The 2018 KCCMDFI Annual Report

KCCDMFI

36 min readJan 18, 2021

Reliable Services, Competitive Products

Certificate of Accreditation

Message from the Chairman of the MNRC, SEC

Moving Forward: KCCDMFI’s Recovery, Stability and Growth

Message from the Chairman of the Board

The past three years have been a major challenge for Kasanyangan Center for Community Development and Micro-Finance, Inc. (KCCDMFI: with a membership drop of over 50% among its-borrowers, portfolio at risk (PAR) rising to crisis levels, and outstanding loans with creditors going past due.

In the second quarter of 2016, the board of trustees (BOT) was reorganized. Bold steps were taken to right-size, restructure and redeploy management and field staff. Outreach and collection targets were set for field operations along with strengthened incentives for good performance. For efficient and accurate monitoring of operations, state of the art automation technology was installed which provides the BOT and management real-time progress updates. It also shortens response time for risk management. Automation has significantly reduced the need for manual recording, giving more time for field credit officers (FCOs) to interact with members, and to undertake outreach work.

These rigorous and sustained efforts have since increased membership base and loan portfolio. Loan risks, by industry standards, have been consistently on excellent levels. Moreover, KCCDMFI has satisfactorily met its obligations with creditors, thus earning it the status of “credit in good standing”. Finally, KCCDMFI has received an above average performance given by the Microfinance Council of the Philippines Inc. (MCPI).

Moving forward

KCCDMFI has started to put substance to a long neglected but singular feature of the organization — Center for Community Development — with the innovative concept of Kasanyangan Community Club (KCC) which was introduced in all barangays covered by KCCDMFI. A KCC consists of regular members (loan borrowers) and associate members (non-borrowers with voluntary membership) who come together for self-help, addressing broader community problems especially issues that concern the predominantly female membership of KCCDMFI. Collective efforts are proposed and planned to address the identified community concerns. KCCs raise funds in various ways to support projects and for emergency needs. KCCDMFI also provides a counterpart.

KCCDMFI is carefully venturing into non-traditional MF loan products: seasonal agriculture and aquaculture enterprises specifically for livestock, rice, and corn, vegetables and seaweeds growers. These ventures have their usual birth pains, but lessons are quickly learned, and weaknesses addressed.

Loans for house repairs and children’s schooling have been also extended to member-borrowers in good standing with encouraging results.

From its Zamboanga Peninsula home for over a decade and a half, last year KCCDMFI turned to Metro Manila. Opening up a branch in Marikina is an experiment in reaching out to highly-urbanized urban poor entrepreneurs. Setting up the branch and full operationalization predictably encountered rough seas. But close monitoring, early problem identification and consideration of the best possible options work in the branch’s favor. Numbers indicate that the branch can attain its year-end milestone, advancing towards self-sufficient and profitable operations.

The BOT, management and staff are proud to issue this 2018 Annual Report, sharing KCCDMFI’s strides towards recovery, stability and growth. We are grateful to our growing membership for their loyalty, support and, most of all, their trust in working with KCCDMFI.

In closing, my personal thanks for the hard work of colleagues in the board, management and staff. It’s been a pleasure and privilege to wok with you.

“Donde otros MFIs no se atreven, KCCDMFI vamos.”

Jose T. Deles Jr,

Chairman of the Board

KCCDMFI

Vision, Mission and Core Values

Vision

A leading, sustainable and reliable partner of empowered organized poor communities in the Philippines.

Mission

In partnership with its allied institutions, KCCDMFI will continuously provide responsible and competitive microfinance products and services for the empowerment of its partner-organized communities.

Core Values

COMPASSION — The heart and soul of KCCDMFI is compassion for the poor. This means having sympathy for the hard life of poor people; sharing their fears and hopes; and devoted to alleviate their condition. It also means recognizing their God-given dignity and rights and having faith in their capacity to improve their lives with the right resources and opportunities.

SERVICE — The purpose of KCCDMFI is to serve the poor, predominantly women headed households, low levels of formal education and burdened with care for their family. Staff should acquire and put to practice the knowledge, skills; and attitudes of social workers in dealing with them as unique individuals with their own life history and capacities. Staff should know them not just as clients and customers, but as partners working to improve their livelihood and living conditions.

EXCELLENCE — We strive to be the best banker for the poor by providing them the most appropriate loans and services that can mobilize fully the assets of the poor households such as the skills, social network, savings, access to land and natural resources, ambition to feed their family, build decent housing and send their children to school for a better future. We are always looking for ways and means to improve our products and services thru continuing education, research, study, mentorship and training of staff and clients. We aim to employ the best and the brightest staff, provide good compensation and benefits and build up leaders in the community.

HONESTY — Honesty is the best policy at all levels of the organization. Honesty is being truthful and fair in all dealings within the organization, with clients, stakeholders and government. We practice zero fraud by any staff. Fraud destroys the job and life of erring staff; destroys the organization and harms the poor we aim to serve.

TEAMWORK — Each and everyone in the organization has a role to play and contribute to its success or failure. We achieve our goals by working together as a team. Teamwork makes the dream work.

