2006 4th Issue

communi-k

KMBI

A quarterly publication of KMBI

“Partner for a Progressive Life”

International Review 2005 Microfinance Information Exchange (MIX) Global 100: MFI League Tables Leading MFI’s by Profitability Rank

MFI

Return on Assets

Country

1

Zambuko Trust

2

Daulet

Zimbabwe

30.24%

3 KMBI

Philippines

21.39%

4

Compartamos

Mexico

21.12%

5

FINCA Armenia Armenia

20.97%

This table is based on the analysis of MIX on the profitability of over 500 MFI’s worldwide.

MIX is a non-profit organization existing to help build the microfinance market infrastructure by offering data sourcing, monitoring tools, and specialized information services.

Opportunity International’s Partner Review for the Third Quarter of 2006 Sustainability & Profitability 160.29% 146.26%

Loan Activity Number of Loans Made Value of Loans Made (US$) Average Loan Size (US$)

107,398 12,802,783 119.21

Efficiency Cost per Unit Lent (US$) Cost per Loan Made (US$)

0.15 17.91

Opportunity International is a global coalition of organizations dedicated to providing opportunities for people in poverty to transform their lives.

Organizational Performance Total Client Outreach

89,628

Ave. No. of Clients per PA

236

Loan Portfolio

PhP278M

Portfolio At Risk

3.34%

Financial Self-Sufficiency

149.29%

Operational Self-Sufficiency

150.54%

Total No. of Staff MF Operations Support Group

517 34

(As of December 31, 2006)

Onward to greater impact

30.90%

Uzbekistan

Operational Sustainability Financial Sustainability

4th quarter 2006 .VOL 3 NO 4

KMBI launched its five-year business plan dubbed as GOAL 25.250 in Jade Valley, Quezon City and Waterfront Insular Hotel, Davao City on December 10 and 17, 2006, respectively. “GOAL 25.250” stands for KMBI’s goal to reach 250,000 clients on its 25th year in 2011. Its aims to create greater transformational impact, deepen and widen client outreach, and increase financial sustainability.

The business plan, embodied by seven directions, shall be the organization’s manual in reaching out to these clients. Foremost to these directions is “to actively share Jesus Christ and promote Christian values” among its staff and clients. KMBI believes that genuine transformation is only possible and lasting if it is founded on spiritual change.

To create greater impact, two entities shall be established on the next five years, a bank and a training institute. The bank is intended to cater to micro-entrepreneur graduates by providing financial services that will suit their needs.

The training institute, on the other hand, is aimed at harnessing the skills of MF practitioners through research, consultancy and formal training.

Aside from these, the seven directions bear the intention of the organization to further develop its workforce through providing a

BOT member Eduardo C. Jimenez signs the business plan signifying his commitment to the fulfillment of GOAL 25.250 while Atty. Servillano Mendoza, Dr. Amelia Gonzales and other members of the Board await.

growth platform for leadership and management, as well as training opportunities in partnership with the academe and other development organizations. KMBI believes that by doing so, it will enable its workforce to deliver effectively and efficiently demand-driven non-financial services for the clients.

The event, first time in the history of the organization, were highlighted by the unveiling of the seven strategic directions, symbolic signing of the Board of Trustees’ approval of the business plan, and video presentation on the conception of GOAL 25.250.

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Strategic Directions

1. Actively share Christ and promote Christian values.

By year 2011, all members of the Board, staff & clients should have heard the Gospel and been given the opportunity to receive Christ as their personal Lord and Savior.

2. Deliver demand-driven and sustainable non-financial services for clients.

Starting 2007, KMBI shall provide non-financial services on enterprise development, social and environmental awareness, and other capacity-building related services.

3. Maintain microfinance operations of the NGO. In five years, KMBI shall operate 60 branches nationwide. To support this, Research & Development and Resource Mobilization & Communication units shall be fully operationalized.

In 2008, Head Office and branch recording systems will be automated & complementary products and services will be provided. KMBI sees itself preparing for international expansion by 2011.

4. Establish a Bank and transfer sufficient and profitable portfolio from the NGO. In 2007, the Bank shall provide financial services to microentrepreneur graduates.

5. Train and equip Board and staff of both the NGO and the Bank on leadership and management towards technical expertise and social responsibility.

Starting 2007, Board and staff shall undergo competency-based training programs equipping them to become world class leaders.

6.

Provide opportunities for personal development of Board and staff of both the NGO and the Bank.

KMBI shall continue to provide opportunities for educational advancement and provision of additional benefits for the staff and their familes.

7. Establish a Training Institute that will offer consultancy and courses on microfinance, business management, research and related fields, locally and internationally.

