Vince Rapisura 2307: Improving financial literacy of KaNegosyo members through capacity building
00:44.0
individuals with the knowledge and skills they need to manage their finances effectively
00:48.6
and make informed decisions about saving, investing, and spending.
00:52.3
This can help to increase their earning potential and promote economic activity.
00:56.7
By teaching individuals about money management, a financial literacy training can help individuals
01:02.6
make better financial decisions and avoid financial pitfalls that can trap them in a
01:06.9
cycle of poverty. It can also empower individuals to take control of their finances and make
01:12.1
informed decisions about their financial future, which can promote social change by
01:16.6
helping to level the playing field for marginalized and disadvantaged groups who may have
01:21.7
historically been excluded from financial services and opportunities.
01:25.1
CEDPI, a group of social enterprises in the Philippines, uses financial literacy as a
01:29.6
strategy to enact social change. It envisions the empowerment of Filipinos worldwide in
01:34.6
a manner that they live dignified lives and productive members of society.
01:39.0
As a social enterprise, CEDPI provides innovative financial services and effective
01:43.5
financial education to nano-enterprises and social investors.
01:47.5
One of the goals of CEDPI is to contribute to local economic development of nano-enterprises,
01:52.6
recognizing nano-enterprises as a pillar of inclusive growth.
01:57.7
Education as a strategy is embedded in CEDPI's second goal in providing continuous
02:01.9
education for community empowerment. The third goal is to provide social welfare
02:06.5
protection to nano-enterprises in times of calamities and emergencies through the use
02:10.8
of indigenous coping mechanisms. Lastly, it aims to develop a movement of social
02:16.3
investors that puts social and environmental agenda over profits.
02:20.2
To ensure that these goals are achieved, the following are CEDPI's inputs and activities.
02:25.8
It will conduct financial literacy trainings to its members to ensure that members have
02:30.4
the capacity to manage their money. Providing ethical financing products and
02:35.3
services will further give CEDPI members the chance to create and accumulate wealth
02:39.5
with due regard to social and environmental costs.
02:42.8
Performance of members are closely monitored and evaluated to ensure that their accumulating
02:47.4
savings have adequate insurance protection coverage and are less dependent on debt.
02:52.4
With the activities, the following are the expected outputs.
02:55.5
Through financial education, CEDPI members have effective money management behaviors.
03:00.9
They are able to increase their savings and have positive accumulation of business and
03:04.7
personal assets. Members also have easy access to social
03:08.2
safety nets against emergencies and disasters, not just from CEDPI, but more importantly
03:13.0
from the government. The expected outcomes are as follows.
03:15.8
CEDPI members have manageable debt levels and are able to use savings and insurance
03:20.3
as more effective financial products versus dependency on debt.
03:23.4
Their livelihoods are sustainable and member nano-enterprises also have diversified income
03:29.0
sources. CEDPI members also have a robust financial
03:32.6
preparedness against disasters through savings and insurance consistent with disaster
03:36.7
risk reduction strategies. Finally, the impact would be an overall
03:41.0
improvement of the quality of life of CEDPI members as they are able to break the cycle
03:45.4
of poverty and move up the socioeconomic ladder.
03:48.9
The overall threat of disasters is mitigated through disaster risk reduction.
03:53.5
Since 2017, CEDPI provided capacity building to its members on financial literacy in the
03:58.6
form of trainings, orientations, small group meetings, and the development of information
04:03.2
and campaign materials. The following are examples of topics covered.
04:08.1
Importance of savings and insurance through Damayan.
04:11.1
Good versus bad uses of loans. Buying non-productive assets through savings,
04:16.4
not loans. Plan for increasing business capital through
04:19.8
savings and reducing loan. This is an example of a visual aid used to
04:24.2
differentiate CEDPI's financial empowerment strategy versus other microfinance institutions.
04:29.4
Instead of loans, CEDPI enters into a joint venture with its members.
04:34.2
The goal of a traditional microfinance institution is to collect repayments,
04:38.3
which puts the organization's financial sustainability over the members.
04:42.5
Under CEDPI, the main goal is to assist its members grow their livelihoods.
04:47.2
Thus, CEDPI treats its members as equals as it enters into a business partnership
04:51.5
arrangement versus a traditional creditor-debtor relationship,
04:54.6
where the creditor usually takes the upper hand. In most microfinance institutions,
04:58.8
their goal is to increase the loan amount of clients, making them more dependent on debt.
05:03.7
In CEDPI, we teach our members to save so that they reduce their dependency on loans.
