 figures show 213 participating rural bank head office and branches. Likewise, the cumulative loans disbursed by participating banks grew by 60% from 2003 to 2004 and they have disbursed more than 5 Billion Pesos over the last seven years. While the total amount of outstanding microdeposits mobilized by the participating banks exceeded 1 Billion Pesos as of the end of 2004.

DIRECTION OF MABS Microfinance Approach

The presence of Information and Communications Technology changes considerably the pace of business activities and the environment. ICT offers the rural banking sector a myriad of avenues to profit and provide better and improve financial services in the community. RBAP-MABS, in partnership with Globe Telecommunications, launched the pilot testing process of the “RBAP Text-A-Payment” service with four pilot rural banks. This innovative mobile technology product uses SMS technology that transforms mobile phones into a virtual/electronic wallet. This service offers security and efficiency at a lesser cost for both, the banks and the borrowers, as it helps expedite loan payments.

The guiding principle of microfinance is to make a difference not only by extending financial services, but also through its ability to offer an opportunity to alleviate the living condition of an individual.

Micro Agri Loans is now being pilot tested by five other rural banks under the RBAP-MABS program in order to expand outreach and needed services in the countryside. With the occurrence of globalization, small farmers need appropriate access to financial services to improve their productivity and effectively compete in the market. Being the prime clients of the rural banks, we are pleased to see the MABS Approach being utilized to expand financial services to this sector.

Micro Housing Loans
is again a new microfinance product. The government and private builders and land developers are very active in putting up medium to low cost-housing to cater to the growing demand for housing. However, the high interest rates and exorbitant prices, coupled with the stiff procedures in applying for the housing loans hinder low-income earners to avail of such services. The new Micro Housing Loan therefore aims to aid the low-income earners and the poor sector of the society to uplift their standard of living. This loan is nascent to most rural banks, but we are confident that this new market opportunity will also be an avenue to expand outreach to more clients.

The tireless efforts of RBAP-MABS in developing and assisting rural banks in instituting microfinance services following best practices are manifestations of our fervent desire to achieve a sustainable and equitable socio-economic development in the country.

Lastly, I wish that this two-day Roundtable Conference will become a molding ground of a revitalized and strengthened network of rural banks committed to service the enterprising poor sector in our society and extend the benefits of development even to the remotest areas in the countryside.

Let me then take this opportunity to warmly welcome you all! Maraming
salamat po!