U.S. Embassy Photo Release

June 14, 2007

 

U.S. Ambassador Helps Mark 10 Years of Successful Partnership

Between USAID and Philippine Rural Banks

 

 

 

U.S. Ambassador Kristie A. Kenney praised the cooperation between the Rural Bankers Association of the Philippines and its partner, the Microenterprise Access to Banking Services program (RBAP-MABS) — funded by the United States Agency for International Development (USAID) — at its 10-year celebration held at the Manila Hotel on June 13th. 

 

In her message, Ambassador Kenney highlighted the successes of rural banks and the microentrepreneurs that they serve.  “RBAP-MABS has demonstrated that microentrepreneurs are bankable and credit worthy, and that rural banks can make a good return from microfinance services,” Ambassador Kenney said.  “You have also led the way and served as an important role model for others around the world to follow when creating strategies to provide sustainable microfinance services.”

 

RBAP and USAID first partnered 10 years ago to help accelerate the economic development of Mindanao.  USAID signed a Memorandum of Agreement with RBAP in 1997 to initiate the MABS Program to expand loans and deposit services to microentrepreneurs by assisting banks to develop the capacity to profitably provide financial services to the microenterprise sector.  The billions of pesos that RBAP-MABS has mobilized from deposits have helped free up scarce local government resources originally intended for funding government credit programs.  Local governments can instead invest these resources into rural infrastructure, education, and health. 

 

Pictured above at the 10-year anniversary celebration are (L to R) John Owens, MABS Chief of Party; Francis Ganzon, Bangko Kabayan President; Ambassador Kenney; Virgilio Leyretana, Mindanao Economic Development Council Chairman; John Lindborg, USAID Mission Director; and Ret. Gen. William Hotchkiss III, Chairman, Rural Bankers Research and Development  Foundation, Inc.

 

In 10 years of operation, the participating banks in the RBAP-MABS program have accumulated successes that compare very favorably with other microfinance programs around the world. Recently, the program awarded its one-millionth loan.  As of May 2007, participating bank units have disbursed more than PhP13 billion (approximately US$250 million) to approximately 375,000 new micro-borrowers.  RBAP-MABS performance on savings mobilization has been just as impressive. From January 1998 until May 2007, micro deposit accounts opened under RBAP-MABS had a cumulative value of approximately PhP700 million (about US$14 million).

 

In the world of microfinance — a world more visible to the average person after the Nobel Peace Prize award was given to microfinance pioneer Dr. Mohammed Yunus, founder of the Grameen Bank — these numbers and the impact they represent are significant. The RBAP-MABS partnership is unusual among donor-supported microfinance programs in that USAID’s support is only to provide technical assistance and training to the banks. No loan funds or loan guarantees are provided by USAID.  All loan funds are raised by the banks themselves through deposits mobilized in their own communities, and the banks shoulder all the risk associated with lending to this sector. 

 

Through MABS, USAID provides the rural banks with training and information systems to better track loans and implement a zero tolerance for loan delinquency.  As a result, MABS-participating banks have achieved excellent repayment performances for their microfinance loan portfolios.

 

MABS has provided direct support to 335 rural banking units. In virtually all cases, MABS was the participating bank’s first experience with implementing microfinance in a systematic way applying best practices and principles.  The great majority of participating banks have found microfinance to be profitable, and have made it a permanent part of their business.

 

At the June 13 event, Ambassador Kenney concluded by saying, “The success of microfinance in the Philippines shows that poverty is not irreversible. It also shows that development is not a matter of charity, but of partnership.  The Philippines is a country that demonstrates that it can pull together the skills and aspirations of people from all walks of life, especially the enterprising poor. In this partnership, the Philippines will find the American people standing firmly by its side.”

 

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