Newest good tidings: fund grant from PDTF

By CHITO DELA TORRE
January 10, 2010

There’s the likelihood that the town of Basey in Samar will make it to the top list, in Region VIII, at least, as the first town with duly registered organizations who wish to be the first to qualify for the government’s People’s Development Trust Fund or PDTF, for short.  Basey has a good number of non-bank organizations that engage in micro-financing.  Among them are the millionaire cooperatives among teachers and government employees, including that in barrio San Antonio. The Basey local government unit itself will most likely qualify.  In fact, it is eager to become one of the first LGUs in this part of the country to get enough attention from the PDTF.

Make no mistake about it.  This government funding program is open to all qualified applicants, many of whom may come from other towns and cities in the Eastern Visayas region, if they will be interested to avail of it, including all interested towns and cities.  The PDTF offers a maximum contribution of P500,000 – to be euphemistic, half a million pesos – per mincrofinance institution.  The amount contributed in is about 75% of the total cost of the proposed project, but the proponent-organization must shell in 25% in terms of direct cost (consisting of the equivalent value of the contribution in kind – example, human resources and materials)

The good tidings about the PDTF reached Basey during the last week of year 2009.  Manager Maria Carmen S. Apuli of the resource development and management department, People’s Credit and Finance Corporation (PCFC) introduced the PDTF to the Basey local government unit thru town administrator Balbino Estorninos. Apuli must have marvelled at some of the good points about my hometown which Pare Balbin revealed to her.

According to manager Apuli, the PCFC is a government-controlled corporation registered with the Securities and Exchange Commission.  It was created in accordance with Administrative Order No. 148 and Memorandum Order No. 261.  The PCFC serves as a vehicle for the delivery of microfinance services for the exclusive use of the poor.  As a government-owned and controlled corporation, it is the lead government entity specifically tasked to mobilize financial resources from both local and international funding sources for microfinance services for the exclusive use of the poor.

A brochure left by Apuli in the office of the municipal administrator of Basey says: The People’s Development Trust Fund is a fund created under the Social Reform and Poverty Alleviation Act (Republic Act No. 8425) of the Republic of the Philippines, for the development of a nationwide network of viable and sustainable microfinance institutions and micro-enterprise business development service groups that are able to deliver effective and efficient microfinance services to the poor and help them develop enterprises. The corpus of the PDTF (that is, non-disbursable portion) consists of the amount to be provided by the government over a 10 year period and other additional amounts mobilized through voluntary contributions, grants and gifts from local and foreign sources.  The disbursable portion consists of the earnings of the PDTF corpus and other additional amounts expressly donated, contributed or granted as part of the disbursable portion.

Who are eligible as grantees of the fund?  Fund grantees include non-bank microfinance institutions (meaning non-government organizations, cooperatives, and people’s organizations); special sector organizations (which maybe NGOs, co-ops and POs that are about to start providing microfinance services to unserved and hard-to-reach areas; LGUs; other possible grantees (example, bank-microfinance institutions [MFIs]) which have poverty reduction as a primary objective in their microfinance endeavours upon evaluation and duly approved by PDTF executive committee; and service providers or promoters for microfinance and microenterprise development.

The pre-qualification criteria for an LGU to avail of the PDTF are only two: 1) provide microfinance and microenterprise programs to their constituents, provided that the Fund shall not be used for personal services and maintenance and other operating expenses as loanable fund; and 2) undertake self-help projects where at least 25% of the total fund earnings shall be used exclusively for the provision of materials and technical services.

A non-bank MFI must meet the 8 pre-qualification criteria, namely: 1) duly registered with the SEC (for NGOs, or Cooperative Development Authority (for co-ops); 2) a track record of at least 2 years continuous microfinance operations; 3) presence of credible, competent and qualified board of directors and key officers; 4) presence of accounting and cashiering services and internal control systems; 5) presence of savings mobilization for co-ops; 6) no material and adverse findings on the reputation and competence of the BOD and principal officers; 7) pass the financial criteria: past due rate is not more than 20% of total loan portfolio, total resources of at least P500,000, and has profitable operations for the last 1 year and has capital to risk asset ratio (CRAR) of at least 10% after PCFC and other creditors; and 8) an outreach of at least 100 borrowers.

A microfinance institution is simply defined as an organization that offers financial services to the very poor.  MFIs are NGOs, rural or thrift banks and cooperative committed to assisting low income households.

Microfinance is the provision of a broad range of financial services such as deposits, loans, payment services, money transfers and insurance products to the poor and low income household and other microenterprises.

The clients of microfinance are the economically active and entrepreneurial poor (e-poor).  The National Anti Poverty Commission considers as within this category the shopkeepers, ambulant vendors and household-based entrepreneurs, as they have stable economic activities and the NAPC believes they will be able to sustain and enhance such if they are provided with even small amounts of readily available funds.

The microfinance credit facility of NAPC has also what it terms as “microfinance plus plus”, a package of credit that includes several trainings that are deemed necessary to sustain the gains of microfinance.  Since clients are primarily women, the trainings include modules on gender empowerment, women’s health, and responsible parenthood.