05:10.1
We emphasize, and the members agree, that a sustainable livelihood is one that has
05:15.0
capitalization coming from income saved rather than through loans.
05:19.4
In traditional microfinance institutions, interest is continuously charged to the client,
05:24.2
even if the reason for non-repayment is due to calamities, sickness, and other external
05:29.9
emergencies. In some instances, penalties are even charged in addition to the interest.
05:35.3
CEDPI, in stark contrast, only collects service charge which is fixed. No interest or penalty is
05:41.5
charged, even on late payments. The principle is not to enrich ourselves due to the misery of
05:46.7
others. Instead of charging punitive interest and penalties, CEDPI will assist its members
05:51.9
find ways in order to repay and recover. As business partners, CEDPI and its members
05:56.9
help each other so that no one gets left behind. Microfinance institutions provide
06:01.5
insurance to their clients that usually takes months to process claims. CEDPI,
06:06.5
through the use of indigenous insurance practice called damayan or dayong,
06:10.7
pays out claims within one week. This is for members to avoid getting into debt in times of
06:15.8
emergencies. Most microfinance institutions provide lime insurance coverage only. CEDPI's
06:21.7
damayan provides more comprehensive coverage that includes life, sickness, calamity, fire,
06:26.8
funeral, and accident benefits. CEDPI endeavors to revive indigenous money management practices
06:32.7
that has proven to be effective since these are embedded in our cultural heritage. The main goal
06:38.6
of savings mobilization in microfinance institutions is to function as collateral
06:42.3
to loans of members as well as main source of fund to finance their loan portfolio.
06:48.2
For CEDPI, savings of members function as a collateral to the joint venture but more
06:53.5
importantly this can be used for emergency purposes. Traditional microfinance institutions
06:58.7
also typically offer loans to their clients to purchase non-productive assets. This will make
07:04.0
these purchases almost twice as expensive due to the interest. In CEDPI, delayed gratification
07:10.3
is emphasized. Members are encouraged to save for what they intend to purchase through a layaway
07:15.6
program. This way members pay the items at the suggested retail price while CEDPI earns through
07:21.1
the discount it gets due to bulk buying. We emphasize in all our financial education efforts
07:26.2
that life is more convenient when savings is increased and loans are reduced. The following
07:32.2
are the results of CEDPI's capacity building program which began in 2017. As of December 2022,
07:38.6
CEDPI has expanded its branch network from 2 to 14 covering the provinces of Agusan del Sur,
07:44.7
Davao de Oro, Davao del Norte, Surigao del Sur, and Zamboanga City. It has outreach of 15,000
07:50.2
members. The standard client growth rate of the microfinance industry is 5% per year. CEDPI's
07:56.6
compounded growth rate is 25% which is 5 times higher than the industry standard. This indicator
08:02.9
shows how CEDPI is able to achieve its mission to reach low-income nano enterprises. CEDPI's
08:08.3
joint venture portfolio with nano enterprises grew from 43.3 million in 2020 to 76 million in
08:15.0
2022. The standard portfolio growth rate of the microfinance industry should be at par with the
08:20.0
GDP growth. In the past six years, the average GDP growth is at 4.2%. CEDPI's compounded portfolio
08:26.8
growth rate is 21% which is four times faster than GDP growth for the same period. The portfolio
08:33.8
at risk rate measures the probability of non-collection. The standard portfolio at risk
08:38.7
ratio in the microfinance industry is less than 5%. CEDPI's portfolio at risk ratio is below 1%
08:44.9
for 2021 and 2022 which reflects stellar portfolio quality performance. Overall,
08:51.4
accumulated savings of members rose from 7.37 million in 2017 to 29.45 million in 2022.
08:59.8
Insurance claims extended to members also rose from 1.59 million in 2017 to 5.87 million in 2022
09:08.0
with an average turnaround time of 1.25 days. The growth in membership and improving portfolio
09:14.2
quality signals member loyalty and increasing marketability of CEDPI ethical financial products
09:19.5
and services. The growth in savings also signals less dependency on loans to finance livelihoods
09:24.9
and household needs among nano enterprises. The increase in insurance claims is a sign
09:30.1
that CEDPI places protection of nano enterprises against emergencies and disasters. Overall,
09:35.7
financial literacy reinforced ethical financing to make nano enterprises become less dependent
09:40.2
on debt, grow their livelihoods and be disaster resilient. In conclusion, CEDPI's model of
09:46.4
capacity building on personal finance together with ethical finance as a tool for socioeconomic
09:51.3
development of nano enterprises is effective. Monitoring and evaluation is key to ensure
09:56.6
that nano enterprises implement what they learn.
