As anticipated in the last issue of the Banking with the Poor Newsletter (No. 4, August 1993), FDC has now commenced its activities conducted under the auspices of CIGAP (the UNDP's Program of Credit for Income Generating Activities of the Poor). Our CIGAP activities began in August with a planning meeting held in the Foundation's office in Brisbane. The meeting was attended by our Vice Chairman, Bill Taylor, and Senior Consultant G.B. Thapa (former Governor of the Central Bank of Nepal) in addition to Executive Director, John Conroy, and Program Officer, Mark Otter. Since August, FDC representatives have visited Indonesia, Malaysia, Philippines, Sri Lanka, India, Pakistan and Nepal in order to make detailed arrangements for the Country Workshops to be held late this year and early in 1994. Country Workshops The first of this series of workshops was held in Manila, with a Bankers Workshop on 1 December and an NGO Workshop on 2 & 3 December. See the separate report on this workshop in this issue.Other workshops have been scheduled as follows:
Workshops for Indonesia and Malaysia have not yet been scheduled but are expected to be held in March or April. Access to Credit: a new FDC Publication The Foundation has published a 'popular' version of Banking with the Poor. While the larger report contains full details of the individual case studies of the Banking with the Poor concept in eight Asian countries, as well as detailed recommendations to NGOs, commercial and central bankers, governments and external aid agencies, we felt the need to produce a more accessible and readable account of this unique project. The result is titled Access to credit: Creating income and jobs for the world's poor, and consists of 16 pages of text and full-colour photographs. Written in easy-to-read style and published in convenient 'A4' format, it will be ideal for educators and students, as well as for persons with a non-technical interest in Banking with the Poor. South Pacific Consultations A substantial component of BWTP's CIGAP activities is the dissemination of the results of the research phase of Banking with the Poor through consulltation with the island countries of the South Pacific. The first stage of these consultations involved Bill Taylor and John Conroy visiting Fiji (see a separate report below). Afterwards Bill continued on to Western Samoa, Tonga and Vanuatu, while John visited Papua New Guinea. Mark Otter joined Bill in Vanuatu and then proceeded to Solomon Islands, Nauru, Kiribati and Tuvalu. In these countries the Foundation's representatives met central and commercial bankers, government officials and NGO leaders to discuss the concepts of Banking with the Poor and their applicability to reducing the problem of poverty in the South Pacific. Particular issues which emerged were that the nature of poverty in the South Pacific is not as acute as in some parts of Asia. Poverty nevertheless exists. Rapidly increasing populations are putting severe pressure on the ability of the land to support people in a subsistence manner and of the small formal economies to provide employment. Microenterprise supported by microcredit is recognised as one possible solution and BWTP has proven to be a unique and sustainable concept in microcredit. Very few South Pacific NGOs as yet have experience in administering credit programs and commercial banks typically restrict their operations to the main urban centres. However, almost all of the organisations contacted expressed interest in the BWTP concept. South Pacific organisations will now consider the findings of the BWTP project before the Third Regional Workshop is held in Brisbane in late 1994, where they will have the opportunity to observe the experiences of their Asian counterparts, note the peculiarities applying to their countries and perhaps develop a South Pacific BWTP model. BWTP at Forum Secretariat At the invitation of the Forum Secretariat (the administrative arm of the South Pacific Forum), Bill Taylor and John Conroy made a presentation on Banking with the Poor to delegates at a meeting in Suva, Fiji, on Friday 5 November. They addressed the "Committee of the Smaller Island States", which is a subgroup of the Forum's island country membership. This committee comprises representatives of Nauru, Kiribati, Tuvalu, Cook Islands and Niue, all independent countries in the South Pacific, which have in common small populations, poor resource bases and isolation from larger markets. As examples of their small sizes, Nauru has a population of 7,200, Kiribati 75,000, Tuvalu 9,400, Cook Islands 18,300 and Niue only 2,000 people. The representatives of these Pacific "microstates" were extremely interested in Banking with the Poor. Having made the initial contact, the Foundation will maintain a dialogue with their governments. Transaction Costs Study A major component of BWTP's activities to be conducted under CIGAP is a research study of "Transaction Costs". Transaction costs are incurred by banks in dealing with borrowers, and include the costs of assessing credit-worthiness and administering loans. This study