MICROCAPITAL STORY: USAID AND RBAP'S MABS Expands Rural Banking Nationwide in The Philippines

The Philippines’ Microenterprise Access to Banking Services (MABS), a program of the Rural Bankers Association of the Philippines (RBAP) and the United States Agency for International Development (USAID) plans to expand and increase the number of borrowers using rural banks nationwide. MABS aims to increase the number of borrowers among participating rural banks by more than 375 thousand from 2008 to 2013. The program originated in Mindanao, where it has provided training and technical assistance to rural banks for the past ten years and acts as the implementing agency for USAID’s Mindanao Peace and Development Fund (MPAD Fund) and plans to expand throughout the Philippines. The Mindanao Economic Development Council (MEDCo) is the government implementation and overseeing body for MABS.

A total of 30 participating banks with more than 200 bank branches and satellite offices have received training and technical assistance under MABS in Mindanao, with an additional 46 from Luzon and 14 from the Visayas. These serve a total of 202 thousand borrowers in these areas. Total bank branches and satellite offices nationwide participating in this program now number 453. A complete list of participating banks is available here. MABS Chief of Party John Owens stated that Mindanao has experienced growth in rural banking, accounting for P10.1 billion (USD 212 million) worth of loans out of the total P20.7 billion (USD 434 million) nationwide and that deposits in these banks in Mindanao have reached P797 million (USD 16.7 million), out of the P1.7 billion (USD 35.7 million) nationwide since the start of the program.

MABS entered its fourth phase in August, 2008 when a memorandum of understanding was signed between USAID and the RBAP, which launched MABS-4, operating from 2008 until 2013. New programme initiatives for this phase include microinsurance and housing microfinance, as well as the expansion of a micro agri-loan product. MABS will continue to provide training and technical assistance for existing products, such as microloans and microsavings.

The Mindanao region of the Philippines has suffered from conflict since the 1960s, when the Muslim minority, the Moro, launched an armed struggle for their ancestral homeland. The conflict has resulted in the deaths of 160 thousand people and the displacement of 2 million people, 700 thousand of which were displaced in 2008 alone. Fighting escalated in 2008 after a decade-long peace process between the government and the Moro Islamic Liberation Front collapsed. Additionally, Reuters has reported that much of this violence is caused by severe poverty as a result of decades of under-investment.

The Rural Bankers Association of the Philippines (RBAP) was founded in 1955, although it remained a non-incorporated association of institutions engaged in a common endeavour until 1957 when it was incorporated by the Securities and Exchange Commission. It was created to promote the general welfare and safeguard the common interests of rural bankers and to create a means for making rural bank facilities more responsive to the needs of the people in rural areas. Financial information on RBAP is not available on its website or the Mix Market. MicroCapital has covered articles on the RBAPs partnership with Globe Telecom as well as its work with the Consultative Group to Assist the Poor.

The Microenterprise Access to Banking Services (MABS) program was created in 1998 and is an initiative which is designed to “accelerate national economic transformation” by encouraging the Philippine rural banking industry to expand access to microfinance services. MABS assists client rural banks in the Philippines provides microfinance technical assistance and training to rural banks. Rural banks in the Philippines can apply to the MABS program, and if selected to participate will receive assistance in developing and enhancing microfinance products, the implementation of a profitable microfinance line of business and development of the capacity to manage and expand their microfinance operation. As of September 2008, MABS participating rural banks had disbursed over 1.6 million loans totaling more than P20.7 billion (USD 434 million) to more than 500,000 micro borrowers. These banks also managed more than the P1.7 billion (USD 35.7 million) in small savings deposits from more than 1.3 million microdeposit accounts.

USAID was formed in 1961 as a part of the Foreign Assistance Act and is the principal United States agency to extend assistance to countries recovering from disaster, trying to escape poverty and engaging in democratic reforms. USAID is an independent federal government agency that receives overall foreign policy guidance from the secretary of state. In 2007 USAID had a foreign assistance budget of USD 24.7 billion and provided USD 193 million in funding for microenterprise development through 184 new and existing grants, cooperative agreements, and contracts in 61 countries.

By Lori Curtis, Research Assistant

Additional Resources:

Balita: “Micro-enterprise access program expands to rural banks nationwide”

GMA News: “Rural banking grows via microenterprise access program”

Microenterprise Access to Banking Services: “Home”

MicroCapital Story: “Assets in Philippines’ Rural Banking Industry Grow By 15.72%”

MicroCapital Story: “Globe Telecom Philippines Joins with Microfinance Providers in the Rural Bankers Association of the Philippines (RBAP) to Supply Mobile Banking Services to the Rural Poor”

Reuters Alert Net: “Long-Running Muslim And Communist Insurgencies”

Rural Banker’s Association of the Philippines: “Home”

TMC Net: “More banks to open access to micro-entrepreneurs (Business)“