BIBLIOGRAPHY DAYAOEN, MARSON T. APRIL 2008....

BIBLIOGRAPHY
DAYAOEN, MARSON T. APRIL 2008. Experiences of Selected Members with
the Micro-Finance Program of Benguet Operators and Drivers Association Multi-Purpose
Cooperative, Benguet State University, La Trinidad, Benguet.
Adviser: Clifton D. Llanes, MSc
ABSTRACT

The study was conducted on the BODA MPC to document and relate the
experience of five micro-finance program borrowers/beneficiaries of the Buyagan
Operators and Drivers Association Multipurpose Cooperative in relation to loan
acquisition, use, and repayment as well as their feedback or comments on this program of
the cooperative.

An interview guide was used to gather information from the respondents.

The respondents belong to average household sizes although one respondent earns
less than the Philippine poverty threshold.
Considering the main objective and lending policies of BODA MPC microfinance
program, results show violations to these objective and lending policies.
The delinquency and difficulty of loan repayment may be due to the fact that the
loans are providential rather than productive which is the main purpose of the program.
The cooperative must therefore make further studies on the efficiency and
effectiveness of the program and strictly implement its policies to sustain and improve its
operation as well as to avoid possible complication.

TABLE OF CONTENTS

Page

Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
INTRODUCTION

Rationale of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1

Statement of the Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3

Objectives of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3

Importance of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
REVIEW OF LITERATURE

Micro Finance in the Economy . . . . . . . . . . . . . . . . . . . . . . .. . . . . . .
4

Clients of Microfinance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5

Loan Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5

Purposes of Loaning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6

Benefits from the Loan Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7

Problems in Paying Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
METHODOLOGY

Locale and Time of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9

Respondents of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9

Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9

Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
ii

RESULTS AND DISCUSSION

Profile of the Respondents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10

Number of Times Borrowed Amount and

Reasons for Loan by the Respondents . . . . . . . . . . . . . . . . . . . . . . . .
11

Loan Application Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13

Loan Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15

Loan Delinquency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17

Problems Encountered by the Respondents

after Loaning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18

Feedback of Respondents on the Policies,

Terms and Condition of the
BODA MPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19

Respondents Suggestions and Comments

on the Micro Finance Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23

Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
LITERATURED CITED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27

iii

1
INTRODUCTION

Rationale of the Study
Cooperatives are socio-economic organizations. They are organized as one of the
alternative course to uplift the economic condition of the low income sector of the
population by providing adequate goods and services at reasonable prices. They are
associations of the people, by the people operating for the greater good of the greatest
number. They are defined as organizations “of small produces and of consumers who
voluntary join together to form business enterprise which they themselves owned, control
and patronize”.
R.A 6938, Article 111 cited that Cooperative is a financial organization owned
and operated by its members to encourage savings among its members; to create a pool of
such savings for which loans for productive or provident purposes may be granted; and to
provide related services to enable its members to maximize the benefits from such loans.
A Cooperative provides maximum economic benefits to its members and
propagates effective practices and new ideas and management and allows the lower
income groups to increase their ownership in the wealth of the nation (Leung, 1993).
The Buyagan Jeepney Operators and Drivers Association Multi-Purpose
Cooperative (BJOMPC), became Benguet Operators and Drivers Association Multi-
Purpose Cooperative (BODAMPC) on March 17, 2005 popularly known in the area as
BODA. This association was organized in 1975 but was only registered on August 18,
1988 with the Securities and Exchange Commission with SEC. Reg. no. B-148. BODA
operates in Baguio City and La Trinidad, Benguet via Magsaysay and Bokawkan with the
main routes at Motorpool and Wangal, La Trinidad, Benguet.
Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

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The Benguet Operators and Drivers Association Multi-Purpose Cooperative
(BODA MPC) was organized and registered with the Cooperative Development
Authority on April 22, 1996 under CDA Regional no. CEO-562.
The BJOMPC started its operation on May 13, 1996 which had only 36 members
with the total paid up share capital of 125,000.00. As of December 31, 2003 almost 7
years of existence, BJOMPC has 144 regular members with a total paid-up share capital
of Php. 920,270.09 with an asset of more than 3 million pesos.
The BODA MPC has a micro-finance program. This program aims to provide
financial assistance for livelihood project of the members of the cooperative within the
area of operation. The program targets the low-income earners as means of augmenting
their family income.
To start the program, the BODA MPC opted to borrow capital from the
Cooperative Bank of Benguet. In January 11, 2005, the bank finally released the loan to
the Cooperative an amount of two million pesos (Php. 2,000,000.00) with 12% interest
per annum, 2% for service charge and another 2% for other charges and 0.15% for
handling or documentation fee.
The micro-finance program of BODA MPC formally started on January 14, 2005.
This means that the program has already been in operation for four years but no
evaluation or study on the program has ever been conducted. This study was conducted
primarily to document the experiences of some beneficiaries of the micro-finance
program of BODA MPC.

Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

3
Statement of the Problem

Given that the micro-finance program has already been operating for four years
and that the BODA MPC, as would any cooperative or organization for that matter,
would like to determine aspects in operation to improve upon, it is hence necessary to
identify the strengths and weaknesses of the programs, even in an initially explorative
faction, for the organization to pinpoint certain aspects of operations to improve upon.

Objectives of the Study

Considering the need to identify strengths and explore possible weaknesses of the
program, this study intends to relate the experience of the borrowers regarding loan
application, loan acquisition, loan use, loan repayment, and their feedback to the
cooperative.

Importance of the Study

The study provide information on the status of five borrowers who availed of
loans under the Micro finance Program of BODA MPC as well as their experiences with
the programs. The information gathered will serve as a basis/tool for the officers and
management staff of the Cooperative to evaluate their micro-finance program if it really
served its purpose. The data will serve as a tool to verify further if such experiences were
true/duplicated by other microfinance borrowers which in turn would possibly indicate
strength and weaknesses of the program that would help them formulate strategies and
policies to further improve the program.

Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

4
REVIEW OF LITERATURE

Micro Finance in the Economy
Micro finance means providing very poor families with every small loans to help
the engage in productive activities or grow their tiny businesses. Micro finance is unique
as a development tool because of its potential to be self-sustaining. Successful micro
finance institution have proven that providing financial services to the poor can be
effective means of poverty reduction and be a profitable business. Dozens of institutions
have proven that financial services for poor people can cover their full cost, through
adequate interest spreads, relentless focus on efficiency and aggressive enforcement of
repayment. A large and growing proportion of today’s micro finance services are being
provided by institutions that are profitable, even after adjusting for subsides that they may
have received (Anonymous, 2007).
World book Millennium (2000) defined that Finance Company is a firm th loans
money to people who promise to repay the loan with an interest in a specified period of
time. Borrowers must offer some guarantee that they will repay the loans, such as a lien
on their salary or personal possessions.
Micro- credit has emerged as an anti-poverty instrument in many low-income
countries. They target the poor especially women, with financial services to help them
become self employed (Khander, 1998)
Microfinance institution have played a key role in the development of
microfinance and they will continue to do so. But what is really needed to reach both
Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

5
further and deeper- is a whole page of institution that serve poor people and to reach
more and more people

Clients of Micro Finance

The typical finance clients are low-income persons that do not have access to
formal financial institutions. Micro finance clients are typically self-employed, often
household-based entrepreneurs. In rural areas, they are usually small farmers and others
who are engaged in small income-generating activities are more divers and include
shopkeepers, service providers, artisans, street vendors, etc. micro finance clients are
poor and vulnerable non-poor who have a relatively stable source of income.

Loan Requirement

The credit Management Handbook (1994) cited that in granting of loans, we have
to consider the borrower’s background through credit investigation and background
investigation (CIBI) which focuses on character, capacity, collateral capital and condition
of the borrower, and the capacity of the co-maker to guarantee loans.

Foronda (1980) stated that collateral, tax declaration of poverty, certificate of land
title, income tax return and tax account number, co-makers among other are requirements
for loan. The author further stated that the determining factors in borrowing loans are
based on the character and repayment capacity.

Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

6
Purposes of Loaning

A Cooperative to encourage or initiate members to save, ad also gives financial
aid by giving different loans. They also help members in case of emergency besides, the
most or main function of a cooperative is to eliminate the unfair practice of the users.
These are the functions of a cooperative particularly the credit unio cooperative (Onagan
and Simangan, 1993).

Ganawed (1997) found out that the purposes of agricultural borrowers in loaning
is to finance their livelihood activities such as vegetable production, cut flower
production, swine production, poultry production and other agricultural activities.

Likewise, the commercial borrowers use loans to finance their commercial
business such as sari-sari store, restaurant, vegetable trading, shoe repair shop, auto repair
shop, dry goods store, an other commercial activities.

