Presentation on the findings of a Study for Policy Review by Ma. Angela Villalba for the National Anti-Poverty Commission - focused on the People's Development Trust Fund

1. People’s Development
Trust Fund: a Tool for
Poverty Reduction
A STUDY FOR POLICY REVIEW
Maria Angela dlc. Villalba, Researcher

2. The study aims to find out:
 How PDTF was used as a mechanism/resource in poverty
reduction?
 How has it advanced the SRA and addressed the needs of the
poor (basic sectors)?
 What were its strengths and weaknesses?
 What are the new areas in which PDTF can best serve the needs of
the poor?

3. Methodology - Coverage
 Review of literature: official documents, MFI reports & publications, PDTF
reports, microfinance and poverty related studies.
 Survey & FGD: 17 PDTF grantees, 500 respondents & participants.
 5 case studies: with distinctive approaches to development and poverty
alleviation.
 Internet: data gaps and data validation.
 Simple statistical analysis and triangulation method.

4. What did the study find?

5. On PDTF & MFI
1. The PDTF as a resource was used mainly to build the capability of the
Microfinance Industry (MFI) to increase its reach and become financially self-
sustaining.
2. PDTF’s biggest achievement was bolstering the institutional capacity and
growth of its MFI grantees.
 Four (4) PDTF grantees were in the top 10 MFI performers in the country;
• Taytay sa Kauswagan, Inc. (TSKI)
• People’s Bank of Caraga, Inc. (PBCI)
• Negros Women of Tomorrow Fdn (NWTF)
• Alay Sa Kaunlaran, Inc. (ASKI)

6. On PDTF & MFI
3. The MFI in the Philippines has shown remarkable growth within a six-year period
(2005-2011), and became one of the most robust in the world.
 Increase in MFI borrowers in 6 years by 138.7% ;
 No.1 in terms of policy and regulatory framework;
 4th in over-all microfinance business environment;
 According to CGAP, 2005, Philippines was best in poverty reducing microfinance
programs.
4. Even as MFIs were reaching the poor, their impact on poverty reduction, however,
had been minimal.
 Only 9.9% of borrower population access loans from MFIs and 10.2% from cooperatives.
(BSP Baseline Survey)
 Notwithstanding high growth rates in the industry, the country’s poverty incidence just
hovered around the 25% rate.

7. On clients of MFI grantees
 MFI clients belonged to the basic sectors:
 Farmers & landless farm workers (33.9%); indigenous people (9.6%); workers
in informal sector (9.6%), fisherfolks (8.7%).
 78% were women.
 60.2% were poor, with meagre assets and hardly any surplus.
 53.4% were subsistence poor with less than P5,000 monthly income.
 Most higher income households received remittances from their OFW members.

8. MFI clients’ income
Individual % Household %
1,000 & below 14.9 1,000 & below 0.0
1,001-5,000 38.5 1,001-5,000 30.9
5,001-7,000 6.8 5,001-7,000 14.5
Sub-total 60.2 Sub-total 45.4
7,001-8,000 3.1 7,000-8,000 7.5
Sub-Total 63.3 Sub-total 52.9
8,001-15,000 20.2 8,001-15,000 8.9
15,001-21,000 15.6 15,001-21,000 12.7
21,001-30,000 0.4 21,000-30,000 7.9
NA 0.5 30,001-50,000 7.9
Above 50,000 9.7
Total 100 Total 100

9. Issues and
Challenges

10. On PDTF
 Competition – increasing number of capability building programs for
MFIs and basic sectors by government, private business and NGOs.
 Mismatch in supply and demand – increasing number of MFIs and
microfinance products without significant increase in clients’ economic
production and income may easily compromise the market for their
goods and services.
 Relevance – decreasing number of and interest in grant applications
may be an indicator. Most MFIs can now pay for their own capability
building needs, while LGUs have other windows with bigger funds.

11. On MFIs
 Increasing number of and competition among MFIs and with other
financial intermediaries, e.g. MFI oriented banks;
 Shifting business landscape that adversely affect its client base, e.g.
entry of malls, business franchising;
 Clientele’s new & emerging needs, e.g. demand for better & more
efficient services, bigger capital, insurance, etc.
 Poor, unstable and unreliable returns from economic activities of
clients, particularly the basic sectors.

