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Saturday, Oct. 8, 2005

Philippine NGO head seeks help for poor

Staff writer

The government and Japanese businesses can help thousands of impoverished people in the Philippines by providing funds and business skills to a Filipino bank that extends startup loans to poor women, according to the bank's founder.

News photo
Aris Alip

Aris Alip, founder and managing director of the Center for Agriculture and Rural Development (CARD) Mutually Reinforcing Institutions, said the lending arm of the group, CARD Bank, extends small unsecured loans to 152,000 poor women who have families in rural areas of the Philippines.

The loans, which are repaid in small installments, helps borrowers launch businesses in handicrafts, food retailing and farming.

The bank boasts a 99 percent repayment rate, Alip said, noting the loans only go to women because men would tend to spend money on drinking or gambling if their businesses become profitable, while women would use the money solely to better the lives of their families.

But due to the high demand, the bank hopes to increase the number of borrowers to 1 million households using its so-called microcredit approach, Alip said in a recent interview, adding the bank also aims to help borrowers expand their business to create jobs.

"Japanese are good at entrepreneurship," he said, referring the large number of small manufacturers and shop owners in Japan. "So this is the kind of technical assistance that I require" from the Japanese, he said.

During his six-day trip to Japan that ended Thursday, Alip spoke with officials from the Japanese Trade Union Confederation (Rengo) and sought help to transfer such skills to the bank. He also met with representatives of the Japan Bank for International Cooperation to request funds from the government.

CARD Bank, the first financial institution in the Philippines to extend microcredit and the largest of its kind in the country, started as a nongovernmental organization in 1986 and was licensed as a bank in 1997.

Alip said he established the NGO and the bank with the objective of helping the poorest, who have no land and cannot borrow money to start a business. He was inspired by the success of Grameen Bank, a pioneering microcredit institution in Bangladesh that extends small loans to poor women.

But when he first mentioned his idea to potential supporters, they all laughed, he recalled. "They said I am a crazy man because I want to give loans to the landless who have no assets."

At that time, the only institution that believed the idea could work was the Asian Community Trust, a Japanese public trust that collected $20,000 from the public and other foundations and made a donation to the NGO, Alip said.

"I want to pay my respects to the Japanese people because they are the ones who really helped me at the beginning."

CARD Bank now has 143 branches across the Philippines and total assets of $30 million.

Alip said one key to its success is its policy of making small loans repaid in small amounts. "You can easily pay" the small repayment installments and you can also save a small amount.

Bank employees visit borrowers every week to collect loan payments and give business advice, while the NGO arm of the group looks for potential borrowers.

Alip said he wants to help those who run small businesses to expand so they can create jobs, citing the example of a woman who borrowed $40 to make palm-weaving handicrafts. Now she sells her products at department stores in Manila and employs 110 people.

"I want many people to become like this lady," he said. "That's another challenge for me."

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