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KMBI expands anew in LuzMin branch accounting associates were hired. The expansion also prompted promotions of some program unit supervisors and branch managers to higher posts.

The new branch managers are Roselyn Embac for Daet branch, Gloria Baluyot for Biñan, and Suzette Madayag for Tacurong. Former branch manager of Naga, Grace Dr Amelia L. Gonzales, chairwoman of the Board of Trustees, Asedillo, is now assigned to cuts the ribbon as Emmanuel M. de Guzman, vice chairman, assists during the inauguration of Biñan branch on November handle Metro Davao 1, a split 2006. of old Metro Davao branch, while Grace Bautista handles Five new branches were opened in Metro Davao 2. Koronadal branch, November 2006 to reach out to more which used to be the third unit of micro-entrepreneurs in Luzon and Gen. Santos megabranch, is now a Mindanao. The expansion created full branch and managed by Rhanny 65 new jobs and nine promotions into Barrera. various managerial posts in Daet, Likewise, branch managers Biñan, Tacurong, Koronadal, and Ian Mark Villacruz, Ronaldo Ravelo, Metro Davao. To strategically manage Reynald Alpajando and Hazel Laurente the branches, Southern Mindanao were promoted to area manager posts operation was split into two, creating in Bicol, Calabarzon 1, Calabarzon North and South Cotabato (NORSOCO) 2, and Davao, respectively. Previous and Davao operations. area manager of Bicol, Enrique Maca, KMBI saw it necessary to returned back to Mindanao to take establish the aforesaid branches as it care of Caraga operation, while is beginning to position anew for the Nemwell Arzaga, who used to be the year 2007 in reaching out to micro- area manager of Southern Mindanao, entrepreneurs and to help people retained his post but this time in living below poverty line through NORSOCO operation. Realizing that its financial services, enterprise KMBI operations have grown bigger and development services (EDS), and thus will need thorough monitoring values formation programs. and supervision, two operations Having widened its operations, managers were also appointed in the KMBI closed in 2006 with 29 branches persons of Carmela Porras for Luzon, scattered in six areas, with 551 staff and Vencent Abraham for Mindanao. and 89,628 program members.

For 2007, KMBI will open eight To operate the new branches, new branches in the National Capital 62 program assistants and three Region and Central Luzon.

“O Lord, you are my God; I will exalt you & praise your name, for in your perfect faithfulness you have done marvelous things, things planned long ago.” (Isaiah 25:1)

Modified systems fortify transformation programs To further create significant impact to the lives of its clients, KMBI implemented its modified system on November 6, 2006 in all its branches nationwide. Modifications were done in the aspects of recording, reporting, branch and center structures, loan application and processing, human resource management, among others.

The initial implementation is being watched closely for evaluation and further refinement.

The need for system modification stemmed up from the issue on the effectiveness of the program assistants in facilitating transformation among the lives of the clients. It was noted during management consultation that program assistants, the frontliners of the organization, were preoccupied by administrative works that they cannot allot time to their real work which

is affecting and influencing people towards spiritual and social change.

One of the solutions looked at was to revisit the current system. Thus, the management team, composed of departments heads and officers, conducted series of meetings to discuss, evaluate and propose changes that would turn the system into a tool rather than an obstacle in facilitating transformation.

In the modified system, lesser clerical load is given to the program assistants for them to have in-depth focus on the implementation of transformational programs clients.

Forms being used in loan application and processing, as well as in reporting were reduced significantly to fiftyeight percent, which resulted to speedy processing of loans, provision of added developmental training for the branch staff, among others.

“With the modified systems, we could cater more to the needs of the clients since the program assistants will have more time in doing their functions as facilitators of change,” said Liza Eco, Deputy Director for Support Services. “This also streamlines the roles of program members in their trustbanks to better train them as leaders responsible for developments in themselves and in the greater society,” she added.

Entailed in the implementation is the development of the branch manager’s skills in terms of directing their respective operations, finances and human resources development.

The Training Department is also gearing up in equipping the program assistants in community organizing, accounting, portfolio management, proactive customer service, and facilitation skills.

A Quick Look at the Systems PREVIOUS SYSTEM

MODIFIED SYSTEM

Set of Center Officers

The SUCCESS Centers elect their chairwoman, vice chairwoman, secretary, assistant secretary treasurer, assistant treasurer and auditor.

The SUCCESS Centers elect the president, VP for membership, VP for finance, VP for education and VP for special projects.

Recording System

The program assistant updates the subsidiary ledgers while accounting staff encode information in the computer.

