Thursday, December 8, 2005

Oikocredit, small change, big impact

You must have seen a 20-peso bill with a circular doodle with three arrows coming out of it. You must have wondered whether that was someone’s way of venting his ire on the state of the Philippine currency. But when you looked closer, you must have read the words below that whorl--``UN Year of Microcredit 2005, Sustainable Microfinance Services for the Filipino Entrepreneurial Poor’’.

With a big bang, the 2005 UN Year of Microcredit ended last week with the so-called ``Filipino entrepreneurial poor’’, composed mostly of mothers, bannering the theme, ``Tinig ng Mga Nanay, Ating Ipatnubay'' (Let the mothers' voices be our guide). Microfinance beneficiaries, enterprising mothers mostly, from different parts of the country attended the gathering in Quezon City and showed off what has become of the ``small change’’ entrusted them. The delegation from Negros even brought in masscara dancers to provide color.

Oikocredit and the Microfinance Council of the Philippines organized the event that capped the International Year of Microcredit.

``Small change, big impact’’ was the catchphrase used by microfinance institutions (MFI) to trumpet their successful efforts. Indeed, countless mothers who used to be very poor have leapt out of poverty with the help of microfinance, many of them with rags-to-raves stories to tell.

Please pass the Kleenex. Staying dry-eyed was hard to do when the video docu on Virginia Borde, 2005 Citigroup Microenterpreneur of the Year, was shown to the assembly. Abandoned wife and mother of several children, Borde rose from penury, thanks to microcredit, to become owner of farm machinery for rent to small farmers.

A woman from Camarines Sur was able to expand her market stall through a small a small loan from the Center for Agriculture and Rural Development (CARD). ``Now,’’ said this poster woman for microfinance, ``my earnings have truly improved. I can afford to send my children to school and I can even save money in case of an emergency.’’

CARD, one of Oikocredit’s partners here, is the conduit of loans worth 1.2 million euros.
Oikocredit is an international church-related private development financing institution. (Oiko comes from the Greek word oikoumene where the word ecumenism was derived. Ecumenism means Christian unity.)

Oikocredit’s 30th year coincided auspiciously with the UN’s International Year of Microcredit. Established in the Netherlands in 1975, Oikocredit is owned by members from around the world. These are churches, church-related groups, local parishes and individuals from developed countries. Oikocredit draws from the members’ ``small change’’ and ``widow’s mite’’ as well as from third parties.

May I say here that many NGO careerists and beneficiaries do not realize that the money they spend comes from the ``widow’s mite’’ of ordinary people in Europe and elsewhere.

Oikocredit is convinced that many of the world’s poor stay poor because they have no access to credit. Mainstream banks think the poor are not creditworthy. So where can the poor get capital to start a small food stall, buy a second-hand sewing machine or a milking cow?

Oikocredit does not lend directly to beneficiaries. It channels the resources to MFIs.
``Walk a second mile.’’ The exhortation from the bible (Matthew 5:41) pushes Oikocredit to go beyond the handing out of loans. The local Oikocredit staff must walk the second mile to monitor the projects and give assistance should problems arise. What are the local realities? What factors contribute to success or failure?

Two friends of mine, veteran church development workers Delle Tiongson Brouwers and Ging Ledesma work with Oikocredit in Europe and Asia to walk the second mile.

In the beginning Oikocredit was regarded with skepticism. There was this belief that economic initiatives of the poor will dissipate and so will Oikocredit’s investments in them. But the unpredictable happened. The poor paid their loans. In all of Oikocredit’s 30 years only 10 percent of disbursed loans were written off. Of course, realities such as typhoons, disease, civil wars and economic meltdowns have to be factored in.

Oikocredit is present in more than 30 countries where more than 400 projects are being assisted. Some 24,000 churches, parishes, religious orders and individuals worldwide have joined and bought Oiko shares.

Investment in Oikocredit is now more than 200 million euros. No investor has yet lost a penny. Investors are not there for the money. They believe in Oikocredit’s goals—to provide the poor access to credit and to give churches and individuals an instrument for socially responsible investments.

Investors could withdraw their investment when necessary and receive a modest dividend of two percent.

In the Philippines, Oikocredit is exposed to 27 MFIs, cooperatives, small- and medium enterprises, fair trade organizations and other groups with proven social relevance. Loan size is from 50,000 to two million euros; term of loan is from one to six years. Interest rate is flexible and depends on the risks involved.

``Let us be clear: microfinance is not charity,’’ UN Secretary General Kofi Annan had said. ``It is a way to extend the same rights and services to low-income households that are available to everyone else. It is a recognition that poor people are the solution, not the problem. It is a way to build on their ideas, energy and vision. It is a way to grow productive enterprises, and to allow communities to prosper.’’

Oikocredit Philippines’ email address is: