Beyond the Outbreak



Dr. Jaime Aristotle B. Alip is the founder and chairman emeritus of CARD Mutually Reinforcing Institutions, a group of 23 institutions that envisions to eradicate poverty in the Philippines. He is the recipient of the 2019 Ramon V. del Rosario Award for Nation Building.



It is around this time of the year when our farmers would harvest the produce they have tirelessly worked hard on for months. Instead of a full table and an income that would support their family until the next harvest season, they are left with uncertainty and instability due to the COVID-19 outbreak that none of us expected.

Focusing on protecting people from COVID-19, the local and national government declared lockdowns and community quarantines in many cities and municipalities across the nation. This severely curtailed movement and public gatherings that made the operations of microfinance institutions untenable. In response, microfinance institutions declared a suspension of operations in their covered areas, including moratorium on loan payments while the community quarantine is in effect. Many of these institutions are members of APPEND and MCPI whose combined outreach is nine million poor and low-income families served by more than 50,000 staff and an estimated P70-B loan portfolio.

With the expected decrease in business activities, the reprieve will allow clients to channel their budget to basic needs. Even so, an unsettling voice still lingers: is the delay in the collection of loan payments ever enough to sustain their needs after all of this is over?

The bigger picture

With significant experience in community development, microfinance institutions (MFIs) have seen poverty-stricken families rise above poverty through access to and ownership of financial and non-financial services. Because of the COVID-19 outbreak, all of this could potentially go down the drain. The low-income sector, who are mostly clients of MFIs, are greatly distressed by the effects of the pandemic and the necessary measures imposed by the government.

Since main bank branches of CARD Mutually Reinforcing Institutions (CARD MRI) nationwide are still open for services like withdrawals and remittances, our skeleton workforce still has interactions with our clients. Field staff have also remained connected with clients through cell phones and/or social media that enabled them to communicate to management what was happening to their communities. Our Regional Directors have reported that many of the clients are experiencing devastating effects on their livelihoods. Most of them have products to sell but are restricted by the physical barriers of community quarantine, severely affecting their income to support their own families. For example, in the National Capital Region and elsewhere, in order to implement social distancing, marketing hours were imposed, compelling many small eateries and stalls in the public markets to close.

Microentrepreneurs in the agriculture sector also have a crucial role in society. Most of our farmer-clients in Luzon end up selling their produce at bargain prices, or giving them away to neighbors, or worse, leaving them to rot because they could not travel to the market due to strict rules on the movement being implemented. In Masbate and Marinduque, our clients can neither send their seafood products to key cities nor let their wholesale buyers come because seagoing vessels are no longer allowed to leave or enter their ports.

Come post-quarantine, enough capital would be needed by these farmers to buy inputs such as seeds and fertilizers. But given the situation we have today, transporting and selling their produce becomes a challenge. If they cannot sell their products, then they would not be able to farm again. Ultimately, it is not only the farmers who would face the consequences. We might be dealing with a possible food shortage if our supply is not enough to meet our country’s demands.

Some of these microentrepreneurs also employ other members of the community, therefore contributing to the enrichment of the local economy. While the success of one microentrepreneur has proven to affect a community positively, its downfall can also ripple to many families and eventually, to the whole community.

Post-quarantine dilemma

With all these challenges faced by microentrepreneurs, the microfinance industry anticipates reduced capacity of clients to pay after the outbreak. Even with the high risk of low repayment, MFIs continue to provide financial and non-financial services to the low-income sector during the period of quarantine. In fact, industry leaders continuously think of ways that could still support the economic activity of these microentrepreneurs.

However, we recognize that we could not do it alone. Expecting negative effects on liquidity, MFIs are seeking for potential interventions to continue its business of eradicating poverty in the country.

MFIs are looking for support from organizations and institutions who can provide additional credit facilities and funding to support its cause in helping people improve their lives while facing this global health emergency. We are also convening partners and industry leaders to discuss this pressing issue to mitigate the effect of the pandemic in the industry.

Most importantly, the support from the government is most crucial at this time. The Philippines has proven to be a conducive environment to implement microfinance. Bangko Sentral ng Pilipinas has repeatedly recognized MFIs as champions for financial inclusion. Further, laws such as RA 10693 or the Microfinance NGOs Act, which was signed in November 2015, enables Microfinance NGOs to expand outreach to a greater number of poor people especially in the hard-to-reach areas and implement community development programs funded by tax incentives. These programs include medical missions, scholarships, and livelihood training, among others.

We encourage you to think about the low-income sector; the landless farmworkers, the small farmers, the fisherfolks, the maglalako, the sari-sari store owners, and other microentrepreneurs. The lockdown and community quarantine may end soon but if we do not act now, their sufferings will worsen even after the outbreak. Because health protection and financial inclusion go hand in hand, may we not forget to balance the scale in favor of one over the other. Let’s ensure no one gets left behind.

As a Consultative Group to Assist the Poorest blog concludes: “It seems likely that without significant support and concerted action, many MFIs are at risk in the coming storm. The question is: what steps can we take now to ensure the industry survives and can contribute to the eventual economic recovery? Without taking on hard questions and beginning to put plans in place for COVID-19, it won’t be poverty that is in a museum, but potentially the modern microfinance movement.”


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