Commercialization of Microfinance: Philippines

The author explains microfinance commercialization as an accepted prerequisite for sustainable growth and as possessing the following features:

• Having a professional business like approach;
• Progressing towards operational and financial self-sufficiency;
• Using commercial sources of funds;
• Operating as a for profit formal financial institution.

According to the author, some of the challenges to microfinance commercialization in the Philippines are:

• Lack of appreciation for the viability and sustainability of microfinance as a market niche;
• Lack of network and adequate support services for rural banks and cooperatives which hamper staff training, products and services development and audit and control service enforcement.
• Commitment to balancing social and financial goals as an internal challenge for NGOs.

Some of the constraints in the operating environment, as per the author, are:

• Government micro credit programs crowding the private sector;
• Policy reversal threat;
• Unclear regulation and supervision for MFIs;
• Illegal deposit mobilization in microfinance NGOs;
• Inadequate access to commercial sources of funds;
• Absence of credit information bureaus;
• Lack of microfinance training centers.

The author concludes by mentioning some of the implications of microfinance commercialization as:

• Increased outreach and competition amongst MFIs;
• Improved efficiency for MFIs;
• Increased access to commercial sources of funds;
• Expanded set of microfinance products.