Sinha and Matin (1998), also found out that credit made by microfinance
institutions is not used for directly productive purposes by all household borrowers.
Resource poor household tend to use additional credit for smoothing consumption. Others
have used loans for agricultural activities, business, health and social, loan repayment and
others.

Farm household need funds not only to boost agricultural productivity, but also to
pay living expenses, including the education of the children and other home consumption
expenditures (Shim, 1998).

Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

7
Benefits from the Loan Income

The availability of financial service acts as a buffer against sudden emergencies,
business risk, and seasonal slumps that can pass a family into destitution. More and better
financial services specially geared towards low-income groups can help poor households
to move from mere subsidence for daily survival to planning for the future and investing
in better nutrition, improved living conditions, and the children’s health and education.

Experiences show that micro finance can help the poor to increase income, build
viable business, and reduce vulnerability to external shocks. It can also be a powerful
instrument for self-empowerment by enabling the poor especially women to become
economic agent of change (CGAP, 2003).

ADB (1990) stated that granting loans and financing projects of the banks aimed
at improving the facilities, education and improve physical amenities. They added that
higher productivity and higher incomes for small farmers and landless peasants are
among the anticipated benefits from loans.

According to Macli-ing (2002), credit cooperative in developed countries have
been very effective in improving the social and economic condition of the poor, small
farmers, fishermen, factory workers, and other low income groups, Mayocyoc (1984)
have also found it her study that majority of the borrowers gained after using their loans
by increasing their ability to buy foods, equipments and appliances.

Problems in Paying Loans

According to Taganas (1979), the failures of Cooperatives are often due to the
member-borrower to pay their loans or delinquency of members in paying their loans.
Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

8
The failure of members to pay their loans, according to Taganas, was because the money
wa s diverted to non-farm activities such as food, house repair, education and recreation.
Some loans were used to settle other accounts from supplies of farm inputs. Cawaon
(1982) found out in his study that most farmers experience problems during maturity
period like high cost of production, low market price of crops, and money was used for
other purposes. Guadna (2004) also found out in his study that most of the borrowers
were delinquent in the repayment. The borrowers did not pay their loans at he maturity
date to less income incurred from the low market price of their farm product and
occurrence of natural calamities. All these problems led to financial shortages, which
caused to the difficulty of the borrowers in paying their loans.

Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

9
METHODOLOGY

Locale and Time of the Study

The study was conducted on the Benguet Operators and Drivers Association
Multi-Purpose Cooperative located at Western Buyagan, La Trinidad, Benguet from
January to February 2008.

Respondents of the Study

Five members of BODA MPC who availed of loans under the micro finance
program were chosen as respondents of the study. The researcher personally interviewed
the respondents on their experience with the microfinance program.

Data Collection

An interview guide was prepared to help the researcher in gathering information
required in the study. The researcher probed into the experiences of each respondent with
regards to their experiences in the micro-finance program and their comments on the
program itself.

Data Analysis

Given the qualitative nature of information gathered, certain data were related to
the respondents profile and to other information gathered in order to describe the nature
of their experiences with the program. Information gathered was interpreted as to its
implication on cooperative management.
Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

10
RESULTS AND DISCUSSION

Profile of the Respondents

Table 1 presents the profile of the respondents. It shows that all respondents are
married with one already widowed. Three respondents are female and two are male. Both
male respondents are drivers but respondent 1 earns significantly more than respondent 5
since the former also does farming to augment his income. Two female respondent do
business as a source of income, while one is a teacher.
All respondents have average household size although respondents 5 earns an
income lower than the poverty threshold of Php. 14,866/month (NSCB, 2007). He has
also been a member of the cooperative the longest.

Table 1. Profile of the respondents

NO. OF

OCCUPATION

YEARS WITH

CIVIL
SOURCE OF HOUSEHOLD
MONTHLY
RESPONDENT
THE COOP
AGE
SEX
STATUS
INCOME
SIZE
INCOME

1
4
47
M
M
Farming,
5
More than
20K
Driving
2
4
58
F
M
Businesswo
6
10K-15K
man
3
4
53
F
M
Teacher
3
More than
20K
4
3
44
F
M
Businesswo
4
More than
20K
man, farming
5
6
29
M
M
Driving
5
5K-10K

Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

11
Number of Times Borrowed, Amount and
Reasons for Loan by the Respondents

Table 2 presents the loan availed by the respondents. All respondents have
acquired loan not less than three times already.
Table 2 shows that respondent 1 initially borrowed Php. 7,000.00 in 2 instance
particularly for the maintenance of his PUJ. The second loan of P10,000.00 was used for
crop production.
Respondent 2 borrowed the amount of Php. 20,000.00 in 2 instance for the
educational purposes then capital Php. 5,000 as additional capital for her business.
Respondent 3 borrowed twice to pay hospital bills, the third loan was used for
educational purposes and fourth loan of Php. 30,000 was for the improvement of her
house.

