Creating an Enabling Policy Environment for Microfinance

This presentation reviews the demand of microfinance by the micro-enterprise sector in the Philippines. It reveals that the bottom 30% of poor Filipinos manage at least two micro-enterprise activities; of these, less than a fourth have access to credit.The presentation discusses:

• Government initiatives in microfinance and their limited successes.
• Barriers to microfinance, that include,
  • Perception that poor are high risk;
  • High transaction costs;
  • Regulatory barriers;
  • Poor's feeling of intimidation by formal institutions;
  • Lack of infrastructure and physical access to formal institutions.
• Laws and issuances supporting microfinance.
• Government's national strategy for microfinance.

Further, it reviews the activities and involvement in microfinance of Bangko Sentral ng Pilipinas' (BSP), which has a 3-pronged approach:

• Creation of an enabling policy and regulatory environment;
• Increase in the capacity and skills of the BSP and the banking sector on microfinance;
• Promotion and advocacy.

Finally, the presentation discusses BSP's support to microfinance through:

• The establishment of microfinance-oriented banks;
• Policy and regulatory initiatives;
• Introduction of performance standards for institutions engaged in microfinance;
• Training and capacity building efforts;
• Promotion and advocacy campaigns and initiatives.