BALANCE OF WORK AND LIFE — KCCDMFI supports a proper balance between work and life of staff and clients. We make sure that daily and weekly working hours are reasonable to provide time for rest and home life. We should learn to work smart and not hard. Work should not just be a means to earn income but must be fulfilling and fun..

TEAMWORK — Each and everyone in the organization has a role to play and contribute to its success or failure. We achieve our goals by working together as a team. Teamwork makes the dream work.

STRATEGIC GOALS AND OBJECTIVES OF KCCDMFI

The Kasanyangan Center for Community Development and Microfinance Foundation, Incorporated, is a Non-Government Organization (NGO) registered under the Securities and Exchange Commission with Certificate of Registration Number OCN 2RC0001546627. Just recently, it was accredited as a microfinance institution by the Microfinance NGO Regulatory Council (MNRC) on March 18, 2019. Its Board of Trustees include microfinance and micro insurance experts, with Mr. Jose T. Deles Jr. serving as Chairperson of the Board, Atty. Ibarra A. Malonzo as President/ Chief Executive Officer (CEO), Angela L. Baes, Corporate Secretary, Czarmilson P. Manza as Treasurer, Iluminada L.E. Cabigas as Member, Jun Jay E. Perez as Member and Hermis S. Tan as Member. The KCCDMFI boasts a loan portfolio of P143, 554, 580. 03 as of March 2019. It has managed a total of 16, 256 accounts in a total of eighteen (18) branches in Zamboanga City, Zamboanga Sibugay, Zamboanga del Norte and Marikina City. It is currently expanding its loan products to effect a wider inclusion among marginalized Filipinos.

In the midst of rising crisis and poverty this fast-changing world has been for years, KCCDMFI will continue to bring the light of hope for financial and social stability. The organization’s willed to uplift the poor through innovations of products and services in accordance to the core values. We must not forget the reason for the creation of the organization bounded by the vision and mission — the beloved clients and members.

They are our inspiration for continuously giving out the best in these times of need. We must not forget that we stand as a medium for social and financial development in the society and must keep in mind that the creation of the organization has a purpose — to bring hope and future for the poor Filipino families through micro financing.

In lieu to this, our cover represents the plans we have for the future. KCCDMFI, together with the board of trustees and all members and staffs will do their best to provide every possible way to bring financial stability to its members and clients. Whether it’s housing, agricultural, educational or insurance, the organization has the best a leading microfinance has to offer.

The organization is targeting 31,948 enterprising poor in the defined areas within the Philippines with P314.9M loan portfolio with a projected net income of P30.8M at the end of 2023. It will strictly adhere to the standards of the Microfinance NGO Act on Governance, Financial (using PESO rating) and Social Performance to be able to enjoy the 2% gross receipts tax for microfinance NGOs starting January 2019. Also, KCCDMFI shall pursue the following objectives to push the organization to a higher level in the next five (5) years:

1.To synergize the different KMFI institutions that deliver capacity building and enterprise development services;

2.To delight members with proactive products and services;

3.To make KCCDMFI a happy and rewarding place to work in;

4.To ensure financial sustainability of KCCDMFI;

5.To actively participate in the microfinance industry and NGO-MF’s initiatives; and

6.To maintain the trust of partner institutions and regulatory agencies.

KCCDMFI was a spin off microfinance project from Kasanyangan Mindanao Foundation, Inc. (KFI). It began its microfinance assistance to disadvantaged households in 2001 with an initial capitalization of P500, 000.00. Today, its well-established reputation as a valuable platform to alleviate the lives of Filipinos is unassailable with the continuous, exponential growth of its numbers, from a loan portfolio of over P140 million, to clients numbering over 15,000.

The Board of Trustees

Jose Deles Jr.

Chairman of the Board

Deles has had over 30 years in development and management of donor-assisted governance and public sector reform programs, and in-depth experience working in post-conflict and Islamic environments, particularly in the Philippines (Autonomous Region of Muslim Mindanao), Afghanistan and Cambodia.

Atty. Ibarra A. Malonzo

President and CEO

As president of the National Federation of labor (NFL), Malonzo spurred the transformation of plantation unions into agribusiness cooperatives under agrarian reform (AR). The spin-off into AR and social forestry eventually led to NGO microfinance work and KCCDMFI.

Illuminada L. E. Cabigas

Champion of KCCDMFI CommDev and KC Club

A magna cum laude graduate in business administration with a Masters degree in Public Administration, Cabigas is a certified public accountant and former president of Land Bank. She pushed for creation of the community development unit based on Kasanyangan Community Clubs which initiates projects to uplift the lives of poor families.

Angela L. Baes

Corporate Secretary

A graduate Bachelor of Science in Commerce Major in Accounting at Ateneo de Zamboanga University. Baes is a former Manager of United Coconut Planters Bank.

Czarmilson P. Manza

Treasurer

Manza is a development professional with more than 10 years of work experience in rural development programs particularly in the field of agriculture, food security, policy advocacy and organizational capacity building.

Jun Jay E. Perez

Member

A Master’s Degree holder in Business Administration from the Pamantasan ng Lungsod ng Maynila. Perez is a former officer-in-charge of the National Anti-Poverty Commission — microfinance unit.

Hermis S.Tan

Member / Client Representative

A businessman from Alicia, Zamboanga Sibugay, Tan cultivates agricultural lands for copra production. Tan has also developed a modest seaside resort with affordable rates which safeguards the environment and provides some local employment.