12. On Basic sectors
High cost and lack of support to economic activities:
 Farm inputs: seeds, fertilizer, irrigation, labor;
 Transport, fuel, market access, post harvest services;
 Technology, machineries.
Calamities and pestilence working against efforts to build stable, reliable and growing economic concerns.
Competition among micro-enterprises and losing out to malls & franchise business;
Patronage, dependency that can lead to despair, passivity/”laziness” - a product of intergenerational inability to
access productive assets and decent jobs.

13. Emerging needs &
initiatives

14. Basic Sectors
1. Access to/provision of assets that bring the full benefits of
economic activity:
 Making ownership of home-lots & farmlands possible through subsidized
schemes;
 Pre and post harvest facilities: water, warehouse/storage, FMR, etc.
 Capital - adequate and reasonably priced to scale-up enterprise;
 Appropriate machineries and technology;
 Rational market highways and schemes for a dispersed (archipelagic)
production.

15. Basic Sectors
2. Insurance-protection against calamities and pestilence;
 Citizen (BS) owned agri-banking schemes for seeds, livestock;
 Training on effective practices in pestilence prevention.
3. Other options: wage-job, economic activity, economic
relationships.
 Fisherfolks – alternative/supplementary activity during stormy seas;
 Freshwater-inland fishing, fish processing;
 Rural based manufacturing jobs for women and girls.

16. Microfinance Plus & Corporate Shared Value (CSV)
People’s Bank of Caraga &
Kennemer Foods International
 Microfinance Plus brings together financial resources, knowledge and skills, builds
confidence and innovative spirit among clients, creating multiplier effects and impact
on communities. [Westly, Jacqueline M. 2007]
 Corporate shared value (CSV) – policies & operating practices that enhance the
competitiveness of a company while advancing economic and social conditions in the
communities in which it operates.
“ It does not matter which of the wealth-creating sector creates value as long as it
benefits the people and uplift them from poverty.” [HBS]

17. Intersecting value chains
KFI
Buy
INPUTS
Technology
FARMER
Harvest
Grow
PBCI
Orient
Organize
MF
Loan
Proces
s
Sell
Pay
loan
Sell
Monitor
Collect

18. Social Enterprise
Alter Trade Foundation Inc. (ATFI)
Can poverty be addressed when the sugar industry itself is in crisis?
• Social entrepreneurship was employed by AFTI to solve the sacada system, a
complex socio-cultural problem in the sugar industry.
• Social enterprise –an organization that applies commercial strategies to tackle
social problems, improve communities, people’s life chances and
environmental well-being.
• Social entrepreneurs – individuals with innovative solutions to society’s most
pressing social problems. They aim for value in the form of large-scale,
transformational benefit that accrues either to a significant segment of
society or to society at large.

19. Social Enterprise &
Entrepreneurship

20. Social/Community Economy
Dumingag Municipal Economy
 A public sector-led local economy development focused on solving poverty
and raising quality of life: increase productivity with organic agriculture,
liberate people from hunger and sickness.
 Started with organizing basic sectors and mobilizing them around a 15-point
Genuine People’s Agenda (GPA) bringing together private sector, farmers
organizations, cooperatives, non-profit organizations, social enterprises and
charities.
Social Economy – empowers producers and consumers; it is making money,
markets, and the productive system work for human development.

21. Internally-driven, poverty-reducing growth
LGU
Responsible,
Responsive &
Accountable
SOCIO-
ECONOMIC
JUSTICE
Mindset ,
Values &
Work ethic
Jobs &
livelihoods
Diverse
economy &
income
HEALTHY
HAPPY
COMMUNITY
Entrepreneurship & 4
Bottomlines
R&D , technology
& local value chains
Resource-based economic
development –
infrastructure support
Manufacturing, market
development
Human Resource
Capacity building
Infrastructure
development
Economic
self-reliance
Equal
access to
benefits

22. Conclusion

23. On microfinance & poverty
 The intent of PDTF (in R.A. 8425) - to develop a viable and sustainable
microfinance institutions - had been realized.
 MFI grew but its outcome and impact as a poverty reducing strategy did not
produce significant outcomes.
 Microfinance has been more of a safety net and a buffer resource, not a
poverty-reducing capital asset.