The Branch Accounting Associate updates all subsidiary ledgers, while the branch accountant will check and monitor accuracy of data and safe keep branch records.

Reporting System

Each unit prepares reports on the daily operations update, daily balances of accounts, daily cash positions, daily bank reconciliations, weekly cash flow projection and monthly financial statements.

The branch makes only one set of reports, to be prepared by the branch accountant, approved by the branch manager and submitted to the head office.

Statutory Benefits & Gov’t Remittances

The system is centralized; government remittances, loans and benefits are processed by the head office.

The system is decentralized; benefits and remittances are processed by the branch.

Loan Collection

Center Collection Reports (CCR) are printed daily by the accounting staff.

The new CCR is designed to be used for 24 weeks (entire loan).

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4th Quarter 2006

Staff brings hope to Bicol organization, for its part, released PhP387,000 as fund for the first distribution.

Typhoon Reming affected more than 5,500 KMBI program members from the cities of Naga, Iriga, and Legaspi; and destroyed properties and livelihood of some 827 program members.

More than 20 of them lost their homes. Three clients, three of their children and a spouse died as mudslides from Mayon Volcano covered (Top) KMBI staff with Executive Director Edgardo Mercedes examine their barangays. The 285 patches of land where the houses of Bicol program members once stood; Branch Accounting Head Harry Dalanon carries a sack of rice kms/hour wind also left to give to affected clients and their families. the region without potable water, electricity and Executive Director Edgardo S. communication lines for several Mercedes led two relief distribution activities in Bicol region on December weeks.

The typhoon did not spare 25 2006, which provided assistance to 3,700 program members of KMBI Bicol staff from its cruelty. However, affected by the typhoon Reming despite their loss, the Naga staff and mudslide. Regional staff and opted to help repack the goods at clients from different branches and the branch office. These goods and members of the Board of Trustees, other supplies were then distributed who continue to give encouragement to the program members by some and prayers to the recovering victims, head office staff, namely, Carmela contributed some of the goods. The Porras, Vencent Abraham, Harry

Hope watch Bicol clients welcomed the new year with renewed hopes; Most of the affected clients are starting anew, their children are coming back to school and the men are rebuilding their homes.

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Dalanon, Charis Ken Layawan, Jasper Nazarro, James Marcelo, Francisco Baltazar, Virgilio Rillamas, and Ian Mark Villacruz. These head office staff spent five full days visiting the program members and branch staff.

They also encouraged them to find hope in God despite the tragedy.

Financial support was also extended to program members who lost their loved ones through the Karamay sa Buhay, a microinsurance program of KMBI. “The wreck in Bicol showed that our program really helped our clients. In times like these, it’s not only the economic and physical aspects that we must boost, but also their trust in God in order for our clients to rise above the crises,” said Ian Mark Villacruz.

More relief goods, supplies and financial assistance were given by the Board and staff of both Luzon and Mindanao areas during the second visit.

Aside from extending the loan repayment period, the management is also finding more ways to further assist the affected program members.

“O Lord, you are my God; I will exalt you & praise your name, for in your perfect faithfulness you have done marvelous things, things planned long ago.” (Isaiah 25:1)

Hope express

In the operation’s perspective, Bicol was the region hit worst by natural calamities in 2006.

Prior to the devastation brought

by Typhoon Reming, some parts of the region was covered with mudflow due to the eruption of Mayon volcano in Legaspi, Albay during the third quarter of 2006.

This calamity brought many program members to hopelessness since their sources of livelihood were badly affected. Prior the intervention delivered by the Head Office, Legaspi branch distributed relief goods to 60 program members in Camalig, Albay on October 7 through their “Mayon Express.” They also sang worship songs and shared God’s Word with the members and their families. This activity heartened them to persevere and even be joyful despite the circumstance.

Hope watch - Approximately 1,700 greatly affected clients have not recovered yet.

- Approximately1,725 clients’ business and homes are totally washed out.

- Some of the clients and their families are still in evacuation centers.

EDS embarks in Community Development The EDS or Enterprise Development Services unit embarked in a community development project in Koronadal, South Cotabato which commenced on December 2006.

The aim of the project is to develop the potential of more than a hundred household beneficiaries for community enterprise, and from there build up the economic landscape of the locality.

According to Hazel Christine Rosacia, EDS Unit Head, the move is also part of KMBI’s strategy in creating market and deepening impact. Once the community is ready, microfinance program will be offered to the locale’s

microentrepreneurs to further boost its economic activites.

Currently, the chosen community, situated within the barangay of Carpenter Hill, is deprived of access to financing, market, common infrastructure and support services. Through the project, the community will be organized for participatory planning and capacity building until viability of the enterprise is achieved.

