Top Three Things I’ve Learned About Filipino Microfinance

For the past two weeks, I have been criss-crossing the Philippines with Sanjaya Punyasena, one of Vittana’s International Partnerships Managers, and Roger Johnson, our Chief Financial Advisor. We have spent 2-3 days with each of our three Filipino partners, meeting staff and students at each step along the way.

Why are we doing this?

Other than the obvious answer that we wanted to get some extra vitamin D (we’re starved for it in Seattle), over the course of the past six months or so, our Partnerships Team has been hard at work building new partnerships to increase the number of students we reach. Many of our new microfinance institution (MFI) partners are just a few steps away from finalizing their student loan product and offering it to students. As we get close to disbursing the first student loans with these new partners, we lead market research studies, focus groups with students and training workshops with the MFI team in order to make sure that these pilot launches go off with out a hitch.

In plainer terms – we’ll have more students on our site, and soon. This trip was to make sure our MFI partners (and their students) are set up for success.

To be clear, I’m not usually a part of this process. Trips like these are run-of-the-mill for Sanjaya, but not for me – I typically talk to our lenders and help run the shop at home. As such, this trip is the first chance I’ve had to really see microfinance in action. And let me tell you, it’s amazing.

Here are three things I learned during my trip to the Philippines:

Sanjaya and Roger discussing student loan specifics with staff of our current partner, NWTF.

1) For one thing, the people are committed. A few questions about microfinance have recently been raised in academic circles. While those questions should be asked and answered, let there be no doubt that the people putting together the Vittana student loan product have only the students’ best interest at heart.

Our MFI partners surveyed their communities in advance to see what the students were interested in studying, what size loan they could realistically afford, and whether they’d even be interested in taking out a loan. From there, we worked with them to nail down the nitty-gritty, essential details. (How long does each student have to repay? What will the interest rate be? How are we confirming that they’re going to good schools?)

The final answers to all these questions look a little different at each partner, as the needs of their clients are correspondingly different. But one thing is the same – we are confident that each new student loan product is one that will be useful for students, affordable for them and their families, and sustainable for the MFI. Our MFI partners view this new loan product as a needed service for their clients, and students are thrilled at the chance to afford an education. It’s a win-win on all sides.

The dean of a local hospitality school shows us around the working kitchen her students use in the course of their classes.

2) Their reach is vast. Our Filipino MFI partners are proud of their holistic approach to client services. Whereas a traditional MFIs focus solely on micro-business loans, our partners in the Philippines offer other services (often referred to as “credit plus” services) like classes on good business practices or mentoring to new business owners.

Our partners’ approach to their new student loan products are no exception. I’ve been so impressed that even though each partner has tens of thousands of clients, the MFIs that we’ve met with view all their clients (students included) as individuals whom they are responsible for shepherding through the process . Our MFI partners want these students to be as successful as possible and are really walking their talk.

For example, One partner has plans to offer resume workshops after graduation, and assistance in finding jobs. Another is building relationships with local companies to introduce their students to the business world, and potentially jobs. All will regularly check in to see how each student is faring in class, and if they need any help.

Five of Vittana's current Filipino students.

3) The thirst for education is great. “Clients are already waiting for this program.” “When can we start?” Over and over throughout the trip, we heard from the MFI’s staff, their clients and then the students themselves that they were excited about being able to get a student loan. At one partner, the entire focus group interviewed (165 out of 165 people) said that if given the choice, they would like to take out an educational loan. There’s consensus for you. And when we had a chance to interview a few of our current students (pictured left), when asked if it was worth it to take out a student oan, every single one said “Yes.”

That said, the Philippine government previously attempted a loan program called “Study Now, Pay Later” that wasn’t particularly successful. For that reason, we have proceeded carefully throughout the product-building process, and are excited about what we’ve come up with. In short, you should be seeing a lot of Filipino students on Vittana’s website in the near future.

Sanjaya, Roger and I with the general manager, chairwoman of the board, and a branch manager of PMPC, one of our new partners.

Unfortunately, our trip in the Philippines is drawing to a close, and we will soon be back in the States. It has been incredible to see our partners in action, and get a glimpse into the realities of daily life for each of our students. It’s energizing just to watch these innovative new programs being built. But for me, it’s now time to kick back into gear in my corner of the world.

Until the next update, though, keep an eye out on the site for new Filipino students (or go lend to another worthy student in the meantime!).

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About The Author:

Lindsey got her start running operations for Vittana and is now a project manager working on web and tech jazz. Lindsey now works at Redfin.

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