Respondent 4 borrowed twice for the purpose of improving her store’s operation,
each time is Php. 7,000 amount was borrowed. The third loan was for crop production
purposes.

Respondent 5 borrowed the amount of Php. 15,000 for house improvement. The
second loan of Php. 5,000 was for Emergency Purposes (hospitalization). The third loan
which is Php. 7,500 was used to purchase an appliance and for the fourth loan was for
educational needs (tuition fee).

As stated in the microfinance program of BODA MPC, the program objective is
for financial assistance for livelihood projects of members and the target beneficiaries are
the low income earner as a means of augmenting their family income. However, based
from in the interview with 5 borrower respondents, who availed of the microfinance
Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

12
program it was found out that the borrowed amount was not used solely for livelihood
project but for the other purposes.
Among the 5 case respondents, respondents 3 and 5 borrowed for provident
purposes such as tuition fee, to pay hospital bill and to improve house and to purchase
appliances. Only respondent 1 and 4 borrowed for purely productive purposes.
Results hence show that there has been a violation of the objective of the
cooperative’s micro-finance program.

Table 2. Number of times borrowed, amount and reasons for loans.
NO. OF TIMES LOANED
AMOUNT LOANED
REASONS
Respondent 1

First loan
7,000
Maintenance of PUJ
Second loan
10,000
For crop production
Third loan
7,000
Maintenance of PUJ
Respondent 2

First loan
20,000
Educational purpose
Second loan
20,000
Educational purpose
Third loan
5,000
Added capital for the business
Respondent 3

First loan
20,000
Emergency purpose
(pay
hospital bill)

Second loan
5,000
Pay hospital bill
Third loan
10,000
Educational purpose
Fourth loan
30,000
Housing project
Respondent 4

First loan
7,000
For business (store)
Second loan
7,000
Store expansion (business)

Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

13
Table 2. Continued …

NO. OF TIMES LOANED
AMOUNT LOANED
REASONS
Third loan
10,000
Crop production
Respondent 5

First loan
15,000
House improvement
Second loan
5,000
Emergency (hospital bill)
Third loan
7,500
Purchase appliances
Fourth loan
7,000
Educational needs (tuition fee)

Loan Application Requirement
and Waiting Time

Requirements in availing loan (Appendix A) from the BODA MPC were the
following a) must have paid the minimum capital share of 2,000 pesos one hundred
membership fee; b) must have attended the Pre-membership Education Seminar; c) must
have been a member for at least one month; d) must have co-maker; e) must be presently
with in the area of operation; and f) must comply with the paper requirement in
borrowing (application form co-borrower statement form promissory note and collateral
for loan more than 7,000 pesos).

Table 3 presents the compliance of the respondents to those requirements each
time they made a loan. It also includes the length of time the respondents waited for their
loan to be released.

Results of the interview with the 5 case respondents showed that the cooperative
was not so strict in the submission and accomplishment of the requirements for
borrowing specifically on the micro-finance project. An example was the case of
respondent 2, the first time she borrowed Php. 20,000, the cooperative required a
Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

14
collateral, interviewed by the loan officer, before the loan was released, but for the
second time where she borrowed the same amount, there was no collateral required and
the loan officer no longer interviewed her. She complied with the other requirement
except for the collateral. According to her the cooperative had trust on her that is why she
did not submit other requirements and the cooperative did not also require it from her
(Table 2). However, in the microfinance program policy states that a borrower can apply
for r a loan twice as much as his share capital, collateral is not required (Appendix A).
There are no statements on exemption whatsoever.

It also states that a non-collateralized loan include those loan that are Php. 7,000
or less. Her non-compliance to this requirement in her record loan of Php. 20,000 is a
clear violation of the policy.
For the other case respondents, it shows that the policy in the submission of
collateral was all followed. It appears then that respondent 2 is given preferential
treatment by whoever granted her the loan.
This implies that there maybe lax application on loan providence by persons given
the responsibility.