The project is implemented in coordination with the local government of Koronadal City and funded by Aus AID through Opportunity International Australia.

BOT and management visits Tampakan Members of the Board of Trustees and management team visited the copper and gold mining project of Sagittarius Mines, Inc. (SMI) in Tampakan, South Cotabato on December 14 and 15. The objective of the visit was to expose KMBI on the exploration activity of SMI and to learn from its community development initiatives.

The two organizations are looking at the possibility of working together to enhance the economic landscape of Koronadal City and its surrounding municipalities through microenterprise development. Opportunity International Australia recommended KMBI to Indophil Resources NL, SMI’s Australian partner.

If the partnership is forged, Indophil-SMI will provide funding

for the community-based enterprise development program (CBEDP) in SOCSKSARGEN (South Cotabato, Sultan Kudarat, Sarangani, Gen. Santos) region, while OIA-KMBI will do the implementation. CBEDP, a four-year program, shall consist of activities ranging from community development, micro-finance, enterprise development, and values formation.

Sagittarius, a Philippine incorporated and unlisted entity, has been cited by different organizations for its sustainable and responsible mining practices. Considerable effort has been directed by SMI in building and maintaining close working relationships with local communities and indigenous groups.

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A Step to Innovation The Helenita S. Cervas SUCCESS Story Maker of Charcoal Stove with Blower

Helenita S. Cervas (middle) together with her youngest child, Hechel, and Caraga Area Manager Enrique Maca.

Though many Filipinos are creative and innovative, only a few have the courage to believe in the potential of what they have created. Helenita S. Cervas, program member of Butuan City branch, is one of them. She, together with her husband Crisostomo, makes charcoal stove with blower out of mere clumps of clay, cement, plain tin sheets and tiny cables. It is with this special stove that Helenita was able to cut her budget for LPG and allot it to more important things like the education of her children. Also, the convenience of using it allowed her to sell siopao and banana-cue, local Filipino snacks, during her free time for additional income. The benefits of practicality brought by her usage of this stove caused her to believe in the help that it could give to many Filipino homes.

Three years back, Helenita and Crisostomo bought a similar charcoal stove from Misamis Occidental. When cooking with that ordinary stove, Helenita needed to continuosly fan the charcoal to build fire, thus ending up exhausted and covered with dark soot

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on her hands and face. Her husband saw that something must be done to ease her wife from that grueling task in order for her to attend to more constructive and productive activities during her free time. One day, he studied the stove closely and began the process of innovating it to make it more convenient, durable and presentable.

With many tests, he came up with a new charcoal stove that features a built-in electricity-operated blower, which can minimize or maximize fire by turning its knob. It greatly helped Helenita. From then on, they began reproducing the stove and marketing it to neighbors, government workers, bank employees, nurses, and teachers in their community in Buenavista, Agusan del Norte. These people also benefitted from the product, making Helenita and Crisostomo believe all the more in the product they have made.

The challenge came when their projection for increased productivity and marketability was backed up by their financial instability. Monetary assistance could not be acquired from local banks, hence KMBI’s microfinance program became a big help. Helenita joined its trustbank, and now in her sixth loan cycle, they are able to produce seven charcoal stoves in a day,

marketing it even to the nearby municipality of San Francisco, Agusan del Norte.

What was more of a channel for financial aid in KMBI became a venue for her to experience transformation emotionally, socially, economically and spiritually. Today, she leads the thirty women of SUCCESS Center 437 of Butuan City branch, confidently markets her product to local offices in other barangays, interacts shrewdly with fellow microentrepreneurs, is a better homemaker and most importantly, is now growing in her knowledge of Jesus Christ. Crisostomo is also very much influencial in her spiritual transformation. He became a renewed Christian before she did, and with his life testimony, she was ushered to Christ. Both husband and wife carries on despite the impending challenges in the business. However, seeing their children, Michael, Mishel, Cris Gill and Hechel, grow up healthily in all aspects inspires them to pursue the vision of success that this product enthuse.

“O Lord, you are my God; I will exalt you & praise your name, for in your perfect faithfulness you have done marvelous things, things planned long ago.” (Isaiah 25:1)

Aiming for the Stars The Story of Atty. Servillano C. Mendoza Board of Trustees Corporate Secretary

The road to success is never easy. Often, the journey is marred by stumbling blocks, wrong turns and dead ends. Most people give up, wandering off and drifting along a safer route. Few people, however, choose to face it head on – taking the risk, rising up after each fall, and battling their way to the end.

Such is the attitude of Atty.

