Model microfinance: ASA Philippines
The model for microfinance is ASA Philippines. In 15 years, they have been lending ₱21 billion to 1.9 milion borrowers for a yearly total of ₱60 billion. The chemistry is brought about by Mr. Kamrul Tarafder and the Aquino-Dee Foundation. ASA Philippines was given ₱10 million to start with and the possibility of raising this capital to ₱40 million. They were so successful that they only borrowed ₱30 million before they told Aquino-Dee Foundation that they would not need any further capital. They now have a branch in every province of the country and thousands of staff all of whom can drive a motorcycle. The proof of their success is that recently the Asian Development Bank just gave them a loan of $30 million, 80% of which is to be directed to the Muslim provinces of Mindanao. Congratulations to ASA Philippines and the Aquino-Dee Foundation and Mr. Kamrul Tarafder and his staff. Microfinance has been in the Philippines for over 50 years now but it has not had the success that ASA Philippines has had.
The fundamental rule in microfinance is that the staff are not to be allowed to cheat or squirrel away funds. This supervision is critical and Kamrul has been able to monitor every loan that they make through his computer. He has a program written by his son, Simon, in which every loan can be monitored in the computer of Kamrul. Kamrul Tarafder is from Bangladesh, the originators of microfinance. Kamuul has worked hard to help our poor people with financing. He also has been able to build a staff who have been efficient and generous. They have had staff killed in hold ups and otherwise suffered for the group. Kamrul not only has a well-trained staff but is also backed by an excellent board headed by Ambassador Howard Dee and a president who was formerly president of China Bank, Mr. Edward Go. I understand that Mr. Richard Dee has been particularly interested and helpful in the affairs of the operation.
In microfinance the interest rate is of secondary importance. What is critical is availability of funds. This is one reason there is little problem with the borrowers. To grow their business, they need the funding by the lender. Microfinance is a great way to help our people, especially the poor. And ASA Philippines and Aquino-Dee
Foundation have shown the way.
A former Jesuit who went into lending asked me for advice and I told him that as long as only he and his wife did the lending, there was no danger. The critical element is honesty in staff and proper supervision. Honest staff need always to be monitored. Staff that have been with the organization for over ten years can always be tempted to borrow from the fuds that they handle. Therefore, supervision is critical. Relaxation in this is the cause of microfinance failure.
Computer programs are a great help. There is a great joy in the staff when they see they are able to help poor people rise from poverty on their account. Most staff are honest and trustworthy but vigilance is always necessary. I have had staff who have been with us for over 10 years, then tempted to steal.