As to the requirement for an interview by the loan officer, except for respondent 1
and 2, each of the other respondent were interviewed by the loan officer every time they
applied for a loan. Respondent 1 was not interviewed for the third loan while respondent
2 was not interviewed for her second and third loan. This may again indicate the
preferential treatment for respondent 2.

Result also show that there are varying period to wait for the release of a loan.

Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

15
Table 3. Loan requirement and time of release

NO. OF TIMES ATTENDANCE
INTERVIE
FILLED
UP PROMISSO-
COLLA-
WITH
NO. OF DAYS
LOANED
TO
W OF
APPLICATIO
RY NOTE
TERAL
CO-
RELEASED
ORIENTATION
LOAN
N FORM
MAKE
SEMINAR
OFFICER
R
Respondent 1

1
√
√
√
√

√
Same day
2

√
√
√
√
√
3 days
3

√
√

√
1 day
Respondent 2

1
√
√
√
√
√
√
2 days
2

√
√

√
1 day
3

√
√

√
Same day
Respondent 3

1
√
√
√
√
√
√
Same day
2

√
√
√
√
√
Same day
3

√
√
√

√
1 day
4

√
√
√
√
√
4 days
Respondent 4

1
√
√
√
√

√
2 days
2

√
√
√

√
2 days
3

√
√
√
√
√
2 days
Respondent 5

1
√
√
√
√
√
√
3 days
2

√
√
√

√
Same day
3

√
√
√
√
√
1 day
4

√
√
√

√
2 days

Loan Benefits

Table 4 shows the benefits of loan among the respondents. Respondents 1, 2, and
4 claim that BODA MPC had made it easier for them to access necessary capital to
improve their business. All of the respondents mentioned that through loaning, they
increase their ability to buy food and equipment for the family. All of them also agreed
that the program of the cooperative is very important when it comes to educational needs,
because they have their own kids that are still going to school. These are claims even by
Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

16
respondents 1 and 4 even though they haven’t acquired loan for provident purposes. This
may mean that to them improving their business through the loans improving their
businesses through the loans improve their abilities to purchase their family needs and
pay for their children education.
Two out of five respondents said that through the loan they were able to pay their
personal debt and bills especially when it is urgent like hospital bills, personal credit with
someone and other emergency situations.

Respondents 1, 2 and 4 mentioned that the cooperation had provided them more
capital for business especially in the case of respondents 4 who used the borrowed
amount to start a store, then the second amount for store expansion and the third amount
for a new enterprise which is crop production. However, for respondent number 2 only
the third loan which was the smallest amount she borrowed was used for additional
capital to her business. As mentioned by these 3 case respondents, because of the
additional capital provided by the cooperative there was an increase in income there by
increasing their ability to buy food and provide other needs of the family like education
(tuition fee) for their children.

For respondent 3 and 5, who used the borrowed amount for other purposes other
than livelihood, they mentioned that the benefit received from the loan was the increase
in their ability to purchase food, equipment and home appliances, for education of their
children, had improved their houses and was able to pay personal debts/bills like that of
hospital bills and other debts.

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Table 4. Loan benefits
BENEFITS
RESPONDENTS
1
2
3
4
5
1. Increase ability to buy food, equipment
√
√
√
√
√
and appliances for the family.
2. Increase ability to provide for children’s
√
√
√
√
√
educational needs.

3. Increase ability to pay personal debt/bills

√
√
4. Provides more capital for business √
√

√

purpose.

5. Increase ability to improve house

√
√
project.

The use of loan to pay for debts is a troubling thought since this means that the
borrower is working themselves deeper into debt by borrowing in order to pay for
previous debts which creates a vicious cycle.

Loan Delinquency

Among the 5 case respondents, only respondent 1, has no records of loan
delinquency. Respondent 2 and 4 had the loan delinquency for the second loan,
respondent 3 had loan delinquency for her first loan and respondent 5 had loan
delinquency for the third and fourth loans. Matching results with Table 2, it could be seen
that delinquency occurred on non-productive loans except for that of respondent 4 which
was for store expansion.

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Table 5. Loan delinquency
RESPONDENT FIRST LOAN
SECOND
THIRD LOAN FOURTH
LOAN
LOAN

Respondents 1

Respondents 2

√

Respondents 3
√

Respondents 4

√

Respondents 5

√
√

This indicates that there is a relationship between delinquency and the purpose of
the loan.

