Microfinance Institution had brought a lot of changes not just on the economy but also to the poor family here in the Philippines. It is said by Rina Jimenez-David on her study “Poverty and Growth”, that in order for the economy to continually grow, a passive income must start in every household. With this situation, Microfinance Institutions believed that it is their role to help the Filipino people conquer the challenges brought by poverty.
The idea was simple, by providing a small loan with less interest, the Microfinance Institutions gave the opportunity to an individual to expand his/her small business, which can later would help lift their family out of poverty. But if an individual does not pay the said amount, the microfinance institution might face over-indebtedness which affect the cycle of money inside the institution. The over-indebtedness might pose a severe challenge to the growth of the institution. Some challenges faced by Microfinance Institutions also includes Inadequate Investment Validation in which it might affect the quality information the MFI needs to be able to make investment decisions; Lack of Enough Awareness of Financial Services in the Economy is also a significant factor and challenge to the MFI because this stops the rural population from accessing easy credit to MFI; and Regulatory Issues in which other regulations seem to have left numerous issues unaddressed.
Despite the challenges MFI had faced, this doesn’t stop them to help the Filipino community gain and have a life away from poverty. Microfinance works best for the poor by building the local economy, especially by creating wage jobs for the poor and providing them access to financial services.
Microfinance Institutions give and provide the people to protect, expand, nurture and increase their sources of income. They never stop on working to provide more services to particular clientele while maintaining the financial and operational sustainability of the institutions. Being poor sometimes give you fewer privileges in order to access an amount you’ll need to open or start up a business. With this situation, the MFI provide some considerations in order to provide services that are attainable for the poor. This consideration includes providing minimum requirements in lending money, minimal interest, and long range of due date for payment.
The Philippines is one of the natural hazard-prone countries in the world. The economic and social cost of natural disasters in the country is increasing due to some factors that include the increase in population growth, change in land-use patterns, migration, unplanned urbanization, and environmental degradation, which is believed that, causes global climate change. In different ways, it is believed that no matter the situation was, poor people are the most affected by natural disasters. We all know that poor people are more vulnerable to shocks, because any impact on their asset or consumption level threaten subsistence and long-term prospects, and they have less resources to reduce risks or cope with the shock when it occurs.
