Achieving Poverty Reduction Through Microfinance: Evidences From the Philippines

Abstract

This research work sets out to evaluate and compare the effectiveness of two microfinance interventions implemented in the Philippines. To achieve this goal, the study examines two microfinance programs one implemented by the state (Self Employment Assistance Kaunlaran) and the other by a non-profit UPLIFT (Urban Program for Livelihood Finance Training). The analysis focuses mainly on ascertaining which of the two programs that has contributed most to the improvement of the lot of its clients. The paper also compares clients across three groups: new, mature and exit clients in other to ascertain how the programs affect clients at different stages of the program. Furthermore, this work lays emphasis on governance and empowerment as the two key factors that contribute to a more effective and efficient delivery of microfinance services. The study which was conducted in Caloocan City and Navotas City reveals that most microfinance clients are females. It further shows that most of the microfinance clients in the SEA-K and UPLIFT programs use their loans for either smoothing consumption or reinvestment in their businesses. The findings of this research work also identifies interest rates, small size of loans, short loan repayment cycles, and very frequent group meeting as the enabling and disabling factors that affect successful graduation of microfinance clients from microfinance programs.

Keywords: Poverty Reduction, Microfinance, Governance, Empowerment