The President’s Report

This Report covers the last three (3) years of KCCDMFI, from FY 2016 to 2018.

A. FY 2016 was a period of rehabilitation for KCCDMFI. The enactment of the Microfinance NGO Act of 2016 provided KCCDFI the external push to put our house in order. The law, authored by Senator Bam Aquino and Append Party list, provided the legal basis for KCCDFI to undertake its rehabilitation. Whereas before, the Corporation Code and the Securities and Exchange Commission provided minimal guidance to Microfinance NGOs, the phenomenal growth of microfinance NGOS in the Philippines and increasing cases of malpractice and failure pushed Congress to enact the new law. On the other hand, the Microfinance NGOs wanted relief from heavy taxes imposed by BIR applicable to commercial financing institutions.

The new law charged Microfinance NGOs (MF NGOs) a gross receipts tax of 2 percent (instead of 5 percent plus 30 income tax) and required that MF NGOs be accredited by the Microfinance NGO Regulatory Council (MNRC). To be accredited, MF NGOs should get an average score 70 percent on a grading system based on three (3) standards: good governance, social performance and financial sustainability.

Where before most NGOs had passive Board of Trustees, allowing the President and the management a free hand to make major decisions, the new law states that the board of trustees must take the leading role. With this fresh mandate from the law, and pressure from our creditors, the board of trustees took over command of KCCDFI.

In March 2016, the KCCDFI Board of Trustees accepted the resignation of Rodolfo Quinday as President and appointed Ibarra A. Malonzo to replace him. The Board of Trustees was reconstituted with new members to replace three (3) resigned trustees. The board held ten (10) meetings in 2016 and twelve (12) meetings in 2017.

The board of trustees instituted the following measures within 2 years:

1. Retrenched all sixty-nine (69) head office personnel and rehired thirty-four (34) with lower rates;

2. Put in place the CASA for strict cost control measures;

3. Sold off assets amounting to P20 million;

4. Paid outstanding loans due to four financing institutions amounting to P34 million and started paying KMBA at P6 million pesos a year in interest and principal loan;

5. Negotiated restructuring of our outstanding loans with National Livelihood Development Corporation and PCFC amounting then to P84 million in principal;

6. Suspended the collateralized individual loan product because of low repayment rate.

But these were remedial measures to satisfy our creditors. We had bigger problems. We had plenty of competitors in the microfinance business and we could not compete even in our home grounds in Zamboanga City, Sibugay, Basilan, Jolo and Bongao. Our ambition to conquer the rest of Mindanao and even the Visayas was short lived. We shutdown fourteen (14) branches and left around 40 million pesos uncollected loans.

Why could we not compete in the microfinance market? The quick answer is, microfinance had been changing rapidly since we started in 2001, but we stopped changing.

— We stuck to our old small business loan product, while competitors offered new loan products.

— We stuck to manual recording of field transactions and it took months for management to discover fraud by our field staff.

— We stopped training and retraining our staff, probably for fear that their knowledge and skills will exceed management.

While our name states Kasanyangan Center for Community Development and Microfinance Foundation, we were just doing lending like Bombay operators. We did not empower our members to develop their communities. We forgot that mission is to help poor nanays, tatays and communities rise out of poverty.

To rehabilitate is to rebuild KCCDMFI so we can again stand up and compete in the business world of microfinance.

For the past three years, we focused on four (4) urgent things:

First, we installed a management information system called “Instafin,” that is entirely computerized, no longer manual recording, connecting the field credit officer with head office thru the internet and allows head office to discover fraud immediately. The system will also send text messages to the borrowers immediately upon making a transaction, such as release of loan amount, loan payment, savings, contributions and insurance contribution payment and claims received.

Second, we addressed seriously the challenge of community development. Our trustee Ms. Cabigas initiated the formation of Kasanyangan Community Clubs (KCC) that runs parallel to our centers and branches. The KCC aims to be the organization of our borrowers and potential borrowers to undertake self-help and mutual aid projects. They have their own fund-raising sources such as membership fees, savings and raffle draws to undertake community projects. As local community organizations, they can access government social services for health, sanitation, education, livelihood development and environment protection.

Third, we have started a business development department that has developed new loan products such as house repair, education loans, and micro agricultural loans and provide business skills training for our borrowers.

Fourth, we are taking better care of our staff by providing them with more benefits and skills training. We still have a long way to go in these four areas.

B. 2018: Year of Recovery

Let me now report on 2018. I am happy to tell you that 2018 is a year of recovery for KCCDMFI.

1. Let me show you the summary figures on our microfinance performance for the last three years including 2018:

2. Let me show you our outreach or number of borrowers and their branch location:

We opened 3 new branches in 2018, namely, Liloy, Olutanga and Marikina. These figures clearly show that KCCDMFI is no longer sick. We are now in good health.

C.As evidence of good health we got our initial accreditation from MNRC last year good for one year up to March 2019. We amended our name to KCCDMFI in 2017 as required by MNRC guidelines.

D. We also got our second accreditation from MNRC in March this year, effective April 1 and good for 3 years. This means we passed the MNRC standards for good governance, financial sustainability and social performance based on our application report. But MNRC will review and validate performance and compliance with their directives.

