Cory Aquino

Her Works



Creating the Infrastructure for Micro-enterprise in the Philippines: PinoyME as a Collaborative Vehicle for Change

Speech delivered at the Silang Seminar on International Development
International Institute for Rural Development
June 20, 2007

As some of you know, I have convened a private sector social consortium to pursue a focused and proactive anti-poverty strategy that blends and reinforces ongoing programs of existing institutions and networks. That consortium has been branded as PinoyME, short for Filipino micro-enterprise. As a colloquial phrase typical of today’s mobile “text generation,” the name is also an expression of pride among Filipinos, especially those who have chosen to carve their future on home soil. As a movement, PinoyME is a call for various sectors in our society to invest in the self-help efforts of the poor—in the purest and noblest spirit of people power.

Since January, in line with the consortium’s spirit of inclusiveness and subsidiarity, we have been engaging other networks and organizations with goals and programs that are potentially convergent with what we are trying to achieve. Indeed, there are established institutions like the International Institute for Rural Development (IIRR) which bring decades of anti-poverty experience and insight to the table. PinoyME  is not out to duplicate, supplant or co-opt successful models of micro-enterprise development out there. Rather, we would like to see how we can help replicate, enhance, link and scale up the diverse initiatives out there so that poverty can significantly be reduced across our nation.

Using this highly inclusive and collaborative approach, we are confident that we can meet PinoyME’s goal of empowering microfinance institutions (MFIs) to expand their coverage to five million clients  in the country’s poorest regions and to raise P5 billions in accessible funds within five years. The fact that some 300 MFIs are now serving the basic financial needs of close to two million clients in depressed communities,  which in turn has fueled the growing interest among commercial banks to go into wholesale microfinance lending, makes this so-called “5-5-5” goal achievable.

“5-5-5,” by the wayt, is no mere mnemonic. Five million microfinance clients are deemed a critical mass because that number approximates the number of families living below the poverty line. Five billion pesos in capital is the minimum needed to augment the current equity and deposit base of  the MFIs. And five years is a realistic frame within which to make a difference, since it takes 4-7 years to help stabilize micro-enterprises and 3-5 years for an MFI branch to achieve financial sustainability.

On the surface, building on available resources and on the strides made by MFIs in uplifting lives in depressed communities and in  proving that the poor are truly credit-worthy seems like a surefire formula for success. This has defined the path for PinoyME” to focus on ways by which to enhance the MFIs’ effectiveness and to achieve the scale necessary to have a palpable impact on reducing poverty. Toward this end, we have activated working groups around four strategic areas of intervention: resource mobilization, capacity-building, business development services and knowledge management.

The scope of work along these strategic tracks, however, makes it clear that so many other stakeholders have to come into the picture to add value to the overall equation. We had this in mind when we asked Mike Luz to present the IIRR’s program of action before the PinoyME steering committee several weeks ago, In the course of his presentation, the points of strategic convergence surfaced almost instantly.

In terms of operational philosophy, we shared a common bias for market-driven interventions as the only sustainable way of spurring families and communities out to poverty. As the IIRR succinctly puts it, development without enterprise creates dependence on outside sources. We must aspire beyond mere survival of enterprises, nurturing them to profitability so as to bring local economies to life.

While we in the PinoyME consortium wrestled with the problem of access to microfinance in the far reaches of the countryside, here came IIRR with a singular focus on developing rural enterprises to build strong local economies and a stable society. Thus have we become partners in creating an enabling infrastructure for micro-enterprise all over the Philippines.

We look forward to hearing from the working groups of this seminar on how to address issues and challenges that stand in the way of expanding MFI coverage in rural communities and of making microfinance work in high-risk areas that are often associated with agriculture.

Amid the lively substantive discourse in this international seminar, it is only fitting that we launch the PinoyME  Foundation. Designed essentially to manage a social investment fund, the foundation seeks to bridge the poor’s lack of access to capital and assets. Central Bank figures show that less than 10% of the resources in the formal financial system are potentially accessible to those most in need. We hope that the Foundation can help stir the transformation of our economic and financial structures so that a long-term solution to poverty can be found.

As a “social investment banker,” the PinoyME  Foundation adheres to the principle of the double bottom line measuring success in terms of both financial and social metrics. What is gratifying is that significant returns can be gained from relatively modest investments. For instance, it takes only P1,500 to set up a center, managing some 15 centers with a total of approximately 1,000-1,500 borrowers; and around P5 million to set up an equivalent branch in a hard-to-reach area.

The foundation will perform the equivalent of investment banking—lending, investing and promoting market linkage and technology applications – in order to spur the growth of MFIs. It will help build a stronger microfinance industry by making it possible for Filipinos to engage in viable micro-enterprises that go beyond the sari-sari  stores and vending stalls. With the help of institutions like IIRR, we hope to accelerate the flow of investments into viable micro-enterprises in rural or semi-urban manufacturing enterprises with high value-added and strong market linkages.

The PinoyME Foundation will be a primary risk taker going into projects where none of the traditional  financial institutions wish to invest. By assuming the risk, the foundation would make it possible for micro-enterprises to grow and to eventually enter the mainstream market.

The foundation aims not just to make capital available to the traditionally “non-bankable’ but also to lure capital to the bottom of the economic pyramid. Once this venture succeeds, it will embolden traditional financial institutions to offer more products and services for a growing and decidedly credit-worthy market.

If  we reach that point, we would have succeeded in creating a “bite-sized” approach to credit that has reduced the risks associated with lending to the poor. Consistent with the trajectory of corporate social responsibility and enlightened governance, the next step we hope to climb is to make the market work for the poor. This involves using market mechanisms in search of sustainable solutions to poverty and inequity.

The ultimate objective of this approach is to expand the range of market choices offered to the poor. We know we are getting there once usage of financial products and services starts increasing among poor communities which have a variety of options, and once these erstwhile marginal clients begin to be viewed as legitimate markets.

With the collaboration of groups like the IIRR, there is every reason to feel confident that we can indeed make the market work for the poor in the realm of micro-enterprise development. Please join us in pursuing the dream to see a critical mass of micro-entrepreneurs graduate into more stable businesses that would generate jobs, energy, and hope in their communities. This would bring us further along our roadmap toward realizing the vision of PinoyME: to help create a broad middle class, composed of Filipinos who can make mature and intelligent choices that would strengthen our economy and our democracy.

Thank you very much.



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