Repurposing 5-6 in fighting poverty

In a developing country, financing is king and those who can provide it acquire clout over members of a community.

While it should be the government that is relied on to back small businesses, the resources are often limited, opening opportunities for loan sharks who are accessible to those who need money but who charge usurious rates.

Agencies such as the Small Business Corp. seek to counter the domination of the so-called 5-6 financing racket by offering small businesses affordable loans but its capability is restricted by its limited portfolio.

Bangladeshi innovator Kamrul Tarafder studied the lack of financing for micro and small businesses and believed that the 5-6 scheme can be institutionalized without the abuses associated with it.

Thus, the idea to put up a micro-lending institution called ASA Philippines which rapidly grew into a P51-billion concern with about 2.2 million members.

Kamrul said ASA Philippines Foundation was embraced by Filipinos in dire need of capital to start a source of livelihood.

“I saw the opportunity then as poverty was growing at the time and I had the capacity and expertise to provide a solution. I was able to convince benefactors to the project,” Kamrul said about the beginnings of ASA Philippines.

“I thought I could do something from scratch and I was able to convince Vatican Ambassador Howard Dee to join me,” the micro-financing wizard said.

Kamrul got the idea from the practice of loan sharks but he refined it into a legitimate lending business.

He studied the operations of 50 businesses in the field, including 22 microfinance institutions that he helped set up.

“I learned their ins and outs, their weaknesses and strengths so I acquired a very strong knowledge of the Philippine market,” he explained.

Kamrul has lived in the Philippines for over 26 years, starting as a United Nations Development Program consultant for microfinance institutions in September 1998 where he assisted small lenders for more than five years.

His project was evaluated by the UN Capital Development Fund and the global group fighting poverty called the Consultative Group to Assist the Poor. And he received commendations from both groups.

Kamrul completed a master’s degree at the Asian Institute of Management in 2003. During his studies, he came up with a business plan on microfinance that he applied to the founding of ASA Philippines.

In July 2004, with the Assisi Development Foundation and the Ninoy and Cory Aquino Foundation, Kamrul set up ASA Philippines for the prime purpose of poverty alleviation by opening up microfinancing to marginalized individuals, primarily women.

Through his leadership, ASA Foundation grew from an organization of three to 12,000 employees across the country.

ASA Philippines now has over 1,800 branches across the country. Aside from extending microfinancing, ASA Foundation has consistently helped depressed communities through its corporate social responsibility initiatives.

Led by Kamrul, it extended interest-free financing to clients affected by calamities like typhoons, volcanic eruptions, earthquakes and the ravaging effects of the Covid-19 pandemic.

In 2023 alone, ASA Philippines released P14.5 billion in interest-free loans and initiated a rebate to borrowers equivalent to P3.5 billion.

Kamrul’s project found its niche by providing accessible financial services to low-income families, and it has successfully given microloans to women, providing them with the tools and resources to lift themselves and their families out of poverty.

ASA Philippines opened its first branch in Camarin, Caloocan City before expanding nationwide.

It aims to effect social change by helping poor families escape poverty through low-cost capital for micro businesses. (To be continued)