Problems Encountered by the Respondents after Loaning

Table 6 identified the following problems encountered by the respondents after
loaning. Although respondent 1 had no loan delinquency and that he had used the loans
for productive purposes, he still experienced difficulty in paying the loan since the jeep
incurred mechanical defect causing a stop to daily operations and consequently to
earnings. The other respondents reasoned their lack of funds as the cause of delinquency
or difficulty in loan payments. This lack of funds may be due to weak income or
reprioritized spending due to illnesses.

This implies that all members do experience difficulties in repaying loans.

Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
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Table 6. Causes of difficulties in paying loans
RESPONDENTS
PROBLEMS
1
Difficulty in paying the loans when the jeep
incurred mechanical defects causing a stop to daily
earning.

2
Not enough income from the business causing
financial shortage which is the cause of late
payment at times

3
Financial shortage and illness of the family
members

4
Financial shortage/not enough income of the
business

5
No enough income

Feedback of Respondents on the Policies, Terms
and Condition of the BODA MPC

Table 7 shows that all of the respondents claimed to have understood the policies,
terms and conditions of the BODA MPC. However, despite this claim, most of the
respondents (except case respondent, no. 1 and 4) used the loan amount for other
purposes rather than for livelihood purposes. This implies that the members were aware
of their violations on the purpose and policies of the micro-finance program.

Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

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Table 7. Feedback of respondents on the policies, terms and condition of the BODA MPC
RESPONDENT
UNDERSTOOD THE TERM OF BODA MPC
1
Understood
2
Understood
3
Understood
4
Understood
5
Understood

Respondent Suggestions and Comments on
the Micro-Finance Program

Respondents gave their suggestions and comments on the micro-finance
program. Most respondents praised the program as being helpful. However, there were 2
suggestions for flexibility on either giving an extension to the deadline of payments or
giving amnesty to those who cannot pay. Another commented on the high interest rate of
the program which must be lowered if possible.

Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
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Table 8. Suggestions and comments of the respondents on the BODA MPC micro-
finance program
RESPONDENT
SUGGESTIONS OR COMMENTS
1
The program is good. The officers were
approachable but it is better also the cooperative
should give consideration of extension to repay
the loan.

2
Beneficial to the members and officers
3
Sometimes amnesty for those who cannot pay on
time.

4
The program is helpful
5
The program is good but the interest is quiet high
so it needs to lower a bit if possible.

Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
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SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

Summary

The Benguet Jeepney Operators and Drivers Association Multipurpose
Cooperative (BODA MPC) had started a micro-finance program on January 14, 2005. Its
aim is to provide financial assistance for livelihood projects of members of the
cooperative. With the need to identify strengths and possible weaknesses of the
programs, this explorative study was conducted.
This study focused on the experience of a selected 5 members on the
microfinance program of BODA MPC. Such experience included loan application, loan
use, loan acquisition, loan repayment, and their feedback to the cooperative.

Information was gathered through personal interview with each of the respondents
using an interview guide. There were 2 male and 3 female respondents. The 5
respondents belong to average household sizes with one respondent earning below the
Philippine poverty threshold.
The respondents borrowed not less than 3 times from the program at varying
amounts and for various purposes. However, most reasons for loaning 3 of the 5
respondents were for non-productive purposes indicating a violation of the objective of
the program. The other 5 respondents used their loans for productive purposes.

All the respondents complied with requirements for loan application although one
respondent seem to have been given special treatment on certain requirements on her
loans.
Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
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The respondents commend the program for making it easy for them to access
funds needed to sustain their livelihood and strengthen their ability to provide for other
family needs. Although 3 respondents used the acquired funds to directly pay for or
purchase family needs, 2 respondents link their improved ability to provide their family
needs through the improvement of their livelihood as aided by the program.

The respondents experienced difficulty in paying their loans due to financial
difficulties caused by weak income for 2 respondents and reprioritization of expenses due
to illnesses.

All the respondents understood the policies, terms and conditions of the
microfinance program of BODA MPC. However, this did not ensure their compliance to
said policies and objective of the program. Two respondents suggested that the program
be flexible enough to consider payment extensions and amnesty to those having payment
difficulties.

Conclusions

Based on the above results, the following conclusions were derived.
1. Considering the main objective of the micro finance program of BODA MPC
which is to provide financial assistance for livelihood projects, there have
been violations to their intents as there were more loans done for provident
purposes as compared to those for productive purposes.
2. There is an instance of giving loan preferential treatment to a member in
terms of loan application indicating inconsistencies in the delivery of the
microfinance program..
Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
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3. The case respondents who used the borrowed amount for other purposes than
the livelihood activities had encountered problem in loan repayment.

