VZCZCXRO1566
OO RUEHCHI RUEHDT RUEHHM
DE RUEHML #2078 1720821
ZNR UUUUU ZZH
O 210821Z JUN 07
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7075
INFO RHHMUNA/CDRUSPACOM HONOLULU HI IMMEDIATE
RUEHZS/ASEAN COLLECTIVE

UNCLAS MANILA 002078 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP 
 
E.O.  12958:  N/A 
TAGS: ECON EFIN RP
SUBJECT:   AMBASSADOR CELEBRATES PHILIPPINE SUCCESS IN RURAL BANKING 
AND MICROFINANCE 
 
¶1.  Summary.  The Ambassador helped celebrate the one millionth loan 
granted by banks participating in the USAID-funded Microenterprise 
Access to Banking Services (MABS) Program.  Since its launch in 
1997, the Program has worked with 330 bank branches to disburse more 
than $250 million to over 375,000 borrowers.  Unusual among 
donor-supported microfinance programs, this successful 
government-private sector partnership demonstrated that microfinance 
can be profitable for banks and that savings generation is possible 
in impoverished communities.  Central Bank Director Amando Tetangco 
and Director-General Cerge Remonde joined the Ambassador in 
celebrating MABS as a successful partnership between two governments 
that furthers the common goal of fostering a prosperous Philippines 
with a positive view of America.  End Summary. 
 
¶2.  In addition to the Ambassador, the Governor of the Central Bank 
of the Philippines, the Director-General of the Presidential 
Management Staff, the Chairman of the Mindanao Economic Development 
Council, the President of the Rural Bankers Association of the 
Philippines, the Mission Director of USAID/Philippines, and several 
hundred bankers also participated.  The keynote speaker, 
Presidential Management Staff Director-General Serge Remonde, and 
Central Bank Governor Amando Tetangco thanked the American people 
for investing in the Philippine people, calling microfinance a 
flagship program of the President's administration.  They both 
declared that MABS has shown that commercial microcredit can be 
profitable and that microfinance can be an extraordinarily useful 
tool in the effort to end poverty. 
 
¶3.  Begun in the Mindanao region and now a national effort, MABS is 
a USAID-funded project implemented in partnership with the Rural 
Bankers' Association of the Philippines under the oversight of the 
Mindanao Economic Development Council.  This is a true grass roots 
project with USAID providing no loan funds or guarantees to MABS -- 
All loan funds came from the banks themselves.  The Program helped 
rural banks mobilize deposits from the microenterprise sector. 
Microdeposit accounts managed by participating rural banks increased 
substantially, now totaling over one million accounts with an 
overall value exceeding $14 million. 
 
¶4.  The Program provides training and technical support to banks to 
help them develop the capability to profitably offer microfinance 
services.  Using these tools, the Program has disproved the common 
belief that providing financial services to low income borrowers is 
not a viable business proposition.  Virtually all the banks 
participating in the Program have found microfinance to be 
profitable, and many have made microfinance a major part of their 
overall portfolio. 
 
¶5.  The MABS Program is also significant for its contributions to 
the development of new microfinance products not previously 
available in the Philippines - including micro deposit accounts and 
micro insurance.  The Program introduced the "micro agricultural 
loan" for small farming households.  It has also developed new 
delivery vehicles including the use of cell phones as "virtual 
wallets" and the use of personal digital assistants for loan 
collection activities.  Through these mechanisms, the Program is 
helping banks and borrowers reduce transaction costs. 
 
¶6.  Ninety percent of businesses in the Philippines are small or 
micro enterprises.  Forty percent of all households in the 
Philippines depend on microenterprises as their primary source of 
income.  Such was the situation of Mrs. Josefina Albiza, the 
first-ever borrower from the first bank participating in the MABS 
Program.  Mrs. Albiza, who was recognized at the event, used her 
initial loan of PhP5000 (about $110) to expand and diversify her 
small grocery business.  She is now a local soft drink wholesaler. 
With the earnings she garnered, she improved her house and sent her 
daughter to college.  Similarly, Mrs. Erlina Quinones, the one 
millionth borrower, who was also recognized at the event, is using 
her PhP15,000 (about $330) to expand her small shop.  Previously, no 
formal banking services were available to entrepreneurs like Mrs. 
Albiza and Mrs. Quinones and their only option for expanding their 
businesses was to borrow from moneylenders at interest rates that 
usually precluded growing their businesses. 
 
KENNEY