E. Our application for loan restructuring with National Livelihood Development Corporation (NLDC) and with People’s Credit and Finance Corporation was assumed by the Land Bank of the Philippine Islands (LBP) upon the dissolution of the two (2) microfinance institutions. LBP approved our application for loan restructuring in December 2018. The principal amount of P84, 000, 000.00, which was deemed payable in ten (10) years, had accumulated penalties and interest amounting to P13, 000,000.00, which was deemed payable in five (5) years.

Meanwhile, Land Bank of the Philippines issued KCCDMFI a Certificate of Good Standing in January 2019.

To sum up our annual report, we have recovered from our downfall that started in 2014, and we have a five-year plan from 2019 to 2023 to grow KCCDMFI by three hundred percent (300%) in outreach, loan portfolio and revenues by 2023. We have recovered in 2018 and we are confident we can move forward to a brighter future.

Atty. Ibarra A. Malonzo

President/CEO

The Management

The KCCDMFI Community Development: A Bigger Step to Eradicate Poverty

Mrs. Illuminada Cabigas, The Champion of KCCDMFI CommDev, altogether with the staff as they visit the project sight located at Barangay Concepcion, Kabasalan.

The KCCDFI (now KCCDMFI) was founded in 2005 on the twin mandates of creating livelihoods and building communities, but it has neglected the latter to focus on the former. Fast forward a decade later to a 2016 KCCDMFI board meeting tackling reorganization. New trustee Illuminada (Luming) Cabigas had proposed the setting up of Kasanyangan Community Clubs or KCCs in KCCDMFI barangays as vehicles for mutual aid and protection.

Not a few other trustees and executive staff were lukewarm to the idea, citing the problems of funds and overburdened staff. But Luming won over the doubters with her impeccable logic and some fundamental truths. She stressed that microfinance per se cannot address all the issues arising out of poverty: income, housing, education, health. This is where community development comes in which fosters unity among people to help them confront their problems such as lack of housing, toilets, electricity, etc.

Hence the concept of a local organization — Kasanyangan Community Club — empowered, able to raise funds and to harness other resources including those of government. Community development proceeds in tandem with business development. But, in the best traditions of community organizing, Luming emphasizes that the birthing process will eventually have to “let go” because the local organization will have to learn to stand on its own, “No government institution or do-gooder NGO” can achieve the organization’s goals otherwise it will “perpetuate dependency”.

Thus Luming has helped formulate seven goals for KCCs to be integrated into people’s daily lives. These include livelihood training, entrepreneurial development, decent housing, access to health and social services, education for all, environmental protection, and preservation of arts, culture and sports. After all, Luming concludes, community organizing is a way of life, not a project.Luming is a business administration graduate magna cum laude, and a certified public accountant. Now in her 80s, Luming retired from the Land Bank as senior vice president in 1996, headed the People’s Credit and Finance Corporation (PCFC) in 2003, and was president-chief executive officer of Landbank Countrywide Development Fund until 2010.

In 2001 PCFC granted Kasanyangan Foundation, Inc. microfinance unit (KCCDFI’s precursor) a P3 million loan whose renewal hinged on KFI’s spinning off its microfinance unit into another organization. There was apprehension over KFI’s social orientation that might undermine its microfinance operations; KFI had no income-generating projects. PCFC granted the newly-formed KCCDFI a P50 million credit fund.

Luming joined the KCCDFI board of trustees in 2014 ago replete with ideas on how to perk up the organization. Local KCCs were established preceded by orientation sessions in 2016–17. In November 2017 450 representatives from 80 barangays met in a general assembly to form a KCC Federation. Current federation president is Yolanda Sembrano of Barangay Tetuan.

KCCs have four sources of funds: individual members’ savings fund with a P20 weekly minimum deposit qualifying non-client beneficiaries to be KCC members; the KCC center fund created through KCC fund raising campaigns which netted P1.4 million in 2018 and P800,000 in 2019; the Damayan Fund consisting of P200 yearly payments per member which provides a death benefit of P20,000 to members regardless of cause of death; and KCCDMFI which allocates specific sums for projects.

Grace Beron Rosales, head of KCCDMFI’s Community Development (CommDev) unit said that at the beginning it was not clear how the KCC scheme would develop. But as community projects, big and small, started to emerge, things began to fall into place. Examples of small projects are free haircuts and “Operation Tuli”, a free circumcision activity undertaken in coordination with seven military doctors.

Barangay Tolosa in Zamboanga City’s east coast has 130 members spread among four centers which meet in succession meet each Thursday morning Barangay Tolosa KCC decided to have a bigger center building was constructed along with a flush toilet. Barangay Mampang also in the city’s east coast has a perennial water shortage problem. The barangay has 30 KCCDMFI centers and the decision was to construct a deep well in one center using KCC funds of P17,000. Projects in Barangay Patalon, Talisayan and Barangay Lumbangan, Tumaga pertained to center renovation and purchase of furniture and fixtures, all from local KCC funds. (Bigger projects include construction of a foot bridge, a dryer and installation of a water system which will be featured separately.)

