Proximity Funding Credit Cooperative – Micro finance in the Philippines

At the end of our mission for HSSi in the Philippines, we had the opportunity to meet Vicky Agaab, one of the managers of Proximity Funding Credit Cooperative. PFCC is a micro finance institute operating in the poorest areas of Manila.

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Background

Proximity Funding Credit Cooperative (PFCC) is a credit cooperative established in March 2001 by Julien Bello, a French entrepreneur who is still member of the board. The main purpose of the fund was to « improve the living conditions of poor Filipino families through micro finance (credit and savings) ». The fund specially focuses on small local entrepreneurs, to help them grow their business.

PFCC is mainly working in depressed areas of Metro Manila and offers four types of services to its beneficiaries:
• Savings
• Access to PhilHealth
• Productive loans
• Trainings

Throughout its first 8 years of operations, Proximity Funding Credit Cooperative helped more than 5000 entrepreneurs, called « Partners ». The project presently employs 36 employees.

Products and Business model

Savings
To be a member of PFCC, one needs to open an account and make a minimum deposit of 50 pesos (1€ = 57PHP). The money saved is not reinvested in loans, it is entirely deposited by PFCC in BPI, a Philippines leading bank. As for now, 3500 savings accounts have been opened, amounting to 1.9 million pesos.
As PFCC tries to teach the importance of saving money to its partners, a member should save at least 100PHP per week.

Loans & trainings
The average interest rate of a loan is 2% to 3% flat per month, depending on the loan amount. Although high, it is substantially lower than most credit alternatives in Metro Manila.
PFCC concentrates on granting loans to business owners who need additional capital to grow their activity. The fund targets loans that are going to help a family earn more income. For example, typical clients are motorcycle drivers who want to buy their own motorcycle to be independent. Another important loan is the “closing loan for the third party”, which helps out Filipinos who have contracted disadvantaging loans on their own and pay huge interest rates.
One of PFCC’s main objectives is to help out its members without burying them under the reimbursement cost of a loan. This is why for each loan granted, PFCC takes the time to train a member to use its money well and to be careful not to accumulate loans. The fund accompanies its members all along the loan process and prefers to work locally, with a limited number of members, to be sure that each one of them is served well.
All sorts of trainings are also carried out by NGOs and government agencies depending on the needs of PFCC members.

PhilHealth

PFCC and Philippines Health Insurance Corporation signed a MOU in October 2004. PFCC strongly promotes Health Insurance to all its members as a top priority in their budget. Lack of health insurance has indeed been identified as a primary concern for most families, as medical emergencies encountered often lead to the collapse of small businesses.

Sustainability

Since its creation, PFCC has received donations from the Yves Rocher Foundation, a famous French cosmetic company. After 10 years of activity, PFCC is now self-sustainable: it covers all its operating costs with the interest income of the loans. This ensures its long-term stability and will hopefully allow the fund to grow in Metro Manila and to keep fostering business development among poor Filipino families.

Acknowledgment

We would like to thank Ms. Vicky Agaab for receiving us and explaining the model of PFCC. During our HSSI mission, we worked with nationwide rural Micro Finance Institutions (MFIs) such as CARD and NWTF and we were happy to see a local and urban credit cooperative working in the capital!

Further Readings

If you want to learn more about Proximity Funding Credit Cooperative, send an email at : admin@proximityfunding.com

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Also available in: French

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