17

Scaling Up in Microfinance - Issues and Challenges

Second, the mindset of the staff must be

O n the other hand, the donor

transformed to handle microfinance

community in close coordination with

operations.  In microfinance, MFI

t h e government should ensure an

personnel must have to take an attitude

enabling environment for microfinance

that they would like to help their client,

conducive to MFIs' progress toward

that they are one with them. The client is

financial self-sufficiency. Donors should:

their partner and, therefore, their success

(1) help build institutional capacity by

is also the MFI's success.

providing exposure to and training in

microfinance best practices; (2) assist in

Third, it is important to document the

the development/dissemination of MIS;

MFI's procedures in microfinance and to

(3) encourage innovation in enterprise

utilise a very good MIS. With so many

development; and (4) promote linkage

accounts to handle, it is important to

development.

know the status of the MFI's operations.

The MFIs themselves should improve their

MIS is also very important as it allows for

institutional capacity to broaden the

transparency.  It is important to be

scale of their microfinance operations (by

transparent in order to build on the

increasing depth and breadth of

credibility of the microfinance institutions.

outreach as well as financial self-

When the institutions are credible, people

sufficiency) and to strive to continually

trust them and they deal with them.

improve operational efficiency.

Fourth, best practice standards must be

And lastly, the support institutions ­

in place. Just because it is microfinance

m i c r o f i n a n c e networks, a credit

does not mean anything goes. There must

i n f o r m a t i o n bureau that includes

be certain performance standards in

microcredit and microfinance training

place not only for the benefit of the

centres are considered key factors in the

regulatory authorities but also for the

development and growth of a

stockholders and stakeholders as well.

microfinance industry.

Conclusion

Footnotes

Given the number of issues and

Republic Act 9178, Congress of the

1

challenges confronted by microfinance

Republic of the Philippines, 22 July 2002

institutions as previously discussed, it is

"Government's Challenge to the

2

imperative for the government, the BSP,

Microfinance  Sector"  Speech

the funding agencies, the MFIs

delivered by Secretary Teresita Deles,

themselves, and key support institutions

National Anti Poverty Commission.

to act collectively towards the common

National Conference on Microfinance,

goal of boosting the microfinance

November 2001, Manila

industry in the Philippines.

Annual Poverty Indicators Survey,

3

1999, National Statistics Office

The main role that the government

Commercialization of Microfinance -

4

should play in the promotion of

The

Philippines,

Stephanie

microfinance is to create and maintain

Charitonenko, ADB, 2003

a n enabling macroeconomic and

Poverty Incidence, National Statistics

5

sectoral policy environment and

Office, 2002

regulatory framework for microfinance.

Commercialization of Microfinance -

6

The

Philippines,

Stephanie

As the Philippines' central monetary

Charitonenko, ADB, 2003

authority, the BSP continues to balance

"Winning the Challenge" A Survey of

7

As the Philippines'

carefully the need to adapt regulation

I n s t i t u t i o n a l Plans of Philippine

central monetary

and supervision to account for the

Microfinance Institutions, Microfinance

authority, the BSP

specialised nature of microfinance

Council of the Philippines, Inc. (MCPI),

continues to

operations with the need to protect the

January 2002

balance carefully

financial health of banks. The integration

"Update on the Performance of

8

the need to adapt

of risk-based supervision techniques,

Council Members," Microfinance

regulation and

especially for microfinance operations,

Today - The Official Newsletter of MCPI,

supervision to

p r o m i s e s to be effective both for

Issue No. 3, November 2004

account for the

supervision  and  effective  risk

specialised

management.

nature of

microfinance

operations with

the need to

protect the

financial health of

banks.

Ricardo P. Lirio

Mr. Lirio is currently the Managing Director, Supervision and Examination II,

Central Bank of the Philippines (Bangko Sentral ng Pilipinas or BSP)

rlirio@bsp.gov.ph