Servillano C. Mendoza, KMBI’s Trustee and Corporate Secretary. Even before joining KMBI, he led a life of patience, perseverance and resilience. He pours out his heart into everything he does, striving for the best and choosing the way of excellence. Personally, he believes that punctuality, diligence and establishing a harmonious relationship in the workplace lead to success.

Born and raised in Pandi, Bulacan, Atty. Mendoza, also known as Ruben to his relatives and friends, is the eldest child of Manuel Mendoza and Cristina Cruz. Growing up during the turbulent times of Japanese occupation, he remembers observing armed soldiers buying from his lola’s

store, and running for safety whenever there was a raid.

In school, he was an outstanding student and a good friend, never passing up the opportunity to help fellow classmates with their lessons. A consistent honor student, he graduated from high school a valedictorian.

In college, he went to Far Eastern University (FEU), initially took up an Associate Course in Accounting.

Afterwards, he completed a Bachelor’s degree in Political Science, and eventually studied law, with specialization in civil and corporate matters. A scholar, he was always among the top of his class. But despite his busy schedule, he still found time to assist in supporting the family. This was a great help to his father, who worked as a farmer.

After graduating from college, he honed his skills and nurtured a career that flourished throughout the years. He worked with Country Bankers Insurance Corporation, served as Senior Vice President and General Manager. For a time, he taught Business Law at San Sebastian College. One of his students then was Francis Kong, a well known leadership guru in the country. At present, he is also connected with the Rural Bank of Caloocan, Inc., as a member of its Board of Directors.

Ruben enjoys not just the fruits of a fulfilling career, but the blessings of a wonderful family. In 1967, he married a beautiful lady named Perlita Umali, who also hails from Bulacan.

They had three children: Pamela, Paul Rubens and Perseville. Today, they are all grown up and establishing families and careers of their own More than being a lawyer, banker and teacher, Ruben treasures best his being a servant of God. A devout Catholic, he and his wife started the Lingkod ng Panginoon Community Foundation (LPCF). Every Sunday, they gather family, friends even neighbors and host a fellowship at their house. Here, they study God’s Word and hold praise and worship sessions. LPCF will be celebrating its 26th year anniversary on June 12.

Ruben’s faith and love for God sparked an interest in serving other people. When he was invited to become a part of KMBI, he agreed at once, without hesitation. “I believe it was the Lord who led me to this organization,” he shares. He also affirms that through KMBI, his faith has been strengthened, as he witnessed how God has guided the organization through difficult times.

For the last 19 years of his life, Ruben has consistently served God through KMBI. Ultimately, Atty. Mendoza believes that success goes hand in hand with a relentless faith in God. A heart that is fully trusting in Him has no reason to be afraid. With this, he encourages people to expect only the best in every aspect of their lives.

“Aim for the moon,” he urges, with a twinkle in his eye. “Even if you fail, you will still land among the stars.”

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20 years of service celebrated KMBI marked its 20th year on October 26, after two decades of service in the microfinance industry. Festivities were held from October 23 to 27 across six major areas of operations, namely CALABARZON 1, CALABARZON 2, Bicol, Caraga, Davao and North & South Cotabato. Board, special guests, staff and their families attended the formal affair.

During the event, audience watched in awe as a video entitled, “Two Decades of God’s Faithfulness” featured the organization’s history and development through the years.

Quoting from Isaiah 25:1, the theme focused on God, who “in perfect faithfulness has done marvelous things, things planned long ago.”

This was further celebrated by the Board of Trustees and key officers in their inspirational talks. Dr. Amelia Gonzales, Chairwoman and President of the Board, attended Davao and

L-R: Davao branch staff performs in the 20th Anniversary celebration; Dr. Amelia Gonzales, chairwoman of the Board, hands Kidapawan branch staff with KMBI umbrellas as tokens during the program.

North/South Cotabato celebrations, together with Corporate Secretary Atty. Servillano Mendoza. Vice Chairman Emmanuel de Guzman traveled all the way to Bicol; while Board Member Damiana Exiomo joined CALABARZON 1. Meanwhile, EDS Head Hazel Christine Rosacia and RM&C Manager Rizaldy Duque delivered the main message at CALABARZON 2 and

Anniversary Special 90 clients say “I do” Ninety program members at last tied the knot with their partners in special mass weddings held all over the areas Program member Ma. Libunao Contreras of Sta. Cruz branch and her spouse seal during KMBI’s 20th year celebration. their commitment with a kiss in a special The mass weddings, to the married mass wedding. clients, answered their long awaited desires to be legally bonded with their beloved whom they have been staying for quite some time. This project was not only a special gift to the clients, but it sought to restore their relationships to what is accepted in the Bible and in the society. The program foresees that, in the long run, these clients and their families will enjoy the benefits of legally-accepted relationships.