will investigate the cost savings which NGOs, acting as financial intermediaries, can offer to banks. The findings of this study will provide a major contribution to Banking with the Poor's Third Regional Workshop, to be held in Brisbane late in 1994. Consultants engaged for the study are Mr Ronald T. Chua, General Manager of the Center for Community Transformation (CCT) in Manila and Dr V. Puhazhendhi, Deputy Manager of the Bangalore branch of the National Bank for Agriculture and Rural Development (NABARD). Mr Chua and Dr Puhazhendhi will conduct their studies in the Philippines and India respectively. A planning meeting for this study was conducted in Manila recently, immediately following the Philippines Country Workshop (see page 3). Apart from Messrs Chua and Puhazhendhi, the meeting was also attended by John Conroy and Dr Mike Getubig, the CIGAP Program Manager from Kuala Lumpur. Ford Foundation grant for FDC The Ford Foundation, headquartered in New York, is a major source of private sector funding in support of economic and social development in Third World countries, as well as within the United States itself. Ford Foundation officials have reacted positively to Banking with the Poor, which parallels other poverty alleviation activities supported by Ford. (For example, the Ford Foundation has extended substantial support to the Grameen Bank in Bangladesh). The Ford Foundation has also expressed interest in FDC's broader mandate for policy research over a broader range of development cooperation issues in the Asia-Pacific region, and is supportive of the Foundation's goal of establishing a role for itself in Australia which parallels those of the Overseas Development Institute in London, the Overseas Development Council in Washington and the North-South Institute in Ottawa. The Ford Foundation has now announced a substantial grant of US$250,000, conditional on dollar for dollar funding support from corporate and individual sources, in support of FDC's general institutional development. This is intended to support the Foundation for Development Cooperation in developing the role envisaged for it by its Founder, Bill Taylor. At its recent Annual General Meeting, the Board of Governors of FDC resolved to meet this challenge by approaching individuals, corporations and other foundations within Australia to donate matching funds, thereby enabling the valuable work of the Foundation to continue and further expand. New phase opens for Banking with the Poor Major Banks, NGOs meet in Manila Two landmark meetings in the Philippines capital at the beginning of December marked the start of a new phase for the Foundation's regional program on Banking with the Poor, now being supported by the UNDP. As part of UNDP's CIGAP (Credit for Income Generating Activities of the Poor) program, the Foundation for Development Cooperation mounted national workshops for commercial bankers and NGO leaders respectively, to inform them about its report and recommendations on Banking with the Poor. The aim of these meetings was to increase awareness of the potential for linkages between banks and NGOs to provide credit for the poor on a sound commercial basis, and to facilitate such linkages. Both meetings were characterised by a high level of interest among participants in learning how linkages work, and by a strong sense that the time is ripe in the Philippines for the rapid expansion of this innovative approach to poverty alleviation. National Bankers' Workshop The meeting for bankers was held on Wednesday, 1 December, in the conference facilities of the Central Bank of the Philippines, and was sponsored jointly by the Central Bank, the Bankers' Association of the Philippines (BAP), and the Foundation. BAP President Octavio Espiritu and Central Bank Governor, Gabriel Singson, addressed the opening session.. Australian Ambassador, Mr Mack Williams, and representatives of UNDP, the Asian Development Bank, USAID, and the Canadian International Development Agency joined senior executives of more than 30 Philippines private banks at the workshop. They heard Philippines members of the BWTP network, including Ricardo Balbido Jr, Vice President of BPI Family Bank, and NGO leaders Benjie Montemayor, Executive Director of TSPI and Noel Alcaide of KMBI describe their experience with the linkages between their organisations and BPI, which are the subject of one of the case studies in the report on Banking with the Poor. The NGO executives briefed their audience of bankers on how they are able to disburse credit sourced from the commercial banking system at low cost and with high repayment rates. The dialogue stimulated by these claims covered a range of practical issues concerned with collateral requirements and interest rates, and the contractual arrangements for linkages. A number of senior bankers announced their intention of seeking NGO partners and requested a list of interested NGOs. For this purpose, the information needed by private sector bankers about the performance of NGOs needs to be supplied. The meeting discussed ways of filling this information gap. Closing