Day Four: The 30-day writing challenge

Three major trends in terms of access to credit and indebtedness emerged in WMF after Ondoy. First, microfinance institutions, if not leaving the area, had become stricter and more thorough in processing loan requests and following up repayments. Second, informal lending operators like the “Bombay” and 5/6 boomed. Lastly, people are becoming more wary of joining these organizations for fear of not being able to repay.

Stricter MFI’s. At least six major MFIs operated in WMF prior to Ondoy: CARD, CCDI, CCT, ASA, KMBI, TSPI. Among these, CARD seems to be the most preferred.

CARD members can borrow a three-thousand-peso initial loan payable in 6 months with 15% interest. Aside from giving out loans, CARD (as well as KMBI) have a savings component while offering health insurance, educational assistance for college dependents, free weddings, GSIS financial assistance in case of death in the family.

A CARD member who had an outstanding PhP 5,000 loan explained that she has to pay PhP 320 weekly for 23 weeks. Of this amount, PhP 50 goes to savings, PhP 15 is for insurance and PhP 5 will be accumulated  every time, the sum of which can be refunded when the member opts out of the organization. As an MFI solely used for livelihood activities, members can increase loan amounts after some time up to PhP 150,000. People distinguish CARD and KMBI from other institutions  as the latter do not offer benefits except savings component.

Given the reality of increased expenses brought about by Ondoy and their lack of security of land tenure, it became more difficult for the residents to obtain loans from formal MFIs as these institutions feared that the current economic state and possible summary evictions would make it harder for them to obtain repayments.

According to one respondent. “Sila na mismo ang umalis dito simula ng Ondoy kasi natatakot din silang magpautang. Kasi dati kasi ako mismo ang nagrerecruit ng tao. Tulad sa ASA ako ang nagrerecruit nun. Ngayon, hindi kami nahuhulugan ng mga tao kaya umalis sila…Ang TSPI naman, hindi kami dun pinagpatuloy, mula ng nag-Ondoy.”  (trans)

Some people obtain memberships from other less strict MFI’s to pay their previous loan from a stricter ,more stringent MFI for fear of having their appliances pulled out of their houses.

“Ganito ang mangyayari dun, pag nagkautang ka hindi ka nakabayad ng loan, uutang ka dito ulit para pambayad. Kaya ang nangyayari doble bukol ka na dahil yung bayad mo dun, inutang mo sa kabila,” a respondent explained. (trans)

Rise of informal lending. There has been a noticeable increase informal lenders after Ondoy. According to WFM residents, many “Bombay” or Indian businessmen offer to lend residents money especially if they see that the residents have stable jobs or small businesses. Although experiencing bad rap because of their convincing and allegedly sly way of peddling wares like umbrellas and kitchen utensils, the purchase of which is a requirement for getting the loan, some people who badly need the money and do not pass MFI requirements have no choice but to avail of the option.

If possible, many residents still prefer to borrow from neighbours who also usually charge 20% interest but. The advantage is that loan cycles are shorter and repayment dates are not strictly being followed. One can always request for extension.  

MFI’s as added burden. Often, FGD and KII respondents, consider MFI loans as additional worries instead of assistance to alleviate problematic financial situations. Someone from the women’s sector said, “Wala. Yung mga microfinance hindi naman yan…utang yun talaga. Wala yun. Dagdag problema nga yun eh.” (trans)

A KII respondent was leader of 5 MFIs (CCDI, CCT, ASA, KMBI, TSPI) and had many small loans but eventually was unable to pay. She dropped out from most because she had difficulty collecting payments from her members. Now, she is member only of KMBI. 

Some stay with the MFIs only because of the savings component:  “Ang ginagawa ko sasali ako sa lending para at least kahit papaano may savings ako. Halimbawa tumabi ako, halimbawa kumita ako ng Php50, ang singkwenta tinatabi ko para may panghulog ako ganun.” (trans) 


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Yep. still at it.