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Caraga, respectively.

Acknowledgement was given to each staff for their untiring services through the imparting of KMBI “umbrellas” made specially for the occasion. Family members and special guests were also treated to an evening of bonding, entertainment, fun and games. Lively praise and worship sessions, special numbers from branch staff, were likewise included in the program.

Not to be outdone, KMBI SUCCESS Centers carried out their own festivities. Members of Kidapawan Center A45, who also happened to be celebrating their second year as a group, held a special program at their center house in Barangay Magkaalam, Magpet, Cotabato.

After showing a video for the clients, Program Assistant Noemi Laranjo shared a message of encouragement. Barangay Chairman Roberto Laguna also attended the affair. He said that he has seen how KMBI has helped women microentrepreneurs in the barangay since it started microfinance program in the barangay. As a special token of thanksgiving, each center was provided with an anniversary calendar.

“O Lord, you are my God; I will exalt you & praise your name, for in your perfect faithfulness you have done marvelous things, things planned long ago.” (Isaiah 25:1)

KMBI joins People Power People Power against Poverty through Micro Enterprise (PPPME) initiates programs that would support and uplift the Microfinance Industry in order to foster Filipino microentrepreneurs.

This is supported by a multisectoral consortium, for which KMBI is a member, working to enable microfinance institutions (MFI’s) to provide financial and related services to 5 million clients in depressed communities and to raise P5 billion capital in 5 years.

During the third quarter, PPP-ME invited KMBI to participate in its series of consultations on resource mobilization, enterprise development, knowledge management and capacity building. Some staff from concerned department attended the consultations while EDS Unit Head Hazel Rosacia remained to be the regular representative of the organization.

Aside from KMBI, PPP-ME is supported by different institutions from the academe, microfinance sector, corporate sector, foundations, and non-government organizations.

Other microfinance insitutions, which joined the consortium are Alalay sa Kaunlaran (ASKI), Inc., Taytay sa Kauswagan (TSKI), Inc., TSPI Development Corporation, Center for Agriculture and Rural Development (CARD), Inc., Association for Social for Social Advancement (ASA) and Negros Women for Tomorrow Foundation (NWTF), Inc. and ABS-CBN Microfinance, Inc. Through the collaboration of all the members, PPP-ME will endeavor to accomplish several major projects.

Initially, the movement will establish a social investment fund (SIF), which allows MFI’s to secure bank loans that will be reloaned to the clients in poor areas. Banks, development financing institutions, the business community and other social investors of this fund intend for it to benefit the poorest of the poor and expect it to grow to P5 billion in the next five years.

Another project is the creation of the SME value chain portal, a web tool that facilitates information exchange among all the players of the SME value chain.

Other initiatives are the opening of microenterprise development centers for the provincial level, creation of partnerships with commercial banks, facilitation of a business development forum, creation of MFI database with poverty map, provision of MIS training, setting of social performance indicators and offering of a credit bureau. These projects, forums and exhibits on various aspects of microfinance and microenterprise, also made open for MFI clients, will help microentrepreneurs expand their business linkages and products through providing and teaching them efficient and productive ways to do business.

KMBI supports the projects of PPP-ME to boost the entrepreneurial potential of its clients, likewise keeping it abreast with the latest innovations in the industry.

PPP-ME was launched on January 22, 2006 and is headed by President Corazon C. Aquino under the Benigno S. Aquino Foundation established in honor of her late husband.

Staff Development Training To keep the organization apace with the fast movement in the microfinance industry, selected staff were geared to action in different trainings conducted in Metro Manila area.

Arthur N. Gonzaga and Madelyn Frijillano learned new programs and current innovations in the industry through attending a seminar entitled “Microfinance Fast Forward” in Ortigas, Pasig City on October 13. Likewise, Michelle A. Orodio involved in hands-on training on participatory action research in UP Diliman, Quezon City on October 17 to 20. Also, Eureka Pesigan, Joselito Penalosa, Angeli Villamor and Kris Joy Guimary learned the ministry of stewardship in the First Fundraising Seminar conducted in Asian Theological Seminary, Quezon City on October 13 and 14.

Special training entitled “Training the Trainers” and “Hiring and Termination” held in Makati and Quezon Cities on November 14 to 18 were also participated by some Human Resource Development staff to enhance the services provided by the department.

Other external training attended by some finance staff and seleted area managers and program unit supervisors were “Stand Up! Speak Out!” and PCFC Lakbay Aral in Makati City on October 19 to 20 and November 19 to 20, respectively.

