The Development and Implementation of a Uniform Set of Performance Standards for All Types of Microfinance Institutions in the Philippines

A set of standards measuring portfolio quality, operational efficiency, sustainability and outreach
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This essay discusses the development of the P.E.S.O standard. It states that:

  • PESO is the acronym for key factors in microfinance operations - portfolio quality, efficiency, sustainability and outreach;
  • The P.E.S.O standard creates a set of uniform performance standards applicable to all MFIs to address issues such as:
    • Portfolio quality;
    • Efficiency of operations;
    • MFI sustainability;
    • Efforts at outreach.
  • Application of the standards will facilitate analysis of MFI performance providing meaningful comparisons across different institutional types.

The essay:

  • Provides an overview of microfinance in the Philippines, discussing:
    • Policy initiatives;
    • The current trend to commercialize microfinance.
  • Discusses the infrastructural needs of the microfinance industry, looking at:
    • The regulatory framework for MFIs;
    • Performance standards.
  • Discusses the P.E.S.O. standard as a uniform set of performance standards for all types of MFIs, examining:
    • The process of creation and bases for standards;
    • Institutional criteria that will measure the financial institution's practices, performance and condition, while also demonstrating the institution's capacity and readiness to undertake microfinance operations.

The essay lists challenges and future issues in the adoption of the PESO as the industry benchmark, and concludes by stressing on the increase in private sector involvement in the microfinance industry as the main opportunity for growth of the industry.

About this Publication

By Almario, J., Jimenez, A. & Bernadette Roman, P.