Livelihood explaratory field mission report livelihood Manilla, philippines duration

2.1.2 At the local level

Mindanao Island

Mindanao and the Sulu archipelago comprise about one-third of the Philippines’ territory and one-quarter of the country’s total population (about 20 million people). It is the poorest region of the Philippines, partly because of the long-standing conflict with the Muslim population, which numbers over 4 million. After years of negotiations, one of the two main separatist groups, the Moro National Liberation Front (MNLF), signed a Peace Agreement with the GRP in 1996. As economic growth in Mindanao has accelerated in recent years, negotiations between the primary remaining Muslim separatist group, the Moro Islamic Liberation Front (MILF), and the GRP have intensified.

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  After an upsurge of conflict spurred by increasing competition for land and political influence in the 1970s, a process of integration was initiated by the “Tripoli Agreement” with the Moro National Liberation Front (MNLF) in 1976, brokered by the Organization of Islamic Conference (OIC).
  
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  In 1989, the Philippines unilaterally created the Autonomous Region of Muslim Mindanao (the ARMM), with four of Mindanao’s and Sulu’s 21 provinces joining the ARMM despite the MNLF's boycott.
  
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  After intensive negotiations, the MNLF signed a Peace Agreement in 1996. The MNLF Chairman subsequently won election as ARMM Governor.
  
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  In 2000, small clashes between the Philippine armed forces and an MNLF splinter group, the Moro Islamic Liberation Front (the MILF), grew into a major conflict. The MILF signed agreements in mid-2001 on conflict management (with the OIC’s participation) and on a process toward definitive peace.
  
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  The ARMM was enlarged by the adhesion of one additional province and one chartered city in late 2001. The ARMM’s population also approved an amendment to the ARMM’s Organic Act that will expand the authority of local governments within the ARMM Region.
  

Sorsogon

Between 1995-2000, Sorsogon had an average annual growth rate of 2.04% and was the fastest growing province in the Bicol region, one of the country’s poorest. Sorsogon has a poverty incidence of 51.4 percent, and majority of its poor live in rural areas. About 36 percent of its households have no access to safe water, and 28.5 percent of children 6 to 12 years old are underweight. Sorsogon has an agricultural economy with coconut, rice, corn, abaca and pili nuts as the major products. Its rich marine resources yield various products such as fish, crabs, clams, mollusks and seaweeds. With a population of 650,535 (as of year 2000), it has a population density of 307 persons per km2 living in 14 municipalities, one city and 541 barangays.

Metro Manilla

or the National Capital Region has a population of about 10 million persons and is the administrative and economic center of the country. In 2000, there were 110,000 PWDs in NCR. Although it is relatively prosperous compared to other regions, its urban poor population is increasing. Rapid uncontrolled growth and poor urban management have severely impacted the poor. Approximately 20 percent of its population is either under or near the poverty line and 35 percent reside in informal "slum" settlements. Many urban poor communities have evolved into long-term problem areas that constrain sound urban development and promote the influx of additional rural poor migrants. The urban poor must contend with poor quality housing, overcrowding, inadequate access to basic services and lack of security of tenure, which result in decreases in health, increased environmental degradation and an appalling quality of life. In 2000, poverty incidence in NCR registered an increase of 2.3 percentage points. It is also a region of high inequality, with a Gini coefficient of 0.45.

2.1.3 Situation of the Informal sector

The latest data (2000) from the National Statistics Office (NSO) show that microenterprises comprise 91% of the total number of businesses in operation in the Philippines and are the primary sources of livelihood of 41% of Filipino households.
In addition, these microenterprises provide employment to about 37% of the country’s total workforce, making the sector key to economic development. Most of these microenterprises, however, cannot take the next step towards business expansion because of lack of access to additional capital. Financial institutions generally view lending to microentrepreneurs as unprofitable and risky – with the projected interest income barely enough to cover the costs of lending small, uncollateralized loans. Frequently, the remaining option for these microentrepreneurs is to borrow from informal moneylenders at interest rates that do not allow them to have savings or reinvest in their enterprise. As a result, they continue to operate informally and in small scale.

2.1.4 Microfinance Industry

A Mature microfinance sector, highly competitive
There is an extensive network of Philippine rural banks because several factors make Rural Banks ideal vehicles for reaching the microenterprise sector. Rural Banks have excellent geographic coverage (more than 2,000 banking units covering 85% of all municipalities in the Philippines) and, are therefore, geographically and culturally close to the target market.

Rural banks’ cost and overhead structures also allow them to provide

It was only in the last 10 years that microfinance began to be considered as a potentially profitable market niche. Major MFIs include many of the approximately 3,000 cooperatives registered with the Cooperatives Development Authority. A large number of small and regulated MFIs like pawnshops and lending investors serve the upper tier of the microfinance sector. Total volume of formal and semiformal microcredit is unknown, but estimates of the outstanding balance are in the range of P6-8 billion (euros 91-121 million).
The number of poor with access to microfinance is 600 000 to 1 million persons. However, even if 1 million people are served by MFIs, only 20 percent of the estimated 5.8 million poor households have access to microfinance.
Recently, many MFIs have made substantial progress in commercialized microfinance, due mainly to donor-supported projects and government, which has been aggressively working to create an enabling policy environment for sustainable MFIs.
Major players in the industry:

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  Rural banking sector : 791
  
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  Cooperative sector : 66 000 registered cooperatives
  
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  NGO sector : 600 NGOs are involved in microfinance, and 6 big NGOs dominate the microfinance sector with more than $ 30 Million in outstanding loan
  

Source : Microfinance Activity in Philippines, IDLO MF Working Paper, October 2007