Recommendations

Based on the conclusions, the following recommendations are made:
1. The BODA MPC should clearly explain to members about the microfinance
program, its objective and requirements.
2. BODA MPC should strictly implement its microfinance program policies.
This will help decrease delinquency and avoid possible loss of confidence of
members on the program due to preferential treatment on other members.
3. With the discovered problems of the program given the considerably small
number of respondents of this study, BODA MPC must conduct a more
exhaustive study on the efficiency and effectiveness of their microfinance
program, results of which could help them develop more appropriate policies
and strategies that would truly aid its members and sustain the operations of
the program.

Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

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LITERATURE CITED

ADB, 1990. Benefits to the poor. ADB Annual Report. Manila Philippines. P. 42.

ANONYMOUS, 2007. Microfinance Programs retrieved November 14, 2007.
http://en.wikepedia.org:/wiki/microfinance

ANONYMOUS, 2007. Microfinance. Retrieved. November 14, 2007.
http://www.microfinancegateaway .com/section/fag

AQUINO, A. 1993. Primer sa Batas Kooperatiba, RA 6938. Tri-Media Exponents, Inc:
Manila, Philippines

CREDIT MANAGEMENT HANDBOOK. 1994.

CONSULTATIVE GROUP TO ASSIST THE POOR (CGAP). 2003.

CAWAON, J.W. 1982. Determination of Agricultural Credit Requirements of Small
Farmers in Pugo, La Union. BS Thesis. BSU, La Trinidad, Benguet.

FORONDA,C. 1980. Comparative Economic Analysis of Loan Granted by Three Rural
Banks in Ilocos Sur. BS Thesis. BSU, La Trinidad, Benguet.

GANAWED, D. 1997. Credit and repayment performance of loan borrowers of the
Cooperative Bank of Benguet. B.S. Thesis. BSU, La Trinidad, Benguet. Pp. 2.

GUADNA, E.P. 2004. Credit operation of Natubleng Multi – Purpose Cooperative in
Natubleng, Buguias, Benguet. BS Thesis. Benguet State University, La Trinidad,
Benguet. P.12.

KHANDER, S.R. 1998. Micro – Credit Program Evaluation: A Critical Review, IDS
Bulletin. Vol 29, No. 4.

LUENG, C. 1993. Diary: Return to Cooperative. Baguio Midland Courier. Baguio City.

MAYOCYOC, F.S. 1984. KKK loan utilization and repayment status of vegetable
Production beneficiaries in Benguet Province. BS Thesis. BSU, La Trinidad,
Benguet.

MACLI-ING, V. A. 2002. Credit operation of the Universal Multi-purpose Cooperative
BS Thesis, BSU, La Trinidad, Benguet. Pp.1-2.

ONAGAN, L. and. SIMANGAN. 1983. Cooperative’s Principles and Practices. Onagan
Sons Publisher: Quezon City; Philippines. Pp 76-79.
Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

26
SHIM, Y.K. 1998. Present Systems and Problems on Agricultural Financing for Small
Farmers in Korea In: Korea National Agricultural Cooperative Federation,
1998. Improved Agricultural Credit for small farms in Asia Pp.49-50.

SINHA, S. and I. MATIN. 1998. Informal Credit Transaction of Micro-Credit
Borrowers in Rural Bangladesh. IDS Bulletin, Vol. 29, No. 4. Pp. 81-90.

TAGANAS, P.1979. Repayment deficiencies of agricultural loan in Bontoc Mountain
Province. BS Thesis. Benguet State University, La Trinidad, Benguet.

WORLD BOOK MILLENIUM. 2000.

Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

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APPENDIX A

Microfinance Program Policy
(BODA-MPC RECORD)

Enumerated below are microfinance policies implemented by the Cooperative.
1. Requirements in giving loans to the borrowers.
a. Must have paid the minimum capital share in the amount of the two
thousand pesos (2,000.00) plus one hundred pesos (100.00) membership
fee.
b. Must attend the Pre-membership Education Seminar.
c. Must be a member of the Cooperative for at least one month.
d. Must have a co-maker.
e. Must be presently residing permanently within the area of operation.
2. Papers to comply with in applying for loans.