Barangay Concepcion’s footbridge before and after the construction

Grace affirms that the KCCs have, in fact, contributed to KCCDMFI’s outreach and brought in new client-members. As well, potential leaders are identified as in touching base with 4Ps links (4Ps is a conditional cash transfer program of government.) Some barangay folk ask, “Why have the projects come only now? Grace says that the CommDev concept is an organizing strategy in the field, integration within the community which, so far, has hardly been practiced.

Buluan before the construction of the seaweeds dryer

Step-by-step community organizing is laborious and time-taking. KCC simplifies the process by calling center leaders to an FGD (focus group discussion) on vision-mission-goals and structures. Shortly after point persons are identified, and plans are drawn up for the broader processes of community integration, and skills training in mobilizing people, needs identification, accessing resources and networking.

Grace says that the KCC federation can be tapped to help in information campaigns on programs and services, and on activities planned for members. In the past communications coursed through field operations suffered delays because field personnel were preoccupied with collection and outreach. The KCC federation affords direct ground-level contact to people. Future plans include training in garment making, financial literacy (in partnership with business development unit), toilet provisioning in Talon-Talon and information dissemination on access to health and community development are two faces of KCCDMFI. MF has had a headstart of 14 years while comdev is barely three years old. Nevertheless both realize that comdev must catch up and keep pace with microfinance if KCCDMFI is to be healthy and whole.

The fully-completed seaweeds dryer project of KCCDMFI Commdev located at Buluan, Ipil

Among the rural poor who constitute a significant section of KCCDMFI’s membership, Sitio Buluan (on a hilltop in Barangay Salaan, Zamboanga City) has known water deprivation more keenly than most. Until a year ago water for household use had to be fetched by foot from springs one kilometer away over rough and steep terrain. Laundry had to be done alongside streams distant from homes, also the source of water for vegetable gardens during dry months. Water was cited as one of Buluan’s top problems by Nerissa Eugenio, center chief and KCC president at various occasions.

Before and after the construction of the Water Supply located at Baluno Salaan. Witness the genuine smile of an old lady as she washes her clothes with ease.

Buluan residents — particularly close to 40 households covered by KCCDMFI — now have easier access to water, A simple water system was installed in August 2018 through a P35,000 grant from KCCDMFI’s Members Integrated Community Development Fund which purchased 2,000 meters of hose and other materials. Local counterpart consisted of labor and meals of workers amounting to about P7,500.

Ten households have since attached hoses from the main outlet to their homes. However they coordinate hours of use so as not to exhaust the water supply. Households further off fetch water through the habal-habal (motorcycle, a public form of transport in upland communities). Children and the entire family can now bathe daily, no more are stacks of dirty dishes dirty clothes a common sight in Butuan homes.

Village folk however need to do two things. First, modest fees to raise a fund for maintenance, second, to reforest the bare parts of the hillside to ensure a sustainable water source and to safeguard the wellbeing of the earth and the people in Buluan.

FIELD OPERATIONS

LOAN PRODUCTS AND SERVICES

ALELI F. FRANCISCO: BREAKING THE MEMBERSHIP DROUGHT WITH VEGGIE FARMING

Newly widowed Alelie Fernandez Francisco, 40, raises her family of six in the same way she handles her KCCDMFI work: through sound planning, discipline and judicious time management. Alelie is a Commerce graduate who started with KCCDFI as a client-member for nearly three cycles. In early 2006 she was accepted as field credit officer or FCO (now field development officer or FDO). Her current assignment, Mercedes area, has 15 centers (with an average of 25–35 members. She visits three centers daily in clusters to save on time and is thus able to cover the 15 centers weekly.

Alelie is KCCDMFI’s top FDO earner for two years in a row, exceeding standards set for a monthly incentive award including a minimum of 300 clients (she has reached 400 to 490) and below 3% portfolio-at-risk or PAR rate. She easily makes the P175,000 monthly revenue requirement with a P9–14 million total monthly loan portfolios. (PAR refers to the total unpaid balance in the FDO’s monthly loan portfolio.)

Alelie believed that micro-agri would work in Barangay Salaan, an upland community 12 kilometers from Zamboanga City proper with vegetable farming as a major source of livelihood. As a child, Alelie had planted veggies to raise money for her school food allowance, this knowledge base was crucial to implementing the scheme modified to fit the vegetable farming cycle. Veggie farmers could start repaying loans in 4–6 months upon start of harvest, while interest (lower at 18% than the standard 20%) could be paid in 1–4 months. One Salaan member took out a P50,000 loan on her second cycle to plant high-value veggies including ampalaya (bitter gourd), espada (small chili peppers), bell pepper and cucumber.

The long drought was over: micro-agri loans zoomed from zero to P40 million in one year, constituting 20% of KCCDMFI’s total loan portfolio. Apart from the point-on planning and favorable geography that includes an abundant water supply, what accounts for this breakthrough? Part of the conceptualization was realizing that a good half of KCCDMFI’s clientele have farming activities, usually undertaken by husbands. Arguably the biggest factor was that veggie farmers now had control over prices both ways: as buyers and as sellers. In the past financiers and traders dictated the prices of fertilizers and seeds loaned out to farmers, as well as prices of produce which they took as payment. Farmers lost both ways: buying high and selling low. KCCDMFI’s micro-agri scheme simply undercut this grossly exploitative arrangement.