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Entrep 101 By: Hazel Christine Rosacia, EDS Unit Head

ACHIEVING ENTREPRENEURIAL GROWTH One major reason for clients dropping out of microfinance programs is their inability to cope with financial obligations caused by their microenterprises folding-up.

According to the National Statistics Office, the number of microenterprises had been decreasing from the year 2000 to present. This may be attributed to either the struggling economy, the lack of preparedness of aspiring microentrepreneurs to engage in business, or both.

Some microenterprises are established to simply meet the day to day household needs. These are referred to as “livelihood-oriented enterprises”, which were formed out of no clear plans at all. If only every enterprise stems from careful planning, there is a great chance for the enterprise to become a “growth-oriented enterprise” and succeed.

The ultimate challenge for any microentrepreneur is to sustain her enterprise and achieve entrepreneurial growth. Entrepreneurial growth is not mere physical growth through addition of branches, building, employees, or machineries. Rather, it is the expansion through market reach through networking, partnerships, sub-contracting, and etc.

Entrepreneurial growth may be achieved through these practical tips. First, have a clear enterprise focus and plans. A enterprise is like a journey. It needs a compass

and a map in order to reach its destination.

A simple business plan will be helpful in terms of establishing focus and tracking growth.

Second, continue product improvement and introduction of new products based on simple market survey.

A product should answer a particular need and/or want of the market. Asking around the neighborhood/community is one way of doing a market survey.

Third, keep eyes on competition. It helps to know who your competitors are and what they offer. This is one way to check if your product has an advantage over products or services offered by your competitors. Watching the television, reading the newspaper, and simply looking around the marketplace are good sources of information.

Maintain records. This is a usual weakness found in microenterprises. Little do microentrepreneurs know records are very important to signal whether the enterprise is doing well or not. Basic records should include sales, expenses, profits, and losses.

Lastly, do a constant evaluation of the enterprise.

Doing this will guide the entrepreneur in making decision on whether to continue or close shop, expand the existing or open a new business.

NOTE: To enhance the branch staff’s understanding about enterprise development, Entrep 101 will be regularly featured in Communi-K starting this issue.

Becoming the CLIENT’S COUNSELOR Clients usually seek the counsel of program assistants or any branch staff. They have identified that these people can help them ease out from their problems.

However, what usually happens is that the program assistants give advice when the clients need counselors. Giving advice is far different from counselling.

Giving advice is imparting of opinion or recommendation offered as a guide to action, conduct, etc. while counselling is guiding in resolving personal conflicts and emotional problems. In situations where clients have problems, it is best that program assistants or any branch staff become the client’s counselor.

Every counselling situation is as unique as each individual who is in the situation; the counselor and counselee(s) are unique individuals. Each one

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“O Lord, you are my God; I will exalt you & praise your name, for in your perfect faithfulness you have done marvelous things, things planned long ago.” (Isaiah 25:1)

MFIndex: Group Guarantee During the Client Retention Workshop hosted by Opportunity International Network in November, it was revealed that the worst feature of MF programs in the Philippines is “group guarantee” (also known as mutual guarantee). To KMBI this is ironic because it believes that group guarantee is the best feature of the program. Why is there, therefore, opposite views about the feature? Most likely, appreciation of the feature spells the reason. For those who do not understand the beauty and principles behind the group guarantee feature, it will be indeed difficult to appreciate it. Thus, this column intends to explain the why’s of group guarantee.

Group-guaranteed loans involve a co-guarantee responsibility between members, rather than collateral.

Because group loans focus on the poorest borrowers, most recipients do not have sufficent collateral to back the loan.

Instead, a group guarantee requires that members selfselect one another based on their assessment of each other’s character and ability to repay a loan. If one member is unwilling or unable to make a payment, the other members are required to “cover” for her, immediately contributing the missing portion to their group’s weekly repayment. The organization therefore deals with the group as a whole in managing delinquencies. Field results show that sound group guarantees produce higher repayment rates than collaterized loans.

KMBI subscribes to five principles in adapting the group guarantee feature. For one, KMBI’s program is

community-based thus it needs a strategy that supports and promotes communal responsibility. Another is the need for business network. Since microentrepreneurs have to form a group, a network is automatically built, which is very important in the growth of any enterprise. Group guarantee also brings solid empowerment among the program members. There is power in number and with them together, it will be easier to advance advocacies. Control of market is also one of the principles. Members with the same type of business operating in the same location can come together for consultation and agree with a particular product pricing, for instance, and thus have a control of market. Lastly, and more importantly, group guarantee promotes that everyone is responsible with one another, not only in “covering” other’s due payment, but also in ensuring that the other member is doing fine in her spiritual and physical lives. As the adage goes, “No man is an island.”

