The government has commenced a nationwide campaign to educate the country’s 4 million poor households about available microfinance services in the country as it expects this November the second tranche of a $150 million Asian Development Bank (ADB) program loan designed to reduce poverty among Filipinos by widening the access of the poor to customer-friendly credit.

A document obtained from the Microfinance Division of the National Anti-Poverty Commission (NAPC) indicates that the Philippine Microfinance Literacy Campaign is a key component of the Philippine Microfinance Development Program (MDP), a government effort funded through a program loan from the ADB. The first tranche of the loan, worth around $75 million, was disbursed in November 2005.

The loan agreement between the government and the ADB stipulates a package of policy reforms that include better consumer protection for microfinance borrowers and increased financial literacy among the country’s poor communities.

Assistant Secretary Dolores de Quiros Castillo of NAPC said there is a need to help more poor Filipinos understand their financial options and recognize how to effectively use microfinance services to their advantage.

“Instead of microfinance products helping the poor out of poverty, the lack of knowledge on financial options could make the poor more susceptible to debt trap and low savings,” Castillo said.

Financial literacy can enlighten the poor on the products and policies of microfinance institutions—how to calculate and compare costs, how to determine their cash flow, select what they can afford, and prioritize what they really need, Castillo added.

Also present at the launch held at the Bangko Sentral ng Pilipinas (BSP) in Manila were BSP Deputy Governor Nestor Espenilla, Undersecretary Gil Beltran of the Department of Finance, Mr. Eiichi Sasaki of the Asian Development Bank (ADB) Mr. Edmon Sison of UPLIFT Philippines, and Ms. Antonina C. Tiña of the PATAMBA Network of Informal Workers.

More than 3 million poor Filipinos have secured loans amounting to around P74 billion through the government’s partner microfinance institutions over the past three years.

Around 31% of the country’s active microfinance clients are small farmers; 24% are poor fisherfolk; another 28% are informal workers; while 15% belong to the urban poor. The Filipino youth and indigenous folk comprise the remainder.