Aleli points to the 2006 shift from Grameen (group loan responsibility) to ASA (individual accounts) as instrumental in reducing the high drop-out rate of members. She adds that an FCO’s way with members can spell the difference between growing or losing your clientele. For instance: Be respectful especially to seniors, come early or on time, welcome questions, and laugh easily.

KCCDMFI SUCCESSFUL CLIENT STORIES

Microfinance and micro-entrepreneurship in the country is now three decades old. Steep competition among microfinance institutions (MFI) reflects the double truism that even as it provides millions of poor women and their families with sustainable livelihoods, micro-credit is good business. How does KCCMFI rise to the challenge of growing competition? “More and better” seems to be KCCDMFI’s mantra; being more innovative and being better at what it does.

This annual report highlights the experiences of three client-members as they move out of the traditional sari-sari (dry goods) store that is standard for new loan beneficiaries into uncharted waters, so to speak. One member combines fishing and processing of sea cucumber, building fishing boats in the process, another goes hugely into repair and reconditioning of motor vehicles while maintaining a self-sewn mini-RTW (ready-to-wear) line of linen and high-end Muslim gowns, yet a third combines rubber and coconut planting with a modest seaside resort. KCCDMFI nominated Samdani, Abbong and Tan as entries to the 2019 Citi Micro-Entrepreneurship Awards sponsored by Citi Philippines, Bangko Sentral ng Pilipinas and the Microfinance Council of the Philippines, Inc.

RIDZNA

The interweaving narratives of class, ethnicity and gender are writ large in Ridzna Jandani Abbong’s life. Ridzna, 37, has been a KCCDMFI member-beneficiary since 2003.

The oldest of five children abandoned by a father who sought employment in Malaysia (and quietly remarried there), Ridzna had to give up dreams of learning teaching in college after completing high school at 17. As her mother’s helpmeet, Ridzna engaged in production of copra (dry coconut meat) and steamed grated cassava (kamanting), and also vegetable trading, At 18 Ridzna married jeepney driver Madz Abbong who had helped her transport goods over the years, With the birth of a daughter the couple ventured to Malaysia. No child was born in Malaysia in their seven-year stay because their priorities were to earn and save. They returned to Jolo in 2000 with over P40,000 in earnings converted into jewelry. But with poor livelihood prospects there and to avoid getting entangled in a family conflict they moved to Zamboanga City in 2001 with only a jeepney and sparse belongings.

Parked by the boulevard, the jeepney served as family lodging for a year until an aunt allowed them to stay in a small room in a rented house in Rio Hondo. By then Ridzna had two sons. In 2003 she joined KCCDFI (later KCCDMFI), her first loan funding the sales of foodstuff including corn on the cob, and coconut milk and sugar in sachets. With a second loan of P6,000 Ridzna opened a small dry goods store, adding eggs, rice and other items on sale.

With a third loan the couple purchased a welding machine, needed for Madz’ first jeepney repair job. The police customer provided everything else including a pair of scissors and plain metal sheets. The Abbongs netted P15,000 on this first job presaging the robust profits on future jobs. Typhoon Sendang which devastated Northern Mindanao in 2011 proved a bonanza to the Abbongs.

Earlier a P12,000 loan from KKDMFI netted them P50,000 on jeep repair which served as their capital in Cagayan de Oro City. They bought 50 muddied machines at P1,500 apiece (some on installment), later sold at P9,000 to P12,000 per unit after cleaning and minimal repairs. They also earned about P60,000 on a new tamaraw jeepney priced at P21,000 which sold for P85,000. Within a 10-year period starting in 2004–05, Ridzna estimates a total of over 400 vehicles bought, repaired and/or cleaned, and sold.

Ridzna Abbong showing her business. The RTWs and the jeepney repair shop.

While the jeepney repair business makes good profits for the hard-working couple, it is Ridzna’s business acumen — which she started to develop while vending on Jolo’s streets — that is key to their continuing success story. Consider that as virtual refugees in Zamboanga City in 2001 they only had a jeepney and little else beyond the clothes on their back. For about two years they had to make do with jeepney earnings to feed a family of five (another two sons were added later).

With a keen eye for what would quickly sell, Ridzna’s KCCDFI loans yielded her tidy earnings daily. Branching out to household items, Ridzna purchased pots, pans, plates and basins for reselling to neighbors sometimes at double the price. In 2016 she ventured into buy-and-sell of pillowcases and bed covers whose poor quality prompted Ridzna to sew the items herself, upping product quality and raising profits. This emboldened her to produce Muslim gowns for women with herself as model. Her first attempts with cut-out patterns from Manila paper apparently fit her and she now sells gowns at P300-P500 net each. Note that she had no experience or training in dressmaking, to start with.

The Abbong couple had its share of troubles, most notably in 2013 when a son was jailed on false charges of involvement in drugs. In fact it was his new girlfriend’s family which was engaged in drug dealing, he was merely “collateral damage”. On a relative’s promise that the son would be freed in 24 hours for a sum of P120,000, Ridzna pawned all her jewelry to raise the amount. All she got back was her son’s motorcycle. Instead he went to jail, freed only after the efforts of a lawyer who cost P50,000 in legal fees..