These principles have been seen and continuously observed in many Trustbanks, which experienced success both in business and relationships in the family and community. Indeed, the benefits of group guarantee are true and achievable. If these priciples are well understood by the implementor and clients, then they have no way but to succeed or go up.

NOTE: To enhance the branch staff’s understanding about microfinance, MFIndex will be regularly featured in Communi-K starting this issue.

has his own frame of references for which life, in general, and the problems at hand is viewed. Knowing this, the counselor momentarily lays aside the levels for which he views the problem in order to look at it from the perspective of the counselee. Below are some tips you must remember in counseling.

Be emphatic. You may ask the counselee, “What is your story?” You must listen to what is told by hearing the words and observing non-verbal cues. Then, you ask questions meant to get to the whole story & to see how the counselee sees the situation.

Be genuine. Counselees can detect whether the counselor is honest and open to them or not. A good counselor must know where he is coming from and has a good self-concept or well-defined self-identity so that he could be certain that his own biases and other personal issues do not get entangled in the counselling situation.

Be warm and caring. You should assure the counselee that you are willing to listen and to help her by following the SOLER method: Sit squarely facing the counselee; assume an Open stance by not crossing the arms or legs; Lounge slightly forward leaning towards the counselee; maintain Eye contact glancing only now and then to one fixed point; and be in a Relaxed posture, not tense or aggressive.

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Our Vision

Top Five Performing Branches

4th Quarter 2006

Kidapawan stays on top

Kidapawan branch’s exemplary performance is manifested in the joy seen in its clients’ faces.

Kidapawan branch in NORSOCO area remains on top, in terms of performance, among the 29 branches of the organization. Its branch manager, Rhodora Sabillo, revealed that this achievement is brought by their strict compliance to the policies and their exercise of honesty and obedience. Also, she expressed that this is all because of God’s grace and is for God’s glory.

LP

RANK

TOTAL SCORE

BRANCH

AREA

COR (active)

ACP

(Php - Million)

1

9.2

Kidapawan

S. Mindanao

4,541

322

2

9.03

San Pablo

Cal 2

4,202

3

7.4

Sta. Cruz

Cal 2

4

6.7

Butuan

5

6.18

Calamba

PAR (%)

CTO (%)

OSS (%)

OFC. MGT.

FPA

TRANS

15.31

0.00

53.40

190.55

2.3

2.3

2.7

284

17.12

0.00

58.38

181.44

2.6

2.2

2

4,344

284

12.67

2.88

45.79

157.43

2

2

2

Caraga

4,367

312

15.94

1.20

58.57

166.11

2

2.3

1.7

Cal 2

4,369

299

15.64

3.67

54.45

145.89

2.2

2.1

2.3

Abbreviations: COR - Client Outreach; ACP - Average Clients per PA; LP - Loan Portfolio; CTO - Client Turn-over; FSS - Operational Self Sufficiency; FPA - File and Policy Administration; TRANS - Transformation

Collection Holidays DATE

EVENT

January 1

New Year’s Day

April 5

Maundy Thursday

April 6

Good Friday

April 9

Araw ng Kagitingan

May 1

Labor Day

June 12

Independence Day

October 26

Anniversary Celebration

November 1

All Saints Day

November 30

Bonifacio Day

December 25

Christmas Day

December 21,24,26,27 & 28

Last Five Working Days of the Year

December 31

Nationwide Special Holiday (RA No. 9177)

Kabalikat para sa Maunlad na Buhay, Inc. Head Office: KMBI Bldg., 12 San Francisco St., Karuhatan, Valenzuela City Tel (02) 291.1484 to 86 l Fax (02) 292.2441 l http://www.kmbi.org.ph

“To see people in communities live in abundance with strengthened faith in God and in right relationship with their fellowmen and the rest of creation.”

Our Mission

“KMBI is a Christ-centered development organization, existing to help transform the lives of its clients and develop its human resources who will provide sustainable microfinance, training and demand-driven non-financial services.”

Core Values Respect Integrity Stewardship Commitment to the Poor Discipline Innovation Excellence

Goal 25.250 “To reach 250,000 Filipino families in 2011”

editorial box Editorial Advisers: Eduardo C. Jimenez, BOT Member Edgardo S. Mercedes Exec. Director Liza D. Eco, Deputy Director for Support Services

Editor: Rizaldy R. Duque, RM&C Manager Assistant Editor: Kris Joy T. Guimary, RM&C Assis.

Contributors: Hazel Z. Rosacia, EDS Unit Head Tan Guimary