Ebook Impact of Microcredit on the Livelihood of the Poor: The Center for Agriculture and Rural Development in the Philippines
Microfinance is a relatively new field of finance in which savings, insurance, microcredit loans, and other financial services are aimed at low-income individuals. Specifically, microcredit loans are small loans which are taken by borrowers with no credit and no collateral. By paying back small loans, borrowers are able to build a credit history and acquire more assets. More importantly, borrowers use their loans to establish businesses which ensure financial stability in the future.
The founder of microcredit, Dr. Muhammad Yunus, was a professor of economics at Chittagong University in Bangladesh when he established Grameen Bank in 1977. By lending small amounts of money to rural farmers and small-business owners in his community and requiring repayment in weekly installments, Yunus created a system that greatly interrupted the cycle of poverty in rural Bangladesh. Soon, his program had spread to the other regions of Bangladesh, and similar programs were being founded all over the world, all modeled after Grameen Bank. The Center for Agriculture and Rural Development (CARD) Bank of the Philippines is one such program.
The CARD Bank of the Philippines was founded in 1986 by Dr. Jaime Aristotle Alip. In 1989, the CARD Bank pilot-tested a microfinance institution modeled after Grameen Bank but tailored to fit the needs of the Philippines. In 1990, the Landless People’s Development Fund (LPDF) was established, which eventually developed into the CARD microfinance program. Currently, the CARD nongovernmental organization (CARD NGO) is associated with CARD Bank, CARD Mutual Benefit Association, and CARD Mutually Reinforcing Institutions (CARD MRI).
At the end of 2004, CARD NGO had over eighty thousand members. Ninety-nine percent of these members were women, following a pattern begun by Grameen Bank in Bangladesh. This is because CARD NGO targets landless poor women who do not earn more than PhP 1,500 each month (about USD 30). CARD Bank has the same high percentage of women members.
For this case study, ten rural women were interviewed about their experiences with the CARD Bank of the Philippines. All ten women had been interviewed ten years ago on the same subject by the International Rice Research Institute (IRRI). This study was conducted to determine if and how the women’s lives had changed because of the microcredit provided by CARD Bank.
All ten women were selected from two villages, Pinak and Tranca, near IRRI. Eight women are current members of CARD Bank; two have resigned since the last interview. These women were chosen because they had been previously interviewed by IRRI, had progressed through CARD Bank, and had experiences with CARD Bank which are representative of many members’ experiences.
For purposes of this report, three women were chosen whose experiences were illustrative of the experiences of the women who were surveyed for the IRRI case study. The names of the women interviewed have been changed for this case study.
Topics discussed in the interviews included early life, education, family, and business ventures financed by CARD Bank loans. Also discussed were the current financial situation of each borrower and how the CARD Bank microcredit program had contributed to the overall financial circumstances of her family. Each woman has had a different experience with the CARD Bank microcredit program, so each case study added to the broader picture of the typical rural member of CARD Bank.
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