a. applications form
b. co-borrowers statement form

c. promissory note

d. collateral if loan is more than seven thousand pesos
3. Loan Co-maker

a. Must be a member of the Association

b. Member of the Cooperative with sufficient funds

c. Other non-members with special power of Attorney of his property
4. Micro Loan Amount
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a. up to seven thousand pesos (7,000.00.) – non collateralized loan

b. up to 2x the share capital – non collateralized loan
c. more than seven thousand pesos and above – collateralized loan
5. Charges for the following:
a. interest rate – 2.5% per month.
b. Other charges:

1. Service charge – one percent per month.
2. capital build-up three percent of total loan amount.
3. Insurance – Four pesos for every one thousand pesos (1000.00) for three
months term.
- Five pesos for every one thousand pesos (1000.00) for four months plus
one peso for every additional month.

4. Savings – one percent of total loan.
6. Term of the loans

The term of the loan is below seven thousand pesos for three and seven thousand
pesos above six months.
7. Mode of payments of the loans

The mode of payment of the loans is daily, weekly, and monthly.
8. Micro Loan Approving Authority

For loan which is P3,000.00 to P10,000.00 – the loan officer and manager
P10,001.00 to P50,000.00 – the manager and credit committee

P50,001.00 and above the credit committee and BOD with the recommendation of
the manager.
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Interview Guide

1. Socio-Economic Status of the Respondents

Name: _________________________________

Address: _______________________________________

Civil Status: ______________ Age: _____________ Gender: _____________

Occupation: __________________________________

Other source of Income: ______________________________________

Households size: ______

Monthly Income (Household): ______________________________
II. Loan Application
1. How many times have you availed of loans under the micro-finance program
of BODA-MPC? _____________
2. What are your reasons or purpose for borrowing from the program?
Reasons Amount
First _________________________________ ____________________

Second _______________________________ ____________________

Third ________________________________ ____________________

Fourth _______________________________ ____________________

3. What were your experiences in applying for loan?

Good Bad
_______________________________ ______________________________

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III. Loan Acquisition

1. What were your experience in acquiring of your approved loan?

IV. Loan Use

1. Where did you use the loans you availed of?

Use Reasons
a. _________________________________ _________________________________

b. _________________________________ _________________________________

c. _________________________________ _________________________________

d. _________________________________ _________________________________

2. what benefits did you derive from the loan you have availed under the
microfinance program?

______ improving business operation

______ increase ability to buy food, equipment and appliances for family

______ increase ability to provide children’s educational needs

______ increase ability to pay debt

______ other ____________________________________________

3. What problems did you experience in using the loan availed of?

V. Loan repayment

1. What problems did you encounter or experience in repaying your loan?

2. Where do you source out funds to pay your loan?

3. How do you budget your money in paying your loan?

4. Have you ever been delinquent in paying your loan?

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Yes
No

Reason
First loan _________ _________ _____________________________

Second loan _______ _________ _____________________________

Third loan ________ _________ _____________________________

5. Are you aware of loan repayment condition offered by the Cooperative?

__________________________________

VI. Feed back

1. What are your comments or suggestions on the microfinance program of
BODA-MPC?
2. Do you read the loan policies of BODA-MPC? Do you understand its term
and condition?

Experiences of Selected Members with the Micro-Finance Program of Benguet Operators and
Drivers Association Multi-Purpose Cooperative / Marson T. Dayaoen. 2008

Document Outline

Experiences of Selected Members withthe Micro-Finance Program of Benguet Operators and Drivers Association Multi-PurposeCooperative
- BIBLIOGRAPHY
- ABSTRACT
- TABLE OF CONTENTS
- INTRODUCTION
  - Rationale of the Study
  - Statement of the Problem
  - Objectives of the Study
  - Importance of the Study
- REVIEW OF LITERATURE
  - Micro Finance in the Economy
  - Clients of Micro Finance
  - Loan Requirement
  - Purposes of Loaning
  - Benefits from the Loan Income
  - Problems in Paying Loans
- METHODOLOGY
- RESULTS AND DISCUSSION
  - Profile of the Respondents
  - Number of Times Borrowed, Amount andReasons for Loan by the Respondents
  - Loan Application Requirementand Waiting Time
  - Loan Benefits
  - Loan Delinquency
  - Problems Encountered by the Respondents after Loaning
  - Feedback of Respondents on the Policies, Termsand Condition of the BODA MPC
  - Respondent Suggestions and Comments onthe Micro-Finance Program
- SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
  - Summary
  - Conclusions
  - Recommendations
- LITERATURE CITED
- APPENDIX