Paper

Creating an Enabling Policy Environment for Microfinance

The role of Bangko Sentral ng Pilipinas in promoting microfinance for micro-enterprise development
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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.