Household Poverty: Addressing the Core of Microfinance

This Policy Notes analyzes the development of the microfinance market in the Philippines from the household perspective as it relates to poverty alleviation. It presents findings from a survey of 333 households. The sample was categorized into two groups, namely male-headed and female-headed households. They were further grouped into clients or those who have access to the services of the community-oriented financial intermediaries (COFIs) system, and non-clients.

The study revealed that poverty incidence is clearly higher among non-clients than clients of the COFI system. It could be that those who were able to access the COFI system were already economically better off than those who had no access. Recommendations include:

• Government’s poverty alleviation programs should focus on those who do not have access to the COFI system;
• Policy environment allowing COFIs to increase their reach must be put in place for the COFI system to expand its services to those who are currently excluded;
• Planners of poverty alleviation programs should take note that there is virtually no difference in poverty levels of male- and female-headed households;
• COFIs should change their internal policies in order to contribute more to the effort to reduce poverty and income disparities.