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Microfinance transforms lives
July 24, 2009
Sally lives in one of Manila’s poorer communities. She expanded her “sari-sari” or small groceries store into a home-run bakery with help from Tindig Komunidad (Stand Up Community) Inc. (TKI), a local microfinance institution supported by the Philippines-Australia Community Assistance Program (PACAP).
In the bustling metropolis of Manila with its population of around 12 million people, microfinance is a simple yet powerful tool that can lift the entrepreneurial poor out of poverty.
As one of Australia’s longest-running development initiatives in the Philippines, PACAP has been providing opportunities for economic growth to poor communities for more than 23 years.
The initial microfinance loan of just $130 helped Sally realise her dream of sending her children to college despite immense financial hardships.
After the birth of her third child 15 years ago, Sally gave up her career as a laboratory assistant to look after her family but, she recollects, “I couldn’t just stay at home and look after the children while my husband worked long hours.”
Sally knew that her husband’s earnings would only be enough to support their growing family’s everyday needs and not enough to save for the future. “In the little spare time I had, I sold assorted groceries,” she said.
Four years ago, the low-interest, microfinance loan from TKI gave Sally the capital she needed to quadruple her income and she earned enough to buy an industrial oven, making it possible for her to start a home-run bakery.
“The bakery’s profits have helped me ensure that my children will get the education they need to help them prepare for a better future. Without the business I wouldn’t be able to afford to pay their boarding fees at college or buy their textbooks. I enjoy the freedom of working from home and know that one day all my children will go on to be college graduates.”
PACAP supports microfinance activities all over the Philippines, including those run by women’s groups, farmers’ groups, agrarian reform communities and cooperatives. The idea is to foster a sense of self-reliance and savings consciousness amongst the borrowers.
Without the collaboration of development agencies like AusAID and committed NGOs, the prospects of better standards of living for people trapped below the poverty line are few and far between.
“Microfinance has not only provided marginalised communities with access to financial services but has also uplifted them to realise their own potential,” PACAP Program Director David Swete Kelly commented.
In its current phase (2005–2010), PACAP will deliver $20 million to projects supporting poor communities. PACAP has recently produced books on Microfinance and Social Enterprise Development that will assist NGOs in the implementation of their projects. These books are also downloadable online from PACAP’s website.
PACAP’s community-initiated development interventions have benefited almost two million Filipinos since 2005. Communities are now benefiting from, among others, increased agricultural productivity and market access for farming communities; increased small enterprise productivity; increased access to safe drinking water and sanitation facilities; increased access to education through functional literacy classes; increased capacity to implement and manage their own development projects through training, partnerships with local government and networking with local community organizations. Livelihood projects have been particularly successful in helping women to augment their household incomes.
Australia is a long-standing development partner of the Philippines and one of the country’s three largest bilateral grant aid donors. In 2009¬–10, the Australian Government will provide an estimated $123 million in development assistance, focusing on economic growth, basic education, and national stability and human security.
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