the meeting, a representative of the Bankers' Association, Jose R. Facundo, President of CityTrust Banking Corporation, pledged the Association to an active policy stance in support of commercial linkages between its member banks and NGOs. Mr Facundo indicated the Association's intention of taking positive measures to equip qualified NGOs to benefit from such linkages. National Workshop of NGOs More than 60 non-government organisations attended a two day workshop for NGOs, on 2 and 3 December. Ten of the 13 regions in the Philippines were represented at the meeting, making it a genuinely national event. The meeting was organised with the help of the Manila-based Center for Community Transformation, headed by Professor Ruth Callanta, who is also a member of FDC's Program Advisory Panel. A substantial majority of NGOs at this meeting were actively involved in lending to the poor. Very few had got to the point of linking with banks, although a substantial majority (over 50) expressed a firm interest in doing so. They heard presentations from CIGAP Program Manager, Mike Getubig, and FDC consultants G.B. Thapa (Nepal) and V. Puhazhendhi (India) on international experience with NGO/bank linkages. Philippines members of the Banking with the Poor network described the mechanics of linkage arrangements. Foundation representatives Bill Taylor and G.B. Thapa led a lively session at which recommendations of the Report on BWTP, directed specifically to NGOs, were discussed. John Conroy presented BWTP's recommendations to aid donors for comment by representatives of AIDAB, USAID and CIDA. NGOs expressing interest in seeking linkage partners among the commercial banks (more than 50) were invited to register and to provide information on their current operations. Center for Community Transformation staff have been given the task of collating this information for networking purposes. Professor Callanta, will chair an ad-hoc committee of Philippines NGOs to liaise with the Bankers' Association of the Philippines to promote future linkages between NGOs and commercial banks. Executive Director of the Bankers' Association, Leonilo Coronel, attended the wrapup session to repeat assurances of BAP commitment to advancing the dialogue on linkages with NGOs, and to providing technical assistance to facilitate such linkages, in the context of rapid change within the banking industry. Banking with the Poor, an appropriate response to global poverty: Central Bank Governor Central Bank Governor Gabriel C. Singson, described Banking with the Poor as "an appropriate response to global poverty" in a speech opening the Philippines country workshop on BWTP in Manila on Wednesday 1 December. Governor Singson hosted the workshop, along with Octavio V. Espiritu, President of the Bankers' Association of the Philippines and Bill Taylor, Vice Chairman of FDC, in the conference centre of the Central Bank. Noting that some 58 percent of the population of the Philippines lives below that country's poverty line, Governor Singson quoted with approval the conclusion of BWTP that the poor are bankable, adding that the provision of credit to the poor "can make a marked difference in their lives, by enhancing income and employment opportunities". Mr Singson reminded his audience, senior executives of Philippines private commercial banks, that "micro-financing services could be provided to the poor on a commercial yet affordable basis, as part of the growth of the financial sector in a third world economy". Achievement of BWTP's objectives would "usher in a new episode in the financial development process of the third world, as it expands the reach of the formal financial sector to new sectors of the population, mobilises new sources of savings, taps new markets for credit, and...improves the prospects for economic development of poor countries". Enthusiastic reception by President Ramos The Foundation's report on Banking with the Poor had been drawn to the attention of President Ramos of the Philippines, said Presidential Assistant for Poverty Alleviation, NGOs, Cooperatives and People's Organisations, the Hon Mike Maquizo. He added that President Ramos has responded enthusiastically to the message of the report. Addressing the recent Philippines country workshop for bankers in Manila, Mr Maquizo said that the Foundation's report had been "our bible", and one of the sources of inspiration for the first ever national Congress of Peoples' Organisations, jointly sponsored by the Office of the President and 500 Philippine NGOs, last October. Citing research in the Philippines which concluded that "the formal financial system has failed as a mechanism for extending credit to poor households", Mr Maquizo described this as a matter of concern for the Presidential Commission to Fight Poverty, on which he serves with Professor Ruth Callanta (who is also a member of the Foundation's Program Advisory Panel). On behalf of President Ramos, he conveyed the President's congratulations to the Foundation on its work, and thanked the Foundation for its concern for problems of poverty in the Philippines. |