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Innovative Financial Services

Rural banks in the Philippines are now offering a wider range of services — from loans to mobile money — to allow rural businesses to flourish.

​Entrepreneurs like Carina Gonato in the Philippines had no shortage of ideas to build businesses — it was simply the investment capital that kept them from flourishing. Her fledgling business selling chicken lumpia made from her own recipe was expanding, but she lacked financing to invest in new equipment and increase production.


Mrs. Gonato’s problem was all too common in the Philippines. To meet the need for new and better financial products in rural areas, the Microenterprise Access to Banking Services Program (MABS) helped entrepreneurs like the Gonato family find financing and participate in the country’s growing economy.

MABS — a partnership of USAID, Chemonics, and Rural Bankers Association of the Philippines — applied an innovative financial system approach to microfinance by helping banks develop sustainable financial products such as microhousing loans for home improvement, microinsurance, loans targeted at agriculture/farm production, and mobile phone banking. MABS also helped develop rural banks’ skills in conducting market research, develop products for their clients, administer loan best practices, and conduct operational reviews.

The approach created significant impact in the lives of rural Filipinos. In its 15-year span, MABS allowed rural banks to extend 3 million microfinance loans with a collective disbursement of almost $1 billion, resulting in an 80-to-1 return on USAID’s investment.
 
Carina Gonato’s business is just one of many examples of microenterprises that are now thriving because of access to investment capital. Beginning with a $1,162 loan for working capital from FAIR Bank, a local bank participating in the MABS program, Mrs. Gonato applied successive loans to new and better equipment and even diversified into other businesses. Today, her profits top $46,000 per year, of which 90 percent is reinvested in her business. She employs 50 workers and exports to Malaysia and Qatar.
 
“We would not have achieved this kind of success without FAIR Bank. They acted as a financial bridge to help us grow our business,” says Mrs. Gonato, reflecting on her years of partnership with her bank.
 
In addition to promoting microloans for local businesses, in 2005, MABS was the first USAID project to recognize the value of mobile money and the power it has to bring basic financial services such as deposits and transfers to the previously unbanked. Mobile banking services were a natural fit to the rural scope of MABS’ work, where access to financial infrastructure such as bank tellers or ATMs can prove difficult. As of August 2012, the mobile money component of the project has reached 300,000 registered clients with transactions surpassing $100 million per year.

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