Let’s face it. More and more poor people have now access to loans from sprouting microcredit institutions, including commercial banks that are steadily bringing its financial services and strength to the poor sectors. However it is still a fact that the services of moneylenders continued to be valued.

What is with these money-lenders that we cannot even out?

Poor borrowers are prepared to pay high interest rates for services like quick loan disbursement, confidentiality and flexible repayment schedules. In a study conducted by SEEDFINANCE-MAX in selected areas of Luzon, Visayas and Mindanao, micro-enterprise clients do not always see lower interest rates as enough compensation for the costs of attending meetings, attending training courses to qualify for disbursements or making monthly fund contributions that doesn’t find their way back to them.

They also found it repulsive to be forced to pretend they were borrowing to start a business or capitalize existing business, when they were often borrowing for other reasons such as paying for school fees and education-related expenses, dealing with sickness and hospitalization costs or ensuring the family’s food requirement. These for them are more important, on numerous occasions, than the need for additional working capital and much more on meetings.

Have we truly understood the household economics of the poor people?

Having a perspective of bringing microfinance to the next level of development financing is a challenge for every MFI. This perspective should not be misconstrued as abandoning the financial needs of the micro-entrepreneurs but rather expanding the microfinance’s outreach to achieve higher rate of opportunities for growth transformation.

The greater challenge lies on our capacity to pool-in various sectors’ effort in creating an environment conducive for micro-enterprise development e.g. regulatory policies, government support, availability and use of renewable energy, and permanent infrastructure for communications especially in hard-to-reach areas.

The social impact of financial services should be made a major indicator of an MFI’s performance to achieve meaningful change to the lives of the poor and their communities