For all the travails that fill her 37 years, Ridzna is light-hearted and fetching in her beauty. She recalls how she and her siblings survived on the kamanting staple during an impoverished childhood, and how she hardly met any kin during the first years in Zamboanga City. Now relatives are numerous. Ridzna expresses her gratefulness to KCCDFI/KCCDMFI for its invaluable help at a time “when even my own relatives did not extend help”. KCCDMFI’s credit has afforded her an exit poverty strategy, has provided for her children’s schooling (one works as a nurse in Saudi, another is a criminology graduate), and encourages her to pursue her dreams big and small.

DARWISA

Comely Darwisa Samdani, 40, is gentle and soft-spoken, belying the qualities of daring and decisiveness that have brought her business ventures far and wide, literally and figuratively, since she took out her first P4,000 loan from KCCDFI in 2007.

Unable to proceed on to college due to poverty, Darwisa married early at 17, the union producing her only child, newly graduated from criminology, the college course she had aspired for decades eaarlier. Her husband left for Malaysia in 2004 but, by then, the couple was estranged because, Darwisa says, she “cannot accept polygamy”. Darwisa met and married Haier Samdani, captain of a fishing boat in 2006. Haier started the sale of small charcoal packs with driftwood in Sibugay converted into coal and sold at P150 per sack in Zamboanga City. With her first KCCCDFI loan, Darwisa expanded into selling cooked food and opening a small sari-sari store on the side. For two years she also engaged in buy-and-sell of scrap metal and empty plastic containers.

In a few years Darwisa shifted to more valuable marine catch such as mulmul (parrot fish), lapu-lapu (grouper) and most highly-priced of all … sea cucumber (called balat by locals, a Tagalog term), as well as shells of pearl. She offered higher prices ensuring a steady supply from fishers in nearby barangays. Dried sea cucumber is a top delicacy in China especially among its burgeoning middle class. Fresh sea cucumber sells at P1,800 per kilo, rising to P3,000 per kilo once dried after a 1–2-week drying process.

With a P40,000 loan from KCCDFI in 2010 Darwisa focused on sea cucumber and expansion of her dry goods store. Although lucrative, she stopped the scrap buy-and-sell business in 2012, her energies increasingly drawn to the store (e.g. selling shell for crafts and, later, provisioning the fishing boats) and the building of fishing boats.

Darwisa Samdani with the export products she and her husband manages along with the newly-made family fishing boat.

The prized marine catch inhabit coral reef and are caught either by hand or fishing spear. (Sea cucumber is also found among sea grass or on the sea bottom and can also be cultured.) Scaling up of operations needed having one’s own fishing boat.

Darwisa’s loanshave increased over the years. Darwisa and Haier built their first fishing boat or motorized banca in 2011 at a cost of P85,000 which included two16-hp engines (one as reserve). Subsequently they had a new one built yearly and now have a fleet of six motorized bancas. The older bancas have been sold off mostly to kin and in-laws, many of whom work on the fishing boats. Each boat has a team of four including the machine operator and two buseros (divers).

Meanwhile Darwisa has acquired two pieces of land. The first is a 1.7 hectare-lot planted to 400 coconut trees in Zamboanga Sibugay inherited from her mother, the second spans 3..7 hectares with corn-coconut intercropping. . Darwisa plans to expand the coconut plantation. She has also built a P1.5 million home in Sibugay tended by her mother.

When asked about her recording and accounting practices, Darwisa matter-of-factly confessed to having none. One could say, she knows, and grows, business by instinct. When son Bendader married in July, it was like Christmas and Hariraya combined for Muslim weddings are grand occasions. But not to worry about expenses, Darwisa had started saving up for this event long years ago, with no disruption to her business, then and now.

Darwisa plans to build a bigger boat to travel far and catch more. But husband Haier, in his mid-50s, has had to go slow with his weak heart and unico hijo Bensader is considering training as a pilot. Again, not to worry about sustainability. This businesswoman, after all, goes by more than instinct. With the schooling, and mentoring, of two nieces and two nephews, her gaze is steady, her grasp sure, future-wise.

HERMIS

Hermis (Boy) Soria Tan is unlike the typical microfinance client in looks and life story: male, 59, lanky and with experiences that rival the most riveting telenovela. Yet what drives him is akin to the dreams that inspire the critical mass of the country’s female micro-entrepreneurs: turning their lives around, providing for family, reaching out to community. But Boy’s narrative is more dramatic than most.

In the 1940s his father traveled from Beijing with kin to settle in Alicia in what is now Zamboanga Sibugay province, setting up a merchandise store with his Boholana wife that included trading in fresh and dried fish. Over the years the couple purchased 48 hectares of agricultural land straddling coast and hillside in Barangay Tangalan. But a series of deaths — an older brother in a pirate raid, his mother from cancer, and his father in mediating a fight — compelled the remaining eight children to move to Zamboanga City.

His paternal Chinese grandmother taught the brood to mend sacks of copra and to repack peanuts in sachets for sale. Robust sales of sacks, peanuts and empty cooking oil cans earned enough for grandmother to send all eight kids to school. (Grandma taught them so well, half of the siblings now run their own hardware stores.)