24. On PDTF
 PDTF remained a small, under-utilized and insignificant resource for
poverty reduction.
 PhP100 M corpus in 10 years fell short of the PhP4.5 B envisaged by the law;
 Only 44% (PhP13.83 M) or less than half of total grant fund was disbursed;
 By December 2014, PhP15.84 M remained undisbursed.
 Administrative imperfections barred many to access PDTF;
 Inadequate promotions to and preparations of qualified applicants;
 Voluminous requirements and slow processing of applications;
 Inadequate support to LGUs with low capacity to comply with documentary
requirements.

25. On poverty reduction
1. Poverty reduction and economic development is the result of a process of building
people’s capabilities, confidence within a coherent policy platform and strategy
over a longer period beyond one year.
2. Reducing poverty means changing the undemocratic character of the economy
and unleashing the wealth-creating assets to the hands of producers.
3. Adequate capital, technology and machines and infrastructure support are critical
to improving economic activities and reducing poverty.
4. Pathways to poverty reduction other than microfinance were able to set definite
goals against which accomplishments were measured.

26. Recommendations:
Making PDTF an Effective
Poverty-Reducing resource

27. On PDTF
 Increase the Corpus of PDTF and affirm and reinforce its effectiveness.
Year Corpus (M) Earnings Grant Adm
2015 100 4 3 1
2016 350 14 10.5 3.5
2017 700 28 21 7.0
2018 1,100 44 33 11
2019 1,500 60 45 15
2020 2,000 80 60 20
2021 2,500 100 75 25
2022 3,000 120 90 30
2023 3,500 140 105 35
2024 4,000 160 120 40
2025 4,500 180 135 45
TOTALS 930 697.5 232.5

28.  Target the basic sectors in their
organizations and institutions
1. Prioritize rural cooperatives providing support towards higher
institutional/operational capacities:
 Develop a model and advocate for “Cooperatives Plus” that address the financial
and non-financial needs of coop members;
 Encourage collaboration with other cooperatives & other economic organizations in
the locality.
 Locate and integrate cooperatives in the context
 local economy development of a social/solidarity economy.

29.  Local Economy Development puts premium to basic sectors GU led and
internally-driven development that put the basic sectors as key players in and who
stand to benefit most from economic growth. (Dumingag experience)
 Harnessing the strengths and competencies of development players in the three
wealth-creating sectors in the community – private, public and social.
 Clear role of PDTF in a planned local economic
 Target LGUs that demonstrate entrepreneurial and
ethical practice in their poverty reducing initiatives.

30.  Social enterprises can model financially viable and socially responsive
economic units of basic sectors.
 Government and PDTF support (in the first instance) to industry –
based social enterprises is critical for the SEs to be able to scale-up
and optimize the productivity of the industry.
 Existing/nascent social enterprise/s in the sugar, coconut and other
industries need rationalized support in the light of the ASEAN
economic integration.
 Support social enterprise that model socio-
economic justice and democracy.

31.  NAPC must be the PDTF driver – it has the
competence, expertise and focus-location in
government’s poverty alleviation thrust.
1. PDTF should be a resource for poverty reduction
 The decision-making body should be composed of key stakeholders
in poverty reduction:
• Representatives of NAPC
• Land Bank of the Philippines
• Representatives of Basic Sectors, with particular presence of Rural
Cooperatives;
• LGU Representation NAPC Secretariat
• Other experts in poverty reduction, strategic planning. Etc.

32.  Operations
 Consider awarding multi-year grants for projects with strategic
objectives, enduring outcomes and impact.
 Consider support to capacity building components of social
enterprises that are ready to scale-up as SMEs.
 Consider support to capacity building components of social
economy/local economy development.
 IEC about PDTF within NAPC and among its stakeholders, e.g.
Basic Sectors and their representatives, LGUs, etc.

33. MARAMING SALAMAT