November 22, 2000

On-the-road from the Philippines

Tuesday, Nov. 7: Visiting co-ops south of Davao City

After spending Monday learning about PEARLS, Model CU Building, and Savings and Credit With Education (SCWE)—the rural women's lending groups—we hit the road today to visit credit co-ops and see the effects of the World Council of CUs Inc.'s (WOCCU's) efforts in the Philippines.

Our day began with a trip south of Davao City. After an hour and a half, we arrived at Mediatrix Multi-Purpose Co-op. Many credit co-ops here used to be multi-purpose (meaning one or more businesses were run with the credit union). However, most CUES co-ops spin off or close their side businesses, a critical step in reaching FOCCUS-branded levels more quickly.

Mediatrix, with assets of 12 million pesos (US$240,000), primarily serves drivers (men who drive small Jeepney busses and motor bikes that carry three or more passengers) and people who sell in the local market (a major activity in Davao City and small, rural towns). The credit union's collectors collect on delinquent loans, but they also collect savings by visiting members in the market daily. They collect roughly 20 pesos (about 40 cents) on average from the member and take it to the credit union.

The credit union is in Batch 1, the original group CUES began working with in 1998. Mediatrix's assets grew by 36% this year and its membership grew to 3,974 from 442 in 1998. Like other CUES partner credit unions, Mediatrix had to charge off significant amounts in bad loans—850,000 pesos (about $17,000).

Magemco, the second co-op visited, was the program's smallest, with assets of 2 million pesos ($40,000). Magemco's membership is comprised mostly of government employees and children in the small town of Makilala. As a Batch 2 co-op, it began participating in CUES in 1999. Since then, its membership grew to 1,000 from 250, and delinquency dropped to 12% from 38%. Magemco's charge offs totaled 28,000 pesos, but it's well-positioned for future growth and success.

Our third visit of the day was to Bansalan Cooperative Society, another Batch 1 co-op. Bansalan is fully provisioned for loan loss, and its delinquency dropped from 59% in 1998 to 8% today. Savings grew from 4% to 50%, and its loan/asset ratio is an impressive 79.81%. Bansalan serves teachers, merchants, and farmers in a beautiful new building with an extension under construction in the back; the extension is being paid for with a grant from Filipino Congressman Cres Paez, with whom we hope to meet next week in Manila.

Our final visit of the day was to USPD Savings & Credit Cooperative. USPD stands for United Sugar Cane Planters of Davao. The credit union shares space (including an enormous warehouse for storing sugar cane) with an agricultural co-op.

USPD, a Batch 1 co-op, was the first FOCCUS credit union we visited. USPD, just one ratio away from the gold level, displays the FOCCUS signage and visuals with great pride. It also was the first fully computerized credit union we visited.

Membership in USPD grew from 1,300 in 1998 to 4,400 (with 25% growth this year); delinquency dropped from 38% to .21%; assets grew from 8 million pesos in 1998 to 27 million this year (100% growth in 2000); and its savings/asset ratio is 70% and loan/share ratio is 77%.

A sad note: Last year one of USPD's collectors was murdered. While the person responsible hasn't been caught, it's believed the collector was killed by someone unwilling to repay a loan. The concept of collecting is relatively new here. Staff and volunteers of CUES credit unions take significant risks in the changes they introduce—including collections. In the Philippines, pioneers are leading the rebirth of a movement, and we're literally witnessing history being made. Yet these pioneers don't think they're doing anything special; they're just trying to help members.