Merger of 2 agencies imperils loans for poor
The Manila Standard
Government microfinance partners nationwide expressed uncertainty on the livelihood and job generation projects target of 6 to 10 million jobs as a result of Executive Order 362 directing the merger and consolidation of the National Livelihood Support Fund (NLSF) with the People’s Credit Finance Corp. (PCFC).
In a resolution, microfinance conduit partners nationwide composed of cooperatives, rural financial institutions (RFI), nongovernment organizations, people’s organizations and thousands of its poor borrowers have appealed to President Gloria Macapagal Arroyo to defer or suspend the implementation of EO 362.
While reiterating their full support to President Arroyo’s intention in the ongoing government-wide reorganization plan, the group strongly cautioned the President that EO 362, which will establish the PCFC as the exclusive microfinance provider of government, could derail the administration’s effort on livelihood and job generation projects.
Presently, the NLSF as well as the other microfinance players from the private sector are complementing the President’s efforts in the delivery of microfinance for livelihood and job generation projects to attain 6 to 10 million jobs within the next six years.
The group expressed concern that the merger of NLSF with the PCFC might trigger higher interest rates following the 36 percent now offered by PCFC to individual poor borrowers. It noted that NLSF’s interest rate cap of 24 percent has a calming effect in the microfinance industry as it has become a source of affordable financing which has increased the productivity and financial viability of livelihood projects by the poor NLSF beneficiaries. All major microfinance providers in the private sector also charge a 36 percent interest to their borrowers.
Nestor Custodio, manager and president of the Cooperative Rural Bank of Bulacan Inc., said that “we are appalled by this move of our President to merge the NLSF with the PCFC as it could mean offering higher interest rates of 36 percent to the poor borrowers as against the present 24 percent affordable rates being provided by NLSF.” He further explained that government should adopt the NLSF microfinance experience as the model since it has registered almost a 100 percent repayment rate compared to that of PCFC.
“Before, there were not much competitors in the microfinance industry as PCFC was the biggest single source of funds. However, the entry of NLSF has neutralized the prevailing rates in the market to the advantage of poor sectors,” Custodio said.
No Comments, Comment or Ping
Reply to “Merger of 2 agencies imperils loans for poor”