TINY LOANS, BIG IMPACT

24 September, 1998. It was 9 on the clock when we arrived at Neda sa Makati building, the then UN country office in the Philippines. The program host offered his pleasantries to me and my then boss, Mr. Chowdhury. Arriving exactly at the right time was a surprise, the host said, given the traffic condition in Metro Manila. One could either be too early or too late; never on time.

The Metro Manila traffic took a lot of getting used to, but as an expat living in the Philippines for more than two decades, I could only fall in love with a country that’s about something else.

Subsequently, I became the chief consultant of Microfinance Support Project of the UNDP Philippines. I had the opportunity to travel across the country to study its NGOs, rural banks and cooperatives. Eventually I gave direct technical assistance to 22 monetary financial institutions, including the big ones at the time.

The UNDP program gave me an extraordinary outlook of the microfinance market in the country, both the strength and weakness. Within a year of my arrival, I realized that we must do microfinance by ourselves instead of being a consultant if we want to see the benefit of our microfinance method. The UNDP project of the Philippines was evaluated as the best in 65 implementing countries in the UNDP global system.

Nevertheless, I was not happy at all with the progress. I did not see the reflection of my work in the life of the poor. So, I started out our own NGO-MFI in the Philippines.

I took the Master in Entrepreneurship degree from Asian Institute of Management, where I met Amb. Howard Dee, who gave me a big hope of financial support of P150 million in five years. Thus, in 2004, ASA Philippines Foundation was born.

I started ASA Philippines’ first branch in Camarin, Caloocan City, with only three staff to assist me. On our first month, we were able to convince only two female clients to avail of loans: one, P4000; the other, P5000.

We had so much joy, enthusiasm, and dream that, someday, our first two clients would become 2 million. The rest is history. Today, we cater only to female clients.

The journey over the last 19 years was not easy at all. The fraud, misappropriation took a toll on our operations at the outset. This, not to mention the natural calamities between 2009 and 2013: Ondoy, Pepeng, Sendong, Yolanda, among them.

Through all these, we put ourselves to stand by the client, and made it our mantra. We were with our clients through the Bohol earthquake, Zamboanga seige, SAF 44, the war in Marawi.

We thought we would have to close shop, but if we died because of these crises, we would out of a great cause.

In return, our poor clients gave their trust and confidence in full by paying their obligations on time, even through crises.

Today, ASA Philippines has become a neighborhood name across the country: from Itbayat in Batanes to Sitangkay in Tawi-Tawi.

We have nearly 2.2 million active borrowers (one each per family), so the impact of our program is actually in the life of over 10 million people.

The loan portfolio to 2.2 million active borrowers is P38.8 billion. Interestingly, 45 percent of that portfolio is coming from the borrower’s savings as part of the economic literacy and financial advocacy.

As of June 2023, the program is implemented in 1697 branches, managed by over 11,371 fulltime staff. The portfolio quality is still high despite the devastation of pandemic and current price inflation. The NPL ratio is less than 2 percent.

Aside from the loans and savings facilities, we also provide client community services, such as burial assistance, hospitalization assistance, scholarships to the children of the borrowers, business development services, child feeding program and environmental protection program.

ASA Philippines has a substantial CSR budget of five to eight of the gross income (or 14 to 15 percent) of the net income spent for social work alone. Over the years, we spent over billions for social responsibility programs.

Recently we floated the country’s first gender bond with the joint lead of BDO and LandBank.

Five banks, including PNB, Security Bank, BPI, BDO and LandBank, underwrote the corp notes. This gender bond would help ASA bring back 50 percent of its net income to its borrowers. We will refund to the poor P3.5 billion for 2023 alone. The P10-billion loan will be disbursed in 2023 at a zerocost financing to the borrowers for them to recover from the pandemic or inflation crisis.

Our borrowers are the nanays, who are our bosses — the heroes of our families and our society. ASA Philippines is fully dedicated to better the life of this marginalized sector.

The author is the president and CEO of ASA Philippines, one of the top microfinance institutions in Southeast Asia that has enabled millions of poor Filipino women, mostly mothers, to venture in small enterprises. As of 30 June, the foundation has almost P39-billion loan portfolio and fund balance of over P20 billion, assisting its borrowers with its 11,371 staff in 1,697 branches across 82 provinces.

Tarafder has inspired many successes through his multimillion-dollar social advocacy, a use case he has shared in numerous academic engagements worldwide, including fellowships in Oxford and Harvard. The expat from Bangladesh has been living in the Philippines with his family for 25 years, motivated by unrelenting social conscience and an immigrant’s passion for the place.