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Introduction
The Philippines is a land of considerable beauty and many contrasts. As in
many countries, wealth is not evenly distributed with a range of 30%-68% of
population living in poverty, depending on how it is measured. Rural areas are
the most affected.
Many poor families earn barely enough to buy food and clothing and pay for
school materials. If a family member has an accident or gets sick, or a young
person wants to study at college, they have to go into debt. This means paying
high rates of interest to private moneylenders.
In spite of their best efforts it is very hard for these families to work their
way out of poverty. Yet with the help of training and a relatively small loan
it can become possible for them to set up their own small business (or micro
enterprise) and increase their income.
Making ends meet in rural areas
Not only are incomes lower in rural areas, but country people have fewer choices
of employment and education, and are less likely to have services such as running
water, sanitation, or electricity.
Many rural families do not own any land, and those who do own or rent land
have to sell the harvested crop at once to pay their rent or repay loans taken
out to buy seeds. They can easily run into problems if their crop fails. There
is no spare money to experiment with new crops or farming methods.
In coastal areas, some people who do not own land can make a living by fishing.
However there are still costs, such as rent for their small outrigger boats
and the motorised "pump boat" to tow them out to deeper water. Fishing
is a risky business especially during the typhoon season from June to November.
To make matters worse, as commercial operators trawl with vast nets and some
people use dynamite to stun the fish, fewer fish are spawning. If their catch
is very small, the fishermen are forced to borrow from moneylenders.
There are no unemployment benefits in the Philippines, so people have to take
any job they can find - doing laundry by hand for other families, selling fruit
door-to-door, delivering water to people's homes. A few lucky people get a job
in the local shops. Some might drive a bus or a jeepney - a converted vehicle
used as local public transport.
Micro enterprise
Two Filipino communities, one in Mindanao and the other in Southern Leyte,
have received Australian aid through AusAID and World Vision. Assistance was
provided for three main objectives: caring for the environment, improving health
and water supply, and increasing incomes. This case study concentrates on the
third objective.
By offering low-interest loans and training to individuals and groups, men
and women had improved opportunities to undertake new or expanded ways to earn
an income. They have undergone training in planning to set up a small business.
The community has been trained in administering the loan fund and taking responsibility
for monitoring repayments so that the fund is self sustaining. Some of the activities
which people chose are shown below:
Rosario taught herself how to draft patterns and has set up a garment-making
business, using a loan to purchase a stock of fabrics, so she can make ready-to-wear
clothes instead of having to wait for a sale before she could buy more materials.
Rosaria invested in fabrics to sew clothes
Eugenia and four friends have set up a rice-trading cooperative. With a loan
to get them started, they buy the unhusked rice, truck it to town and spread
it out on the "solar dryer" - an expanse of concrete. After one to
three days (with some turning), the rice is raked into bags and taken for milling,
to remove the husks. Milled rice can be sold in Cebu City for more than twice
the purchase price of the unhusked rice.
Eugenia turning the unhusked rice to dry before milling
Quintin is a tinsmith. Since a loan enabled him to buy a grooving machine,
he can produce a wider range of tinware such as buckets, lamps and watering
cans.
Quintin using the grooving machine
Leonides is a carpenter-welder. His new welding equipment allows
him to take on larger projects and provide casual work for his son and several
others. This has doubled his family's income.
Leonidis using his new welder
Romy and Nelsa have borrowed a small sum of money to buy equipment and raw
materials to build up their small blacksmithing business, which produces tools
for local use.
Romy and Nelsa producing tools
A small group of women have learned how to make soap and herbal medicines.
With a loan they can buy containers and ingredients such as good quality coconut
oil, while they add leaves from plants grown in their own gardens.
Women making herbal medicines
Farmers worked out they could make a profit growing cassava, if they could
process the root crop into chips for use as animal feed. They learned how to
care for the plants and to alternate the cassava crops with mung beans. This
replaces soil nutrients and provides another crop to earn extra cash. The farmers
also took a loan to buy a chipping-machine. The machine can do in one hour the
work that used to take three days by hand. The cassava chips are spread out
to dry, and turned over regularly, until their moisture content is only 14 per
cent: dry chips can be stored longer and are cheaper to transport.
Chipping cassava
Fishermen have been able to borrow from the project loan fund at low interest
to buy their own boats and pump boat. This has meant they are no longer restricted
to fishing in small boats which can only be used close to shore, and they do
not have to pay most of their earnings in rent to the owner of the pump-boat.
They plan to repay the loan with the money earned from the extra fish they catch.
The community is also working to restore the coastal environment, so that fishing
is a sustainable source of income.
Fishermen with their own boat
Pedicabs are a popular form of transport for short trips to school or shops.
Drivers have taken low-interest loans to buy their own pedicabs, instead of
having to pay rent to someone else. They save part of their earnings to pay
for essential repairs.
Owner drivers with their new pedicabs.
As the loans are repaid, money will become available for other people to borrow
for new businesses or for borrowers to apply for a larger loan.
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