Unable to speak Chinese, Boy moved from Chong Hua school to the city grade school graduating with honors, followed by secondary school in Ateneo and Mindanao State University in 1976. Completing a hotel management degree in 1980, Boy stayed on as member of the Darangan Cultural Troupe with an 8-city tour in North America in 1984 and a final performance at the Cultural Center of the Philippines which introduced him to the world of high fashion and modeling.

As male model with lucrative side jobs (such as trading in antiques as protégé of Pitoy Moreno), Boy hit it rich but, soon enough, picked up an ultimately self-destructive habit. Bizarre as it sounds, it was the Twin Towers tragedy on Sept. 11, 2001 that firmed up Boy’s resolve. Watching TV footage of the inferno, Boy told himself “This is the right time for me (to break free of the habit)”, packed his bags and never looked back.

Hermis Tan with his rubber latex production and the rice field his family cultivates.

Soon Boy found his way back to the family land in Tangalan where two brothers had modest fishing operations. He spent a month sleeping and shedding the 15-year old habit picked up in Manila. Boy was soon in full command of his faculties and turned to the family farm. After clearing seven hectares of land, Boy purchased several thousand rubber seeds and polybags with an initial P5,000 loan from KFI (precursor of KCCDFI), He employed labor from the 48 families that had settled in the family land — the men for clearing and replanting, the women for seed preparation.

The choice of rubber was dictated by soil tests and the fact that rubber yields a monthly income, while coconut earns quarterly. Work on coconut and rubber employs only seven farmers (for maintenance) and a greater number for allied tasks but their true value lies in the stable income afforded farmers.

The plantations also provide funds to develop a modest beach resort which charges affordable rates. It opened in early 2018 with truckloads of families, mostly from the Subanen indigenous tribe, coming on weekends and special occasions such as birthdays. There is no corkage fee, drinking water is free and so are children 15 and below. Boy plans to open a small restaurant that can provide employment for another handful of people. Labor, as with coconut and rubber, will come from the families settled in the area who enjoy usufruct rights in terms of planting vegetables and rice for family consumption, and also in fishing.

Hermis Tan’s turning his life around in his late 50s — mobilizing coconut, rubber and a sun-blessed coast, and harnessing human capital in the form of settler families — also presages a turnaround in the life of Barangay Tangalan, nearly 400 kilometers away from Zamboanga City, off-the-beaten track and vulnerable to political instability that has hounded the Zamboanga peninsula since the1970s or earlier.

In slaying his demons and honoring the promise of life abundant for himself, Boy Tan is sharing that promise with his neighbors, those who till the land and fish the waters and, by that token, helping bring peace and prosperity to a troubled province.

FINANCIAL STATEMENTS

Computerization: A Journey Towards Digitalization

Management Information System (MIS) is a unit responsible for providing timely and accurate information to the Board and Management for decision-making. MIS provides the big picture of the prevailing condition of the institution. MIS role was put to test when KCCDMFI reached its critical juncture. It was the time when almost half of its branches were closed due to monitoring problems. Had there been a computerized KCCDMFI MIS unit at that time, such problems should not have happened or should have been minimized.

The experience however, pave the way to the computerization of KCCDMI MIS. The computerization eliminates the tasks of manual recording and monitoring of loan transactions. The level of complexity in monitoring loans and other transactions of the institution has been lowered dramatically.

Prior to computerization, KCCDMFI had gone through with the manual MIS. During this period, every loan transaction was recorded manually. Every time the field credit officers (FCOs) went out to the field for their daily center meeting wherein collection is done, they carry with them a 24 inches long, 8 inches wide and ¾ of an inch thick FCO register. All of the transactions of the center with the FCOs are recorded in this FCO register.

Manual recording is prone to errors and time consuming especially if you were doing it on a very long register. Most of the time, when errors were committed, the FCOs have to stay in their respective branches and they could not go home until errors have been found and corrected.

During the manual MIS, it took weeks to submit monthly reports since it needed an ample time to manually consolidate the data. Sometimes, due to time constraints, the submitted reports were riddled with inaccuracies and therefore not reliable.

The subscription of KCCDMFI to a cloud-based software is a first bold step towards computerization. The software minimizes the errors that are usually committed during consolidation of data and report preparations. Submission of reports that previously take weeks or sometimes month to produce, it could now be readily available in real time and can be accessed anywhere anytime as long as there is an internet connection.

A Senior Field Credit Officer doing the daily operations using the manual system vis-à-vis using the internet-based Instafin.

INSTAFIN: The First Bold Step To Digitalization.

INSTAFIN is a cloud-based software from Oradian. This is the cloud-based software that KCCDMFI subscribed for the computerization of its MIS.

With INSTAFIN, KCCDMFI is now able to monitor its operation and access data in real time. INSTAFIN is instrumental in the recent increase of KCCDMFI’s loan portfolio and number clients. For so long, KCCDMFI has only one loan product and adamant of creating another one. This is because of the complexities of manual recording that KCCDMFI is doing before its subscription with INSTAFIN. Now, with INSTAFIN, KCCDMFI has more than 10 different loan products designed to meet the clients’ need.

The road towards digitalization maybe long and full of challenges but with INSTAFIN, KCCDMFI has taken a first bold step forward that concretizes the saying: “a journey of a million miles begins with a single step.”